Our Investment in Silicon Photonics – Ayar Labs Receives $35 Million Funding to Interconnect Massively Parallel Computers

By Brent MacDonald – Principal @ Rising Tide VC

Ayar Labs was founded in 2015 and based on 10-years of research and collaboration between MIT, UC Berkeley, and the University of Colorado Boulder, and funding from DARPA. The Company’s patented approach uses industry standard silicon processing techniques to develop high speed, high density, low power optical based interconnect “chiplets” and lasers to replace traditional electrical based I/O (input/output). Ayar Labs announced this month new financing of $35 million bringing total funds raised to date to nearly $60 million. The latest round of financing included new strategic and global investors as interest in optical interconnect grows. Rising Tide participated in the company’s latest round plus an earlier round of financing.  

We believe the need for more bandwidth is high across diverse applications including servers in datacenters, faster connections between datacenters, and connecting the entire telecommunications infrastructure. It is estimated that the global data center IP traffic will reach 20.6 Zettabytes by the end of 2021, up from 6.8 Zettabytes per year in 2016, according to the Cisco Systems. The single largest driver of such expansion in the data center capacity is the demand generated by the cloud services providers and the IT industry. Enter Ayar Labs. The Company is disrupting the traditional performance, cost, and efficiency curves of the semiconductor and computing industries by delivering a 1000x improvement in interconnect bandwidth density at 10x lower power. Ayar Labs uses standard CMOS processing to develop high-speed, high-density, low-power optical interconnect “chiplets” and lasers to replace traditional electrical I/O. Ayar Labs Mark Wade, President & Co-Founder highlights the Company’s leading technology here. Further, in June the company announced that it is organizing a new industry consortium called CW-WDM MSA (Continuous-Wave Wavelength Division Multiplexing Multi-Source Agreement). It’s dedicated to defining and promoting industry-wide specifications for multi-wavelength advanced integrated optics.

Why We Are Excited:

Silicon photonics is ramping-up to be one of the more interesting technologies to emerge over the last 10 years. The promise of Ayar Lab’s technology is to bring photonics into the chip, where computations actually happen, and the opinion is within 5-7 years most data center short distance physical interconnects will be optical. It is likely that this will represent a multi-billion-dollar market opportunity and Ayar Labs is a leader for in-package optics as measured by technology and manufacturing readiness and ecosystem traction. More importantly, our research indicates that the high-performance computing market is not only ready for this architectural upgrade but is reliant on it if the industry is to keep up with Moore’s Law between 2020-2030, and beyond. Through fruitful strategic partnerships, such as Applied Materials, Global Foundries, and Lockheed Martin and partnerships with the likes of Intel’s DARPA PIPES Project, we believe Ayar Labs quietly has become a force in silicon photonics. Photonic technology has been moving into the datacenter over the decades; we believe Ayar Labs is the most likely to succeed in bringing photonics on-chip.

Disclaimer: The portfolio companies described herein do not represent all the portfolio companies purchased, sold or recommended for portfolios advised by Rising Tide. The reader should not assume that an investment in the portfolio companies identified were or will be profitable. Past performance is not indicative of future results. Investors should be aware that a loss of investment is possible.