Ayar Labs, a San Jose, California-based company, announced it has raised $155 million in a funding round led by Advent Global Opportunities and Light Street Capital, with significant investments from Nvidia Corp., AMD Ventures, and Intel Capital.
This latest funding round has propelled Ayar Labs’ valuation to over $1 billion, according to co-founder and CEO Mark Wade in a statement to Bloomberg News.
AI’s Infrastructure Challenges
The explosion of artificial intelligence (AI) has brought unprecedented demands on hardware infrastructure.
Current AI technologies, particularly those leveraging Nvidia’s powerful graphics processing units (GPUs), require massive amounts of data to be transmitted rapidly and continuously in server systems.
These demands often result in bottlenecks, high power consumption, and excessive heat generation.
Ayar Labs offers an innovative solution to these challenges by replacing traditional electrical interconnects with light-based (photon) technology.
“The AI workload is really breaking the back of the existing hardware infrastructure, especially in interconnects,” Wade explained. “We’ve come up with a way to replace those electrical interconnects.”
Light-Powered Data Transmission
While light has long been used for data transmission—as seen in subsea fiber optic cables connecting continents—Ayar Labs has miniaturized the technology to fit within chip packages.
This breakthrough enables faster data transmission with reduced power consumption and heat generation, addressing some of the core challenges of AI hardware.
Ayar Labs has already begun collaborating with customers to test its innovative chips and aims to have them qualified for high-volume manufacturing by mid-2026.
The newly raised funds will support scaling up production to meet growing demand.
Currently, Ayar Labs’ chips are manufactured by GlobalFoundries Inc., and the company has also partnered with Intel Corp. to integrate its light-based technology into Intel’s manufacturing processes.
Additionally, the startup is in discussions with industry leader Taiwan Semiconductor Manufacturing Co. (TSMC) to further expand its manufacturing capabilities.
TSMC, a strategic partner through VentureTech Alliance, is an existing investor in Ayar Labs and a founding member of a silicon photonics industry alliance launched earlier this year.
The alliance aims to accelerate the adoption of light-based technology, particularly in chip packaging.
Way for a New Era of AI Hardware
With this substantial investment and the backing of key players in the tech industry, Ayar Labs is poised to redefine the future of AI hardware.
By addressing the limitations of current infrastructure with its photon-based interconnects, the company is not only innovating but also paving the way for more efficient, scalable, and sustainable AI technologies.
