Celestial AI raises $250 million to speed up connections between AI chips and transform AI Infrastructure

Celestial AI, a Silicon Valley chip startup aiming to overcome speed limitations in artificial intelligence, announced on Tuesday that it has secured an additional $250 million in a Series C1 funding round. This brings its total funding to $515 million.

The round was led by Fidelity Management & Research and included participation from BlackRock, Maverick Capital, Tiger Global Management, and Lip-Bu Tan, the former CEO of Cadence Design Systems. Existing backers such as AMD Ventures, Koch Disruptive Technologies (KDT), Singapore’s Temasek, Temasek’s subsidiary Xora Innovation, Porsche Automobil Holding, and The Engine Ventures also joined the round.

Founded in 2020 by Preet Virk, David Lazovsky (CEO), and Michelle Tomasko, Celestial AI is leveraging photonics—using light instead of electrical signals—to create faster connections between AI computing chips and memory chips.

“With the rise of complex reasoning models and agentic AI, demands on AI infrastructure are growing rapidly,” said CEO David Lazovsky.

He explained, “Cluster sizes are expanding from a few AI processors in a server to tens in a rack and thousands across multiple racks. These setups require high-bandwidth, low-latency network connections to manage the massive data transfers between processors. Celestial AI’s Photonic Fabric is the only platform that meets these demands, setting new standards for bandwidth, latency, energy efficiency, and total cost of ownership. We’re excited to have the support of global investors who share our long-term mission.”

Challenging the Status Quo in AI Hardware

The speed of data transfer, known as memory bandwidth, is a key factor in the advancement of AI systems. It’s even significant enough to be considered in U.S. government export controls aimed at limiting AI development in certain countries. Nvidia currently leads in memory bandwidth with its proprietary NVLink and NVSwitch technologies. This has triggered a wave of startup activity, with companies racing to develop alternative solutions. Rivals Lightmatter and Ayar Labs have raised $850 million and $370 million, respectively.

Celestial AI, backed by AMD Ventures, is developing a bridge technology using a unique form of photonics. This approach stands apart from competitors and aims to enhance energy efficiency and reduce latency.

Its flagship product, the Photonic Fabric, is designed for AI computing systems and acts as the backbone for data center computing, networking, and memory. The technology offers significant improvements in system performance and energy efficiency, aiming to support sustainable and profitable AI advancements.

Speaking to Reuters, Lazovsky emphasized the importance of balancing speed, space, and power. “There are no good answers beyond Nvidia,” he said during an interview at the company’s Santa Clara, California headquarters. “What we’ve developed with the Photonic Fabric achieves similar outcomes but with better energy efficiency and lower latency.”

Celestial AI plans to continue scaling its technology to meet growing industry demands while maintaining its focus on energy efficiency and cost reduction.