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Should investors in Ayar Labs be nervous? Although there is apparently a lack of concern about the supplier’s design competency, it does seemingly fall into that $200M+ in total VC funding of other optics startups which do not necessarily offer a totally defined solution (please see: https://lnkd.in/etNACyg4). Regrettably, a premium has been placed by financiers on disruption in a space sorely needing much smaller steps, in order to solve very pressing challenges (please see: https://lnkd.in/eQCDvAvy). In fibeReality’s opinion, there is just not an exceptionally large business case for chip-to-chip, optical connections. For all the talk about NVIDIA looking to engage in co-packaged optics, the company is constructing the most effective/powerful clusters in the industry with pluggables (please see: https://lnkd.in/ecYzu9xR), and that would not seem to be an especially favorable sign for solutions provided by Ayar Labs. The exalted R&D schemes over time by the latter involving comb lasers, silicon photonics (including in combination with micro-ring modulators), etc., always had the risk of resulting in a bridge too far. 

On the positive side for Ayar Labs, there has apparently been acceptance of its architecture by NVIDIA, Intel, and AMD. However, at least for the first two firms, there is evidence that they are using their own designs for AI applications (as well as for NVIDIA’s NVLink). Also, fibeReality understands that CPO, which we believe is at least 10 years away from happening in any consequential respect (please see: https://lnkd.in/ey5eggVr, would be required from a process refinement perspective before a true realization of chip-to-chip interconnects. For now, NVIDIA can more than afford to continue to hedge its bets with a relatively small investment in Ayar Labs to carefully watch its progress. As we have discussed in the past, NVIDIA will be prepared to move very swiftly in a direction most favorable to itself (please see: https://lnkd.in/ew4_JWzT). It would be hardly out of the question that the corporation might even decide to choose Avicena as a vendor -- a player that we addressed in 2021 (please see: https://lnkd.in/ewf7eiwj).