Xscape Photonics Secures $44M to Revolutionize Data Center Connectivity with Silicon Photonics

Xscape Photonics raises $44M to accelerate development of laser-based chip interconnects - SiliconANGLE

Next-generation data center connectivity startup Xscape Photonics today revealed it has closed on a $44 million Series A investment, bringing its total amount raised to ate to $57 million. Today's round was led by IAG Capital Partners, and saw backing from Cisco Systems Inc., Nvidia Corp., Altair Engineering Inc., Fathom Fund, Kyra Ventures, LifeX and OUP. The startup is building a new kind of interconnect, or device that's used to link the thousands of graphics processing units and other chips that populate the enormous data centers that power most of the world's technology. According to Xscape, data centers need a better way to connect those chips, as existing interconnects are limited by their available bandwidth, which isn't enough to cater to the most powerful artificial intelligence workloads being run by companies today. The problem is acute, with Xscape citing a 2022 study that shows how developers generally only ever use around 25% of a GPUs capacity, due to the limited networking capacity available. Xscape says its new interconnects, based on a tech called silicon photonics, can deliver much greater bandwidth and therefore accelerate the performance of those GPUs. Unlike regular interconnects, silicon photonics relies on the manipulation of light to transmit data. Xscape's co-founder and chief executive officer Vivek Raghunathan told TechCrunch in an interview that the company's new interconnects rely on "energy-efficient, cost-effective systems that do not existing in the industry yet." The startup has developed a new technique for transmitting terabytes of data using light that differs greatly from traditional interconnects, which use metal wires as the platform for sending information between chips as electric signals. The problem with metal wires is that they require lots of energy and they generate lots of heat, which is why they struggle with heavier payloads. One alternative that's widely used today is fiber-optic links, but this is inefficient as the interconnect's electrical data needs to be converted to optical signals and back again, creating problems with latency. On the other hand, silicon photonics-based interconnects produce very little heat and can get by with much less power. The startup has created what it describes as a "programmable laser" that provides a new way to link GPUs and other kinds of chips with computer memory hardware. The laser leverages various spectrums of light, or wavelengths, in order to transmit multiple data streams simultaneously across the same link, vastly increasing capacity. The technology could eventually form the basis of much faster data center interconnects, but although it has apparently been proven in the lab, one of the challenges Xscape faces is finding a way to manufacture its interconnects at scale. Luckily, the startup reckons it can build its laser-based devices using the same equipment that's used to manu microelectronics in laptops, phones and other hardware. According to the startup, the backing of Cisco and Nvidia is especially notable. Raghunathan told TechCrunch they're not "strategic investors", which means they're not customers yet, but said the fact they're willing to fund the company proves they believe its technology is viable. Raghunathan leads Xscape alongside three others - its co-founders Alexander Gaeta, Keren Bergman, and Michal Lipson, who were responsible for inventing the technique that its light-based interconnects use. Meanwhile, Raghunathan himself previously led the silicon photonics research team at Intel Corp., which is widely seen as a leader in the emerging field. Xscape will use the money from today's round to accelerate the development of its LabriX platform, which is the name for its programmable, laser-based data center interconnect technology. The company says its primary goal with LabriX is to maximize the bandwidth of GPU connections. Xscape is competing in a hotly contested industry segment, with various other rivals all pursuing their own take on silicon photonics. Besides Intel, it faces competition from the likes of Switzerland-based Lightium AG, which recently raised $7 million in funding to design and manufacture photonic integrated circuits based on a new technology called Thin-Film Lithium Niobate.

Xscape is building multicolor lasers to connect chips within datacenters

The GPUs and other chips used to train AI communicate with each other inside datacenters through "interconnects." But those interconnects have limited bandwidth, which limits AI training performance. A 2022 survey found that AI developers typically struggle to use more than 25% of a GPU's capacity. One solution could be new interconnects with much higher bandwidth, according to Vivek Raghunathan, the CEO and co-founder of startup Xscape Photonics. The secret sauce, he says, is silicon photonics: silicon-based material that manipulates light to transmit data. "Xscape has created a platform that connects various computing elements in a sustainable way, while offering the highest possible performance," Raghunathan told TechCrunch in an interview. "The core of this platform's scaling relies on energy-efficient, cost-effective systems that do not exist in the industry yet." Xscape is based in Santa Clara in the heart of Silicon Valley, but has its roots in a Columbia University lab, where three professors -- Alexander Gaeta, Keren Bergman, and Michal Lipson -- invented a technique they believed could be used to transmit terabytes of data over light. The trio spun off Xscape in 2022 after recruiting Raghunathan and Yoshitomo Okawachi, a laser engineer and a longtime colleague of Gaeta's. Raghunathan joined by way of Broadcom, where he helped found the silicon photonics team, and Intel, where he was manager for the company's silicon photonics products. Traditional interconnects consist of metal wires that transmit data in the form of electrical signals. Metal-based interconnects require a lot of power -- and generate lots of heat. They're bandwidth-constrained by their medium's conductivity. And, in datacenters with fiber-optic links between components, the interconnects' electrical data must be converted into optical and back again, introducing latency. Silicon photonics like Xscape's, in contrast, draw minimal power and produce negligible heat. "In the past, we primarily used optical communications for long-haul fiber-optic systems," Raghunathan said. "But recent advancements are enabling the integration of optics-on-chip -- in the form of silicon photonics -- and bringing the optical interface from the electronic plane to the optical plane all the way into the chip." Xscape's first product is a programmable laser to power datacenter fiber-optic interconnects, specifically the links among GPUs, AI chips, and memory hardware. The laser can leverage different colors of light (i.e. wavelengths) to transmit multiple data streams along the same link without interference, Raghunathan claims. "Electrical systems densely packed together tend to produce crosstalk, interference, and other challenges," he said. "However, within the optical domain, data can be modulated on different colors, wavelengths, or channels, and all co-propagate within the same wire or fiber -- and not interfere with each other." Assuming the tech works as advertised, Xscape faces the same challenge as most hardware startups: manufacturing and selling its products at scale. In a possible leg up over photonics rivals like Ayar Labs and Celestial AI, Xscape's lasers can be fabricated using the same facilities used to make the microelectronics in phones and laptops. The first-generation laser can only emit between 4 and 16 colors. However, Xscape is already planning improved versions that'll be able to emit up to 128. Xscape says that it's "actively engaged" with ten customers for potential deployments, ranging from vendors to hyperscalers -- and that it has secured funding from Cisco and Nvidia, whose venture arms invested in its recent $44 million Series A round. The investments aren't strategic, meaning that the companies aren't currently customers. But Raghunathan notes that Cisco is one of the largest sellers of optical networking components in the world. "This reflects Cisco and Nvidia's trust in the value we bring to this ecosystem," Raghunathan said. The latest funding round was led by IAG Capital Partners, and brought the company's total raised to $57 million. Raghunathan says that the proceeds will be put toward growing Xscape's 24-person team, and scaling up fabrication of its lasers and related photonics tech. "The funding will allow Xscape to push the boundaries of our platform and integrate it with simulation, high-performance compute, and AI software to help customers in all industries take their innovations to new heights," Raghunathan said. Xscape certainly has its work cut out for it. Aside from Ayar and Celestial, the firm competes with Intel in the multi-billion-dollar silicon photonics market. Intel claims to have shipped over 8 billion photonics chips and 3.2 million on-chip lasers since 2016.