March 2 (Reuters) – Nvidia will invest $2 billion each in photonics product makers Lumentum and Coherent, as it seeks to power 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 after the announcement on Monday.
At its most recent earnings conference call, Nvidia executives said the company will use its large cash reserves to invest in its AI ecosystem and help boost the productivity of its models.
Nvidia is aggressively looking for new technology to help boost the speed of its chips, with photonics emerging as a popular choice for many chipmakers looking to meet high-end requirements.
The two deals could also help the AI chip giant extend its lead in the fast-moving AI hardware industry as many top cloud providers join forces to develop custom silicon to match their personal AI needs.
Custom chipmaker Marvell Technologies last year announced the acquisition of semiconductor startup Celestial AI in a $3.25 billion deal to advance its work in photonics, which uses light rather than electrical signals to make connections between AI chips.
One of Nvidia’s top customers, Meta last week signed a $60 billion deal with rival Advanced Micro Devices, fueling the need to improve the performance of semiconductors to fend off rivals.
Monday’s agreements include multibillion-dollar purchase commitments from Nvidia and access rights to future capacity and advanced laser and optical networking products from both Lumentum and Coherent.
The investment will help companies support research and development, capacity and operations as they build U.S. manufacturing capabilities.
Lumentum CEO Michael Hurlston said the company would invest in new manufacturing facilities to increase capacity.
(Reporting by Zaheer Kachwala in Bengaluru; Editing by Sriraj Kalvela and Maju Samuel)
