Ayar Labs, a California-based startup specializing in photonic chips, has raised $155 million in its latest funding round. Backed by industry giants Nvidia, AMD Ventures, and Intel Capital, the round was led by Advent Global Opportunities and Light Street Capital. This significant investment pushes Ayar Labs' valuation past $1 billion, according to CEO and co-founder Mark Wade.

The semiconductor industry has long sought innovative ways to enhance efficiency and overcome performance bottlenecks, particularly in artificial intelligence (AI) processing. Ayar Labs' technology leverages light, or photons, to transfer data between chips, offering a solution to the high energy demands and heat generated by conventional electrical interconnects.

“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.”

Unlike traditional data transmission methods, Ayar Labs miniaturizes fiber-optic technology to fit within chip packages. This innovation enables faster and more efficient data transfer, meeting the demands of power-hungry AI systems that rely on rapid, simultaneous data processing.

The funding will be used to scale production, with Ayar Labs targeting high-volume manufacturing qualification by mid-2026. The startup currently partners with GlobalFoundries for chip manufacturing and collaborates with Intel to integrate its technology into their production. Talks with Taiwan Semiconductor Manufacturing Co. (TSMC), a global leader in chipmaking, are also underway.

TSMC has shown interest in silicon photonics, forming an alliance this year to accelerate its use in chip packaging. Existing investor VentureTech Alliance, closely associated with TSMC, continues to support Ayar Labs as the company aims to redefine interconnect technology.

As AI technology advances, the need for efficient data transfer solutions becomes critical. Ayar Labs is positioned at the forefront of this shift, drawing significant interest from leading semiconductor players eager to shape the future of AI-driven hardware.

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