Nvidia's "Photonics" Gambit: $4 Billion Bet on Light-Based Chips

Silicon Valley — Nvidia is "buying" the future again.

March 2, Nvidia announced a $4 billion investment in Coherent and Lumentum to develop next-gen silicon photonics technology. This isn't just an investment — it's Nvidia's big play on "photonics computing."

$4 Billion "Light Change"

According to the agreement, Nvidia will:

Partner with Coherent to develop next-gen silicon photonics technology

Get multi-billion dollar purchase commitments

Gain future access rights and capacity guarantees

Partner with Coherent to develop next-gen silicon photonics technology

Get multi-billion dollar purchase commitments

Gain future access rights and capacity guarantees

"We're preparing for next-gen AI infrastructure," Jensen Huang said in the announcement. "Photonics technology will completely change AI computing."

What is Silicon Photon Optics?

Simply put, silicon photonics uses "light" to transmit data.

Traditional chips use copper wires to transmit electrical signals, but optical signals are faster and more power-efficient. When AI models get larger and need more data transmitted between chips, electrical signals become the bottleneck.

"Electrical signals are like traffic jams," a chip engineer compared. "Optical signals are like highways — no traffic."

Why Now?

Why is Nvidia "changing to light" now?

Simple reason: AI models are too large, traditional chip interconnects have become bottlenecks.

"Data transmission between GPUs consumes 40% of power," the engineer said. "Photonics technology can reduce power consumption by 90%."

That's why Nvidia must "buy" photonics technology — not sentiment, but necessity.

Who Are Coherent and Lumentum?

Coherent: Global leading laser and photonics component manufacturer

Lumentum: Apple's Face ID supplier, also makes photonics components

Coherent: Global leading laser and photonics component manufacturer

Lumentum: Apple's Face ID supplier, also makes photonics components

Both are veteran photonics technology companies. Nvidia "marrying" them is a power partnership.

How Far is Photonics Computing?

But note: silicon photonics isn't "photonics computing" yet.

"Now it's 'photonics interconnect' — using light to connect chips," a technical expert said. "Real 'photonics computing' — using light for computing — still 5-10 years away."

However, Nvidia's strategy is clear: first get photonics interconnect ready, then slowly transition to photonics computing.

What About China?

China isn't behind in photonics technology either.

"China has accumulation in photonics technology," an industry person said. "But industrialization still has a gap."

Nvidia's investment will accelerate photonics technology industrialization. Time is running out for China.

Epilogue

At a semiconductor summit, I met a photonics technology entrepreneur. He told me photonics technology "heating up" is inevitable.

"Like the transition from vacuum tubes to transistors," he said. "Now it's the transition from electricity to light."

Perhaps this is the next station of computing: not faster, but completely different.

Reference: CNBC, Benzinga, Fraunhofer