Ayar Labs bags $150M in additional late-stage funding to help make bigger AI chip clusters

Ayar Labs, a networking technology startup, has secured an additional $150 million in late-stage funding, increasing its total raised amount to over $650 million. The company originally disclosed raising $500 million in its Series E round in March, led by Neuberger Berman, with Nvidia, AMD, and MediaTek also participating. With today's extension, Ayar Labs has raised nearly $1 billion in outside funding, highlighting the potential of its optical interconnect technology.

Ayar Labs aims to replace copper interconnects in AI data centers with its optical interconnect technology, TeraPHY, to help AI systems scale. Copper interconnects face distance limitations, consume excessive power, and overheat when linked to multiple high-performance processors, causing workloads to break down. TeraPHY offers greater bandwidth, performance, power efficiency, and lower latency, enabling the connection of larger GPU clusters across data centers.

The startup's co-packaged optics technology places the TeraPHY Optical Engine directly into ASIC sockets of servers, alongside GPUs, enhancing connectivity. Ayar Labs' co-founder and CEO, Mark Wade, emphasized that the funding will accelerate manufacturing-ready co-packaged optics at scale and expand engineering capacity to support worldwide customer programs.

With momentum growing in recent years, Ayar Labs expects to bring its technology to the mass market by early 2028. The latest funding round has already funded a new chip design center in Bengaluru, India, while the additional cash from today's extension will help prepare products for volume production by the end of 2027. Ayar Labs' partnership with Taiwanese data center infrastructure company Wiwynn Corp. will further support its goal of delivering rack-scale AI systems that reduce the power and complexity limits of copper interconnects.