Ayar Labs, a developer of co-packaged optics (CPO) solutions for AI scale-up in data centers, has secured an additional $150 million in funding, bringing its total primary capital raised in 2026 to $650 million. 

The company also noted a strategic investment earlier this year. Wiwynn, a cloud IT and infrastructure provider for data centers, joins a growing group of strategic backers, including Alchip, AMD, Intel, MediaTek, and NVIDIA. 

This new capital will support Ayar Labs’ continued transition to high-volume manufacturing, including investments in product development, validation, scaling the manufacturing ecosystem, and opening a new Bengaluru Design Center. A key goal for Ayar Labs is to develop deep integration across the semiconductor manufacturing and engineering ecosystem to deliver the highest-performing and manufacturing-ready CPO solution for AI scale-up.

"Copper interconnect is becoming the limiting factor for AI scale-up," said Mark Wade, CEO and co-founder of Ayar Labs. "This funding allows us to move faster on manufacturing-ready co-packaged optics at scale. We're deepening our work across the foundry and packaging ecosystem and growing our engineering capacity to support customer programs worldwide."

Overcoming copper’s limitations

One of Ayar’s goals is to create a path to help scale AI systems by replacing copper with optical connectivity to accommodate the growth of AI models and GPU clusters.

As AI models and GPU clusters grow, copper interconnects are becoming a critical bottleneck because of three main issues: distance limitations, power, and temperature.

First, copper cables can only work over short distances before signal degradation occurs. Copper cables are power-hungry. As clusters grow to thousands of GPUs, copper I/O power consumption rises to unsustainable levels. Finally, traditional copper wiring causes severe overheating when linking high-performance processors.

Ayar Labs’ TeraPHY™ replaces copper with optical connectivity that delivers the bandwidth, performance, power efficiency, and low latency needed to connect large GPU clusters across racks and data centers.

By leveraging co-packaged optics (CPO), Ayar places optical engines like the TeraPHY™ Optical Engine directly into the ASIC socket alongside the processor.