Optical Networking Startup Taps Into Investors’ Chip Envy

Call it a hot chip summer. Investors are flocking to startups making semiconductors and components to run AI more efficiently, minting high valuations for businesses looking to compete with Nvidia and other stalwarts. Etched, a four-year-old startup run by young Harvard dropouts trying to develop a specialized AI chip, announced it had raised $800 million in funding Tuesday. Last week, our colleagues reported that chip startups SambaNova and xLight are both raising hundreds of millions in new funding.

Next up is Ayar Labs, an 11-year-old company founded by academic researchers, which makes equipment for ultrafast connections between AI chips. The startup is in talks to raise at least $200 million at a sharply higher price than the $3.75 billion valuation it fetched, including the money raised, in a round announced a few months ago, according to a person with direct knowledge of the fundraising efforts.