Optical interconnect startup Ayar Labs has 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 $870m, valuing it at $3.75 billion.

The new funding will be used to scale high-volume production and test capacity and expand global operations, Ayar Labs said. This includes growing its new office in Hsinchu, Taiwan, and accelerating the deployment of its co-packaged optics (CPO) solution, 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,” 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.”

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 UCIe (Universal Chiplet Interconnect Express) 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 advanced solutions on a common substrate, bringing optical I/O directly to the AI accelerator interface.

The partners are working with TSMC on the project, using the chipmaker’s advanced packaging and process technology, including COUPE, TSMC-SoIC, and advanced process nodes.