Ayar Labs has raised an additional $150 million, bringing its primary capital raised in 2026 to $650 million, the San Jose company said on Thursday. It builds co-packaged optics (CPO) — optical links placed at or near AI accelerators so that chips talk to each other over light rather than copper traces. Financial data providers put the company's valuation around $5 billion.

New to the roster of strategic backers is Wiwynn, a supplier of cloud IT and data-centre infrastructure that invested earlier this year and has now disclosed it. It joins Alchip, AMD, Intel, MediaTek and NVIDIA, alongside venture investors including Applied Ventures and VentureTech Alliance. The $500 million Series E Ayar Labs closed earlier in 2026 was already large; the fresh $150 million is an extension of that round, not a new one.

The rationale is a physics problem. While AI systems consisted of single accelerators, electrical links were enough. As the industry moves to multi-rack architectures, electrical I/O becomes the binding constraint: it burns power, generates heat and limits reach. Co-packaged optics move high-bandwidth connectivity closer to the compute, letting architects extend AI scale-up without the power and complexity that copper brings. "Copper interconnect is becoming the limiting factor for AI scale-up," said Mark Wade, the company's CEO and co-founder. "This funding allows us to move faster on manufacturing-ready co-packaged optics at scale."

The money is earmarked for product development, validation, manufacturing-ecosystem readiness and the transition to high-volume production. Concretely, Ayar Labs is opening a design centre in Bengaluru, India, complementing existing teams in the United States and Hsinchu, Taiwan. The office is led by Sankara Venkateswaran, the vice-president of silicon engineering hired earlier this year, with Arun Balachandar as site lead. The company frames the Indian hub explicitly as a step from technology development to commercialisation — a signal that it sees manufacturing readiness, not the laboratory proof, as the next hurdle.

Wiwynn's president and CEO, William Lin, calls co-packaged optics "a foundational technology for the next generation of AI and cloud data centers" and points to "a clear path to new architectures" that escape the power and complexity limits of copper interconnects, powering rack-scale deployments for hyperscale AI. That is the language of a system builder — and it is exactly where it will be decided whether optical I/O stays a niche product or becomes the default wiring of the next generation of machines. The wider industry is moving the same way, with optical interconnect now a crowded, capital-intensive race among chip and networking vendors.

One caveat is due. The funding figure, the strategic backers and the new site all come from the company's own announcement and have not been independently verified. It is also unclear how fast CPO will be adopted at scale: the manufacturing ecosystem it depends on — foundry, packaging, test — is still being built out, and volume production of optical engines remains hard. Even so, the arrival of a data-centre supplier like Wiwynn on the cap table is a signal of where the industry expects the bottlenecks of the coming years to sit.

Sources