Five Technology Trends to Watch in 2023

by | Jan 31, 2023

Advancements in AI applications led the 2022 headlines given the trends in Natural Language Processing (NLP), Deep Learning Recommender Models (DLRMs) and the latest advancements with ChatGPT. We look forward to what AI will bring in 2023. In all these use cases, data management is key to ensuring the AI models continue to advance. We are designing our optical interconnect technology to unlock the next generation of data management and will continue to showcase productization milestones throughout this year.  Although there are some economic headwinds, we are excited about the year to come and see the following five key trends impacting our industry.

#1 Strong demand of interconnects is fueling standardization efforts

Given the exponential growth in the amount of data being generated and processed, we expect 2023 will see increased momentum in the standardization efforts for next-generation electrical and optical interconnects. As an example we have seen a number of silicon companies initiate work designing in Compute Express Link (CXL) and Universal Chiplet Interconnect Express (UCIe).

Designed with high-performance data centers in mind, CXL is an open standard for high-speed cache-coherent GPU-to-CPU connections and for high-speed CPU/GPU-to-memory connections. Vendors who have started working with CXL include Intel, Astera Labs, Rambus, Microchip, Synopsys, Samsung, Hynix, and Micron. Although it takes time for an advanced technology of this type to proliferate (CXL is not expected to come fully into its own until 2025/2026), large-scale use cases are already starting to evolve.

UCIe is an open specification for die-to-die and chiplet-to-chiplet interconnects that was introduced in 2022. Due to the long development cycles associated with today’s advanced system-on-chip (SoC) devices, it will take time for a truly interoperable UCIe-compliant chipset ecosystem to develop. Having said this, the ball has started to roll—just a few days ago at the time of this writing, the UCIe Consortium announced that it has grown to 100+ members.

Ayar Labs and our ecosystem partners are at the forefront of development with respect to the optical versions of both CXL and UCIe next-generation interconnects (see Enabling Optical Interconnects Using the New UCIe Standard). We are equipped to serve both the CXL and UCIe markets with our optical chiplets, which are capable of interfacing with host XPUs (CPUs, GPUs, DPUs) through either parallel or serial electrical interfaces, and we are ready to work with our customers to leverage these interfaces to implement high-throughput, power-efficient, low-latency links.

#2 Supply chain capacity restraints will ease

Since the impacts of Covid in 2020, the semiconductor industry has experienced supply chain disruptions and challenges; however, we expect that supply chain capacity restraints will ease in 2023. In addition to benefiting large companies, this will create opportunities for smaller startup companies to succeed.

Organizations that have been forced to make large purchase commitments just to reserve capacity will suddenly find suppliers that are much more open to smaller and more flexible deals. This buyer’s market will be a particular boon for smaller companies, allowing them to better allocate precious capital.

The easement of supply chain restraints is great news for Ayar Labs as we continue to ramp up on our supply chains and our partnerships (see 2022 Is the Year of Commercialization for Ayar Labs and Building Toward Volume Production of Optical I/O).

#3 Venture capital funding will slow significantly

Based on a variety of economic indicators and trends, we expect that venture capital funding is going to slow significantly in 2023, thereby causing some capital-intensive startups to struggle. Furthermore, for the most part, the IPO window will remain challenging for semiconductor companies in 2023.

Thankfully, while IPO and later-stage venture opportunities remain challenging, Ayar Labs’ roadmap to success continues to push forward and we expect to continue to do well with solid long-term fundamentals. Although the general consensus is to act in a slow or constrained manner, this creates an opportunity for nimble and well-funded players to benefit from opportunities and trends.

With recent funding and a roadmap to success, Ayar Labs is well positioned to take full advantage of the anticipated rebound market in 2024 (see Ayar Labs Raises $130 Million in Series C Funding, Accelerating Commercialization of Industry’s First In-Package Optical I/O Products).

#4 AI will continue to drive computational and data requirements

Since 2012, AI computational requirements have been doubling approximately every four months. AI models are advancing toward hundreds of trillions of parameters as researchers continue to push boundaries with conversational AI, computer vision, and recommender systems, and these models consume vast amounts of data.

Several AI hardware startups have been founded in the last few years based on the promises to deliver high-performance AI engines, but we anticipate well-established chip companies such as NVIDIA, Intel, and AMD will continue to lead the AI and datacenter sectors. Building AI hardware is one thing, having the software to coalesce these compute elements together is another. All of the aforementioned companies have well-established ecosystems for both hardware and software, which means it will be very challenging for startup AI chip companies to compete.

Due to its extreme computational and data demands, AI is one of the first areas that will mandate the use of in-package optical I/O (see How Giant AI Workloads and the Looming “Bandwidth Wall” are Impacting System Architectures and Ayar Labs to Accelerate Development and Application of Optical Interconnects in Artificial Intelligence/Machine Learning Architectures with NVIDIA).

Using current optical technologies is too expensive and power hungry.

#5 The US Government will play an increasing role in the evolution of the semiconductor industry

The past few years have highlighted the role of semiconductors as a strategic technology for a strong economy, security, and defense.

As a result, the U.S. Government will play a bigger role in the evolution of the semiconductor industry than ever before. For example, the government is driving initiatives like the CHIPS Act of 2022. The fact that the government is becoming active in this area is stimulating private investment (see The CHIPS Act Has Already Sparked $200 Billion in Private Investments for U.S. Semiconductor Production).

To further its interests in technology advancement for both commercial applications and defense use-cases, the government is currently focused on building more advanced computing capabilities on U.S. soil. Ayar Labs is proud to support the U.S. Government in these endeavors. For example, we are part of project KANAGAWA (the Co-Packaged Analog-Drive High-Bandwidth Optical Input/Output project), whose goal is to transition optical I/O into the defense industrial base (DIB) while driving affordability and scalability for commercial production (see Ayar Labs Partners with Department of Defense to Accelerate Transition to Optical I/O in Next-Gen Defense Applications).


As Mark Twain famously said, “Prediction is difficult, especially when it involves the future.” An alternative point of view is embodied by the saying, “The best way to predict the future is to invent it,” which is widely attributed to PARC researcher Alan Kay.

Here at Ayar Labs, Alan Kay’s saying is part of our philosophy. In addition to the five 2023 trends described above, we predict that in-package optical I/O will become the predominant interconnect technology for high performance computing, data center, and AI applications. Furthermore, we are ensuring that this prediction will come to pass by inventing and delivering our state-of-the-art in-package optical I/O at scale, while helping to build the ecosystem in which it will flourish. 2023 is set to be a great year for Ayar Labs as we harden our technology, build out our supply chain, and make optical I/O a reality for a vast range of high-performance computing applications.

If you are attending the Optical Fiber Communication Conference (OFC) in San Diego in March, be sure to stop by our booth to see a demonstration of our WDM optical link with our TeraPHY™ optical I/O chiplet and SuperNova™ multi-wavelength optical source.

Join our mailing list

Recent News

Ayar Labs Adds $25 Million in Expansion of its $130 Million Series C

Ayar Labs, a leader in silicon photonics for chip-to-chip connectivity, today announced it has raised an additional $25 million in Series C1 funding, bringing its total Series C raise to $155 million. The oversubscribed up round was led by new investor Capital TEN. VentureTech Alliance also entered the Series C expansion that included participation by previous investors Boardman Bay Capital Management, IAG Capital Partners, NVIDIA, and Tyche Partners.

More News →


Ayar Labs + Intel

Anil Rao, VP & GM Systems Architecture & Engineering, Intel: Pushing the envelope with optical I/O.

More Resources →

Follow Us

Related Blog Posts

Optics on SC23

Optics on SC23

Discover the key insights and groundbreaking advancements from SC23 with Ayar Labs’ top observations. Dive into the future of HPC and AI.

See More

Pin It on Pinterest

Share This