Photonics startups attract major investment to take on growing energy demands in data centers

By Laio

Investors are pouring funds into photonics startups to address the growing energy demands and efficiency challenges of AI data centers. Oriole Networks secured $22 million, while Xscape Photonics raised $44 million, with backing from tech giants like Nvidia and Cisco. These companies aim to transform data processing using light-based technologies, potentially reducing AI model training times by up to 100 times and significantly cutting energy consumption.

Photonics technology, which uses light for data transmission instead of traditional electrical methods, offers significant advantages in reducing energy use and heat generation. This makes it an attractive option for data centers, where conventional networking equipment using copper wiring is becoming a bottleneck, especially in the age of AI. For instance, data transfer inefficiencies mean that up to 90% of training time for large AI models can be spent waiting for data, rather than processing it. By leveraging photonic integrated circuits, companies like Oriole Networks and Xscape Photonics aim to address these issues.

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Oriole networks: a radical approach

Based in the UK, Oriole Networks was spun out from University College London in 2023 and co-founded by George Zervas, Alessandro Ottino, and Joshua Benjamin. The company recently secured $22 million in Series A funding led by Plural, aiming to create a fully photonic AI supercomputing network infrastructure. CEO James Regan describes their technology as ‘completely radical,’ eliminating electrical packet switching altogether. This innovation promises to improve AI training speeds by 10 to 100 times, drastically cutting down the energy footprint of data centers.

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Axelera AI, a Dutch startup developing chips for artificial intelligence applications, has secured $68 million in funding to fuel its ambitious growth plans.

Xscape Photonics: Silicon Valley’s contribution

Meanwhile, Xscape Photonics, a Silicon Valley startup, has raised $44 million from investors including Nvidia and Cisco to develop its ‘ChromX’ platform. Founded by Columbia engineers, this platform utilizes silicon photonics to handle hundreds of wavelengths on a single optical fiber, vastly improving the flexibility and efficiency of data centers. With the potential to manage petabyte-per-second chip escape bandwidths at sub-picojoule-per-bit energy consumption, Xscape aims to tackle the energy and bandwidth bottlenecks large-scale data centers face.

Government and tech giants invest €100 million in SMART Photonics

SMART Photonics, the Netherlands-based leader in photonic integrated circuits, has successfully raised an additional €100 million from a consortium of Dutch industry and financial entities.

The future of data centers

The investment surge into photonics startups highlights a broader trend of seeking sustainable solutions to the growing energy demands of AI data centers. As AI workloads are expected to account for over 20% of energy consumption in these facilities by 2025, companies are exploring innovative technologies to ensure efficiency and cost-effectiveness. The combined efforts of Oriole Networks and Xscape Photonics, among others, showcase the potential of photonics to not only meet current challenges but also pave the way for more advanced data processing capabilities in the future.