Ayar Labs has secured $500 million in a Series E round to scale its co-packaged optics technology. Backed by NVIDIA and AMD, the company is replacing traditional copper interconnects with light-based data transmission to solve the growing power and bandwidth crisis in AI data centres.
Ayar Labs has closed a $500 million Series E funding round to accelerate the production of its optical I/O technology, which aims to solve the escalating power and data bottleneck crisis in large-scale AI systems.
Ayar Labs, a US-based semiconductor company founded in 2015, develops co-packaged optics (CPO) that use light to transfer data between chips instead of traditional copper wires. The company's core products, the TeraPHY optical I/O chiplet and SuperNova light source, are designed to be integrated directly into the packages of advanced AI processors and switches.
The Update: Ayar Labs has raised $500 million in a Series E round, bringing its total funding to $870 million and valuing the company at $3.75 billion. The round was led by Neuberger Berman and included new strategic investments from semiconductor giants AMD, Alchip, and MediaTek, alongside existing backer NVIDIA. Key institutional investors such as ARK Invest, Insight Partners, and the Qatar Investment Authority also participated.
"AI infrastructure is hitting a power wall driven by interconnect inefficiency. As bandwidth demands explode, copper becomes the bottleneck, consuming too much power and limiting AI throughput per watt and per dollar. Co-packaged optics overcomes these barriers, enabling thousands of GPUs to operate as a unified system." - Mark Wade, CEO and Co-founder, Ayar Labs
The capital will be used to scale high-volume manufacturing and testing of its co-packaged optics (CPO) solutions, which replace bandwidth-limited copper interconnects with high-speed, low-power optical links. The company plans to expand its global operations, including a new office in Hsinchu, Taiwan, to meet the demands of hyperscale AI customers. The technology is critical for enabling thousands of GPUs to operate as a single, unified system, overcoming the physical limitations of copper that create performance bottlenecks and drive up power consumption in modern data centres.
In an exclusive with @WSJ, we detailed how our CPO technology is solving one of the biggest hardware issues that’s causing bottlenecks in AI and revolutionizing the way chips are connected inside server racks.
— Ayar Labs (@AyarLabs) March 3, 2026
Read more:https://t.co/QrtHhqcdX6 pic.twitter.com/ecCY5Y5qMY
Why it Matters: The significant investment from major chipmakers like NVIDIA and AMD signals strong industry conviction that optical I/O is a necessary technology for the future of AI infrastructure. As AI models grow in complexity, the electrical resistance and power draw of copper wiring become a fundamental barrier to scaling performance efficiently.
Ayar Labs' approach of integrating light-based communication directly onto the chip package addresses this power wall head-on, promising substantial improvements in data throughput per watt. This shift is not just an incremental upgrade; it represents a foundational change in data centre architecture required to sustain the progress of AI.
Get the stories that matter to you.
Subscribe to Cyber News Centre and update your preferences to follow our Daily 4min Cyber Update, Innovative AI Startups, The AI Diplomat series, or the main Cyber News Centre newsletter — featuring in-depth analysis on major cyber incidents, tech breakthroughs, global policy, and AI developments.
AWS has increased prices for reserved AI GPU capacity by around 20%, highlighting the growing shortage of high bandwidth memory and advanced chips. As demand outpaces supply, AI development costs are rising, making large scale model training and deployment more expensive.
Neura Robotics raises $1.4B backed by NVIDIA and Amazon to scale physical AI and humanoids to millions of units by 2030, as autonomous robot teams make their tactical debut at Eurosatory 2026.
Odyssey’s $310 million raise signals a new phase in AI, where the race moves beyond language models into world models. These systems aim to give machines an operating understanding of space, motion and causality, forming the physics layer needed for robotics, autonomous systems and physical AI now.
Cyera’s reported $300 million raise at a $12 billion valuation shows how quickly enterprise data security is being repriced as AI adoption accelerates. The figures should be framed carefully, because Cyera has disputed the reported numbers.
Where cybersecurity meets innovation, the CNC team delivers AI and tech breakthroughs for our digital future. We analyze incidents, data, and insights to keep you informed, secure, and ahead. Sign up for free!
