Photonics startups gaining traction in funding rounds

Computer technology that uses photons rather than electric currents for processing, which a few years ago were only research projects, are now gaining traction with such startups gaining big funding.

The latest case in point is Ayar Labs, a startup that is developing silicon photonics, which said it has raised $130 million from investors including chip giant Nvidia Corp.

While transistor-based silicon chips have boosted computing power exponentially over the last decades with transistors reaching the width of several atoms, is it becoming increasingly hard to make something so miniscule, since with transistors getting small, the risks of signal bleeding gets higher.

Moore’s law, which said that every two years the density of the transistors on a chip would double and bring down costs, is now seeing a slow down, with the industry pushing to seek new solutions to handle the increasingly heavy requirements of artificial intelligence computing.

Data from PitchBook shows in 2021, photonics startups raised more than $750 million, doubling that of the previous year. In 2016 they had raised around $18 million.

“A.I. is growing like crazy and taking over large parts of the data center,” said Ayar Labs CEO Charles Wuischpard. “The data movement challenge and the energy consumption in that data movement is a big, big issue.”

The challenge comes from the fact that large machine-learning algorithms can utilize hundreds or thousands of chips for computing, causing a bottleneck on the speed of data transmission between chips or servers using current electrical methods.

While photons are used to transmit data in fiber-optic cables, including undersea cables, for decades, bringing them to the chip level is hard since devices used for creating light or controlling it have not been as easy to shrink like transistors.

By 2025, Brendan Burke, PitchBook’s senior emerging technology analyst expects silicon photonics to become common hardware in data centers; as per his estimate, the market for silicon photonics will reach $3 billion by then, similar to the market size of A.I. graphic chips in 2020.

Not only are startups pushing the boundaries of silicon photonics, semiconductor manufacturers are also gearing up to use their silicon chip-making technology for photonics.

According to Amir Faintuch, the Head of Computing and Wired Infrastructure at GlobalFoundries. collaboration with PsiQuantum, Ayar, and Lightmatter has helped build up a silicon photonics manufacturing platform for others to use.

Peter Barrett, founder of venture capital firm Playground Global, who is also an investor in Ayar Labs and PsiQuantum, said, he believes in the long-term prospects for silicon photonics for speeding up computing is strong, but the road ahead is long.

“What the Ayar Labs guys do so well … is they solved the data interconnect problem for traditional high-performance (computing),” said Barrett. “But it’s going to be a while before we have pure digital photonic compute for non-quantum systems.”

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