Ayar Labs Inc., a startup that’s developing optical interconnects that can transmit data between computer chips via light, said today it has closed on a hefty $155 million funding round led by Advent Global Opportunities and the aptly-named Light Street Capital.

Also participating in the round was a veritable who’s who of the industry’s leading chipmakers, such as Nvidia Corp., Advanced Micro Devices Inc., Intel Corp. and GlobalFoundries Inc., who chipped in through their respective investment arms. VentureTechAlliance, which has a strategic partnership with Taiwan Semiconductor Manufacturing Co., also took part in the round.

The investment brings Ayar Lab’s total funding to $370 million, lifting its valuation beyond the $1 billion mark, at a time when the semiconductor industry is striving to deliver more efficient chip-to-chip communications to support artificial intelligence workloads.

Ayar Labs is looking to do that by fixing one of the main bottlenecks in AI – namely, the movement of data between the powerful accelerator chips that are used to process AI training and inference.

Most data center operations today rely on traditional electrical interconnects, but the industry has struggled to squeeze more bandwidth out of these. Ayar Labs, with its optical interconnects, says its light-based interconnects can transmit much more data, and do it much faster.

Ayar Labs reckons its optical interconnect module, called TeraPHY, can help customers to maximize the compute efficiency and performance of AI infrastructure, while also lowering costs as it uses less power than traditional interconnects. In this way, it will not only improve performance, but also the “profitability metrics of AI applications.”

Ayar Labs says TeraPHY is the industry’s first in-package I/O chiplet that can be integrated with system-on-chip packages to enable faster chip-to-chip communications, utilizing its SuperNova remote light technology.

With the cash infusion from today’s round, it says it’s ready to start scaling the TeraPHY chip technology.

Jordan Katz, a partner at Advent Global Opportunities, said he believes optical interconnect technology will revolutionize the future of AI infrastructure, and he thinks Ayar Labs is the best placed startup to lead that revolution. “We believe that supporting Ayar Labs and its groundbreaking technology will offer transformative benefits to AI systems,” he enthused.

The backing of so many major players in the semiconductor industry seems to suggest that Ayar Labs is on the verge of achieving something big, but it’s by no means guaranteed that Nvidia, AMD and Intel will adopt the TerayPHY technology anytime soon.

By investing in the startup, they can also get a much closer look at what it’s doing, potentially aiding their own research into optical interconnects. Of course, the money should also put them at the front of the queue if they do decide to use Ayar Labs’s tech.

Ayar Labs does face quite a bit of competition in this area, though. One of its biggest rivals is a startup called Lightmatter Inc., which has attracted significantly more money from investors, having closed on a $400 million round in October that brought its total amount raised to $850 million. Lightmatter also has a much higher valuation, at over $4.4 billion.

Other competitors include the Swiss startup Lightium AG, which closed on a $7 million seed funding round in September to try and make its Thin-Film Lithium Niobate optical interconnects, which based on a different technology, a reality. And in October, another rival called Xscape Photonics said it had raised $44 million, bringing its total funding to $57 million.

It may well be that all of the above startups can make their mark in the coming years, as AI infrastructure spending is forecast to hit more than $1 trillion in the next decade, according to a recent report from Goldman Sachs. That report also highlights a “critical need” for technologies that can eliminate bottlenecks in AI workflows.

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