Indium Phosphide (InP): Indium Phosphide is used to produce efficient lasers, sensitive photo detectors and modulators in the wavelength window typically used for telecommunications, i.e., 1.55 micron wavelengths, as it is a direct bandgap III-V compound semiconductor material. InP is the most important material for the generation of laser signals and the detection and conversion of those signals back to electronic form. Due to its high index of refraction, devices are very small, but the optical loss is also relatively high, so InP is not typically used for passive functions. Wafer diameters range from 2-4 inches.

In addition to making lasers, InP can be used to make a variety of other active optical devices. It has long been used to make high-speed modulators and is now being used to make coherent modulators for 100G transmission. Coherent modulators utilize four nested Mach-Zhender modulators, each running at 28~32 Gbaud to simultaneously impart 4 separate data streams onto a single beam of light. Mach Zhender modulators work by applying a voltage to one arm of an interferometer and changing the index of that arm relative to the second arm using the Electro-Optic effect (for lithium niobate modulators), or quantum-confined Stark effect (for InP modulators), or carrier depletion (for silicon photonic modulators). Mach-Zhender modulators are usually used for the most demanding and longest distance transmission. Another type of modulator is an electro-absorptive modulator. In this case, a voltage is applied to a junction causing the band edge of the InP to shift increasing or decreasing absorption. Electro-absorptive modulators are usually used for intermediate distances of 2-40 km.