The stock price surged 10 times in one year, and Lumentum is building a 6-inch InP wafer factory in the United States.

How does Lumentum’s localization strategy enhance supply chain resilience?

Recently, Lumentum Holdings Inc. (hereinafter referred to as “Lumentum”), a major provider of optical and photonic solutions for cloud and networking applications, announced plans to establish a new indium phosphide (InP) based optical device factory in Greensboro, North Carolina, to supply critical components for the world’s largest artificial intelligence (AI) data centers.

According to reports, this factory, covering 240,000 square feet (22,300 square meters), was acquired from semiconductor chip manufacturer Qorvo. Lumentum chose this location due to its skilled workforce, strong infrastructure, and supportive economic development environment from federal and state governments.

The factory is now operational and will be remodeled for the production of Lumentum’s InP-based optical products, including continuous wave (CW) lasers and ultra-high power (UHP) lasers. The acquisition agreement also includes the transfer of an experienced workforce, which will enable Lumentum to accelerate capacity expansion and efficiently increase output.

Lumentum plans to invest hundreds of millions of dollars in the coming years to scale up production and enhance the advanced manufacturing capabilities of this facility while retaining and creating over 400 manufacturing jobs in the U.S. The new positions are expected to cover areas such as manufacturing processes and equipment engineering, manufacturing technicians, operations, supply chain, quality, management, IT, human resources, and finance. The project has received support from state and local economic development programs.

NVIDIA will become a customer of this factory, helping to expand U.S. critical infrastructure and support research and development efforts through a previously established strategic agreement with Lumentum. Lumentum also plans to provide horizontal and vertical optical solution support for other leading AI infrastructure customers through this factory.

By expanding domestic manufacturing in the U.S., Lumentum is enhancing supply chain resilience, advancing its localization strategy, and strengthening its capability to support large-scale cloud and AI infrastructure networks. The new factory is expected to significantly boost Lumentum’s production capacity for 6-inch InP wafers. The factory is anticipated to be operational by mid-2028.

InP wafers are small, fragile, and expensive. Lumentum is transitioning to 6-inch wafers, while 12-inch silicon wafers are already used in CMOS processes. The yield of InP wafers is highly sensitive to process control. This is why only a few companies worldwide can manufacture electro-absorption modulated lasers (EML), which is one of Lumentum’s most important products, capturing about 50-60% of the market share.

Lumentum CEO Michael Hurlston stated, “Our customers are building the infrastructure that defines the next generation of computing. This new InP manufacturing facility will significantly enhance our capacity, deepen our strategic partnerships, and ensure we can deliver the performance, reliability, and scale required for the AI revolution.”

“As AI workloads grow at an unprecedented pace, it is crucial to securely and reliably acquire high-performance optical components,” said Debora Shoquist, NVIDIA’s Executive Vice President of Operations. “Lumentum’s investment in expanding U.S. manufacturing capabilities enhances supply continuity, allowing us to meet the growing infrastructure demands with greater confidence.”

Benefiting from the surge in demand for optical devices from AI data centers, Lumentum’s stock price has soared over 1,075% in the past year and is currently approaching a 52-week high of $809.

Editor: Chip Intelligence - Wandering Sword