Optical interconnect startup Ayar Labs raised $500 million in a Series E funding round that saw participation from Nvidia, AMD, MediaTek, and Alchip.

Led by investment firm Neuberger Berman – which will also take up a board observer role – the round brings the total raised by the company to $870 million, valuing it at $3.75 billion.

The new funding will be used to scale high-volume production and test capacity and expand global operations. This includes growing its new office in Hsinchu, Taiwan, and accelerating the deployment of its co-packaged optics (CPO) solution that was first unveiled in September 2025.

“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,” Ayar Labs CEO Mark Wade noted in a statement. “Co-packaged optics overcomes these barriers, enabling thousands of GPUs to operate as a unified system. This funding fuels our ability to meet the demands of hyperscale AI.”

Founded in 2015, California-based Ayar Labs develops optical interconnect solutions based on open standards, optimized for AI training and inference workloads.

In April 2025, the company unveiled the world’s first universal chiplet interconnect express (UCIe) optical interconnect chiplet. Five months later, Ayar Labs announced it had partnered with Taiwanese ASIC company Alchip to develop scalable AI infrastructure based on CPO technology.

Offering an ultra-high bandwidth, low-latency, and energy-efficient solution for AI clusters, the solution features Ayar Labs’ TeraPHY optical engines co-packaged with Alchip’s solutions on a common substrate, bringing optical input-output directly to the AI accelerator interface.

The partners are working with Taiwan Semiconductor Manufacturing Company (TSMC) on the project, using the chipmaker’s COUPE, TSMC-SoIC, and process nodes.