March 2 (Reuters) – Nvidia will invest $2 billion each in photonics makers Lumentum and Coherent, as it looks to bolster its data center chips with technology that can better meet the growing need for faster AI processors.
Lumentum shares rose 5%, while Coherent rose 9% in early trading following Monday’s announcement.
In its most recent earnings call, Nvidia executives said the company would use its deep cash reserve to invest in the AI ​​ecosystem and help boost model production.
Nvidia has been aggressively pursuing new technology to help increase the speed of its chips, and photonics is emerging as a popular option for many chipmakers looking to meet higher inference requirements.
The two deals could also help the AI ​​chip giant expand its lead in the changing AI hardware industry, as many major cloud providers focus on building custom silicon to “meet your personal AI needs.”
Custom chip maker Marvell Technology announced its acquisition of semiconductor startup Celestial AI last year in a $3.25 billion deal to leverage its work in photonics, which uses light signals instead of electrical ones to create connections between AI chips.
One of Nvidia’s biggest customers, Meta, signed a $60 billion deal with rival Advanced Micro Devices last week, fueling the need to improve semiconductor performance to fend off competitors.
Monday’s deals include multimillion-dollar purchase commitments from Nvidia and future rights to capacity and access to advanced laser and optical networking products from Lumentum and Coherent.
The investments will help companies support research and development, capacity and operations as they build manufacturing capabilities in the United States.
Lumentum CEO Michael Hurlston said the company will invest in a new manufacturing facility to increase capacity.
(Reporting by Zaheer Kachwala in Bengaluru; Editing by Sriraj Kalluvila and Maju Samuel)