Shares of Coherent (COHR.US) experienced a notable decline during Tuesday's trading session. At the time of writing, the stock was down 5.72% to $390.18.

Catalyst for the Move

The downturn followed the company's announcement that it has signed a non-binding preliminary memorandum of terms with the U.S. Department of Commerce. This agreement outlines the intent for Coherent to receive $50 million in direct funding under the U.S. CHIPS and Science Act.

The allocated funds are designated for the expansion of the company's six-inch indium phosphide semiconductor wafer fabrication facility located in Sherman, Texas. Upon completion, the project is expected to double the site's cleanroom production area and increase wafer production capacity by fourfold. A groundbreaking ceremony for the expansion was held on the same day as the announcement.