Why Coherent’s CEO believes in giving people room to fail

2026-07-24 · Source: Semafor · Field: Technology & Digital — Artificial Intelligence & Machine Learning, Cloud Computing & IT Infrastructure, Emerging Technologies & Innovation · Depth: Novice, extended

Summary

Coherent, a 55-year-old optical technologies company, has seen its market value exceed \$60 billion, with stock rising 350% since Jim Anderson became CEO in June 2024, driven by the AI-powered demand for data centers. The company specializes in photonics technology, which is crucial for transmitting data between millions of AI processors. Coherent secured a \$2 billion investment from Nvidia and up to \$50 million in CHIPS Act funding to quadruple indium phosphide production capacity at its Sherman, Texas plant by late 2025, addressing a key supply constraint. Anderson's leadership focuses on accelerating operational execution, fostering innovation, and encouraging calculated risk-taking, including "risk production" to expedite market entry. The company is also developing co-packaged optics with Nvidia to further enhance data center efficiency.

Key takeaway

For Directors of AI/ML and supply chain strategists building out data center infrastructure, recognize that optical networking components are a critical constraint for AI scaling. Your investment decisions should prioritize suppliers actively expanding capacity for materials like indium phosphide. Furthermore, cultivate a leadership culture that encourages calculated risk-taking and "risk production" to accelerate deployment, as speed and innovation are paramount for competitive advantage in this rapidly evolving sector.

Key insights

Photonics technology is indispensable for scaling AI data centers, necessitating leadership that embraces speed and calculated risk.

Principles

• Speed often wins over size in tech innovation.
• Allowing room for failure encourages risk-taking and faster execution.
• Operational execution must align with technological advancement.

Method

Implement "risk production" by initiating manufacturing ahead of customer testing, assuming product success to accelerate market entry and revenue.

In practice

• Prioritize investments in optical networking components like indium phosphide.
• Foster a culture where teams are not penalized for calculated production risks.
• Explore co-packaged optics to replace copper wiring in data centers.

Topics

• Photonics
• AI Infrastructure
• Optical Networking
• Data Centers
• Supply Chain
• Leadership
• Co-packaged Optics

Best for: Executive, Director of AI/ML, Investor

Related on AIssential

• Coherent Breaks Ground on Expanded Texas Facility, Scaling AI’s Optical Backbone — Optical interconnects, leveraging 6-inch indium phosphide wafers, are fundamental for scaling high-performance AI infrastructure efficiently.
• xAI is looking more like a datacentre REIT than a frontier lab — xAI's pivot to leasing data center capacity highlights the immense value of compute infrastructure in the AI industry.
• The Apple Silicon Disruption — NVIDIA has displaced Apple as TSMC's top customer, shifting silicon industry leadership to data center AI.
• Nvidia invests $2bn each in Lumentum and Coherent for AI optics R&D — Nvidia is strategically investing in optical and physical AI technologies to secure supply chains and accelerate AI infrastructure development.
• Silicon photonics firms warn Europe lacks infrastructure to turn research into commercial success — Lack of scale-up infrastructure and manufacturing access impedes silicon photonics commercialization, despite its strategic importance for national tech sovereignty.
• Intel CEO on Elon Musk — The semiconductor infrastructure lags AI growth, creating a critical bottleneck for future development.

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Editorial summary, takeaway, and curation by AIssential. Original article published by Semafor.