Nvidia-backed Ayar Labs raises $500 million at $3.75 billion valuation

March 3 (Reuters) - Nvidia-backed NVDA.O Ayar Labs, which develops chips that transmit data using light, said on Tuesday it has raised $500 million in a series E round at a valuation of $3.75 billion.

The latest round, which brings the company's total funding to $870 million, was led by investment firm Neuberger Berman and involved new investors including ARK Invest, Qatar Investment Authority and 1789 Capital. Chipmaker Advanced Micro Devices AMD.O is among Ayar's existing backers and invested in the latest funding round.

Investor appetite in the AI ecosystem has remained strong as venture and private-equity firms bet on the technology to upend traditional workflows, driving steady funding into companies building the infrastructure.

Ayar's technology uses light instead of the traditionally used electrical signals, aiming to speed transmission by linking AI computing chips with memory chips, an increasingly valuable prospect as hyperscalers and governments spend hundreds of billions of dollars for achieving AI infrastructure supremacy.

The company competes with firms such as Celestial AI, which raised $250  million last March, as well as Lumentum LITE.O and Coherent COHR.N, which received $2  billion each in investments from Nvidia on Monday.

Ayar plans to use the new funds to scale production and test capacity, expand global operations, including at its new Hsinchu, Taiwan-based office and accelerate the deployment of its co-packaged optics solution.