Ayar Labs, a Santa Clara-based company building optical interconnect technology for AI systems, has closed a $500 million Series E funding round. Neuberger Berman led the round, with new investors including ARK Invest, Insight Partners, Qatar Investment Authority, Sequoia Global Equities, and 1789 Capital joining alongside strategic participants AMD, Alchip Technologies, MediaTek, and NVIDIA. The raise brings Ayar Labs' total funding to $870 million and sets its valuation at $3.75 billion.
The round draws a wide mix of institutional capital and semiconductor industry players, a combination that signals both financial confidence and commercial alignment. Neuberger Berman will also take a board observer role, a move that gives the investment firm a closer seat to the company's strategic decisions as it pushes toward high-volume production.
The AI infrastructure sector is under growing pressure. As AI models scale, the amount of data moving between chips inside data centers has become a performance bottleneck, and copper-based interconnects are increasingly struggling to keep up. They consume significant power and slow down the throughput per watt that hyperscale operators care about.
"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," said Mark Wade, CEO and co-founder of Ayar Labs. "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."
Gabe Cahill, Managing Director at Neuberger Berman, framed the investment in similar terms. "Today's AI infrastructure buildout is one of the largest capital deployment opportunities of our generation, and data center interconnect has quickly emerged as the most critical bottleneck," he said. "Ayar Labs' execution against key customer milestones is driving strong market conviction in its technology leadership. We believe that both ongoing and new strategic investments from industry leaders in this round reinforce this momentum."
Ayar Labs plans to direct the new capital toward scaling its high-volume production and test capacity, with a focus on accelerating commercial deployment of its co-packaged optics solution. The company is also expanding its global footprint, including a new office in Hsinchu, Taiwan, a location central to the world's semiconductor manufacturing base.
Beyond production, the funds will go toward strengthening ecosystem partnerships and deepening integration with custom ASIC design partners. The participation of MediaTek and Alchip Technologies in this round is a direct extension of that strategy. Both companies are key players in the custom chip design world, and their investment ties production-level deployment closer to where chip design decisions are made.
Founded in 2015, Ayar Labs was built around a specific thesis: that optical connectivity, rather than copper, should be the default medium for moving data between AI chips at scale. The company's flagship product is the TeraPHY optical engine, which replaces traditional copper interconnects with optical links that carry more data while using less power.
What sets the TeraPHY apart from earlier optical approaches is its form factor. It is built on standard manufacturing and packaging flows used by major accelerator and switch vendors, meaning it can integrate into existing customer chip designs without requiring a redesign from scratch. That matters a lot in an industry where qualification cycles are long and switching costs are high.
The company describes its solution as production-ready, a label that carries weight at this stage. Many optical interconnect efforts remain at the research or pilot stage, and Ayar Labs has positioned itself as the option that can move directly into volume manufacturing. Its partnerships with AMD, NVIDIA, Alchip Technologies, MediaTek, and VentureTech Alliance all reinforce that positioning.
The $500 million Series E builds on a base of earlier institutional and strategic support. Existing financial investors in the company include Advent Global Opportunities, Boardman Bay Capital Management, IAG Capital Partners, Light Street Capital, and Playground Global. Strategic investors AMD Ventures and NVIDIA were already on the cap table before this round.
The new additions, ARK Invest, Insight Partners, Qatar Investment Authority, Sequoia Global Equities, and 1789 Capital, bring a mix of growth equity experience and sovereign capital to the table. Combined with the strategic participation of Alchip and MediaTek, the round reflects broad conviction in both the technology and the timing.
