Backed by Nvidia and Intel, the Silicon Valley startup is developing optical connectivity technology to replace copper links between AI chips, with its first chip shipments planned for 2028.

Silicon Valley startup CScale has secured $145 million in fresh funding to develop optical networking technology for artificial intelligence data centres. The financing, which includes backing from semiconductor giants Nvidia and Intel, will support the company’s efforts to replace conventional copper connections between AI chips with fibre-optic technology.

The startup is pursuing a particularly challenging aspect of optical networking: integrating lasers directly onto chips without disrupting data transmission when those lasers fail.

The new investment brings CScale’s total funding to $188 million, with the company targeting commercial chip shipments by 2028.

Who Invested in CScale’s $145 Million Funding Round?

The funding round was led by Atreides Management, Valor Equity Partners and Premji Invest. Existing investors Sutter Hill Ventures and Maverick Silicon also participated, alongside backing from Nvidia and Intel.

Previously known as CSpeed, CScale is led by Chief Executive Officer Martin Lund, who left his role overseeing chip and hardware systems at networking giant Cisco Systems earlier this year.

The company has disclosed relatively little about the specifics of its technology, although Lund has outlined the central engineering challenge it intends to address.

Why CScale Wants to Move Beyond Copper Connections

As AI computing systems grow increasingly complex, the connections between processors have become an important part of data centre design.

Copper cables remain widely used because of their speed and reliability. Their limited reach, however, creates physical constraints for companies building powerful AI systems.

Chipmakers such as Nvidia and Advanced Micro Devices (AMD) have had to position processors close together within servers to accommodate those limitations. Packing powerful processors into confined spaces also concentrates the heat they generate, creating a need for elaborate liquid cooling arrangements.

CScale is working on an alternative that uses fibre-optic connections to transmit information through flashes of laser light rather than the electrical signals carried by copper.

The approach forms part of a broader industry effort, with established technology companies and startups investing billions of dollars in optical connectivity.

Moving from copper to fibre, however, introduces a different engineering problem.

The Laser Failure Problem CScale Is Trying to Solve

Lasers are essential to optical data transmission, but their susceptibility to failure presents a significant design challenge.

For this reason, many companies developing optical connectivity systems keep lasers separate from the chips themselves. This allows a faulty laser to be replaced without requiring changes to the chip.

CScale is pursuing a different approach.

Lund said the startup intends to integrate lasers directly onto its chips while ensuring that a laser failure does not interrupt the flow of data.

He has not disclosed the precise mechanism behind the technology, but indicated that the company is combining established technologies rather than relying on entirely new components.

“We’re not using any exotic technologies,” Lund said. “We’re using proven technologies, integrating them together in a novel way, but preserving the same trusted fibre technology that has been out there and shipping in the industry for many, many years now.”

The distinction is important to CScale’s development strategy. Integrating lasers onto chips while maintaining uninterrupted data transmission is the technical objective at the centre of its optical networking plans.

Whether the company can deliver that capability will become clearer as its technology progresses towards commercial availability.

CScale Targets 2028 for Chip Shipments

With $188 million raised to date, CScale is preparing for its next phase of development, aiming to begin shipping its chips by 2028.

The company has yet to reveal extensive technical specifications, leaving several details about its planned optical connectivity architecture undisclosed.

Its entry into the AI networking market comes as the semiconductor industry explores alternatives to the copper infrastructure traditionally used to connect processors within servers.

For CScale, the immediate focus is not simply replacing electrical connections with optical ones. It is developing a way to bring lasers onto chips without allowing individual laser failures to interrupt data transmission.

That engineering objective, supported by its latest $145 million financing, will remain central to the startup’s plans ahead of its proposed 2028 launch.

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