Ayar Labs, sponsored by Nvidia, raises $500 million at a valuation of $3.75 billion

Nvidia-backed Ayar Labs on Tuesday said it has raised $500 million in a Series E funding round at a valuation of $3.75 billion. With this round, the company’s total funding has reached $870 million.

The latest investment was led by Neuberger Berman and included new investors such as ARK Invest, Qatar Investment Authority and 1789 Capital.

Investor interest in the artificial intelligence ecosystem continues to remain strong, with venture capital and private equity firms backing companies that are building core infrastructure for AI systems.

Ayar Labs develops chips that use light instead of traditional electrical signals to transmit data. Its technology is designed to speed up communication between AI computing chips and memory chips — a critical requirement as hyperscalers and governments invest heavily in AI infrastructure.

The company competes with startups such as Celestial AI, which raised $250 million last March, as well as established firms like Lumentum and Coherent, both of which recently received $2 billion investments from Nvidia.

Ayar Labs said it will use the fresh capital to scale production and testing capacity, expand its global operations — including at its new office in Hsinchu, Taiwan — and accelerate the deployment of its co-packaged optics solutions.