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Celestial AI Secures $250 Million to Enhance AI Chip Connectivity

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Silicon Valley-based startup Celestial AI has raised an additional $250 million in venture capital, bringing its total funding to $515 million. The company aims to accelerate AI computing by leveraging photonics—a technology that uses light instead of electrical signals—to enhance the speed of data transfer between AI processing and memory chips.

Memory bandwidth, which determines the efficiency of AI systems, is a crucial factor in chip performance and a key consideration in U.S. government export controls aimed at limiting China’s AI capabilities. Currently, Nvidia dominates this space with its proprietary NVLink and NVSwitch technologies, prompting a surge in investments to develop alternative solutions. Celestial AI’s competitors, Lightmatter and Ayar Labs, have raised $850 million and $370 million, respectively, in similar efforts.

Celestial AI is backed by AMD Ventures, the investment arm of Nvidia’s competitor Advanced Micro Devices (AMD). The company is working on a “photonic fabric” that acts as a high-speed bridge between multiple chips. According to CEO Dave Lazovsky, the technology improves efficiency by reducing energy consumption and latency while saving valuable chip space.

“There are no good answers outside of Nvidia,” Lazovsky said in an interview at Celestial AI’s headquarters in Santa Clara, California. “What we’ve created with photonic fabric achieves similar functionality but with superior energy efficiency and lower latency.”

The funding round was led by Fidelity Management & Research and included BlackRock, Maverick Capital, Tiger Global Management, and former Cadence Design Systems CEO Lip-Bu Tan. Existing investors such as AMD Ventures, Koch Disruptive Technologies, Singapore’s state investor Temasek, and Porsche Automobil Holding also participated.

TSMC CEO Highlights U.S. Investment Driven by Strong Customer Demand

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Taiwanese semiconductor giant TSMC (2330.TW) announced that its increased investment in the United States is primarily driven by strong customer demand, with production lines already fully booked for this year and the next two years. CEO C.C. Wei revealed the company’s expansion plans during a press conference at Taiwan’s presidential office on Thursday. Wei emphasized that TSMC’s $100 billion investment plan, unveiled this week, would not affect its ongoing expansion efforts in Taiwan, despite concerns that overseas investments might harm the island’s semiconductor industry.

TSMC, the world’s largest contract chipmaker, plans to construct five additional chip facilities abroad, including in the U.S., Japan, and Germany. This expansion comes in response to demands from major U.S. clients like Apple, Nvidia, and Qualcomm. While TSMC is planning three new production lines in the U.S. over the coming years, it is also set to build 11 new production lines in Taiwan this year, a sign that Taiwan remains crucial to the company’s global operations.

Wei’s comments follow ongoing pressure from former U.S. President Donald Trump, who has criticized Taiwan for taking U.S. semiconductor business and has advocated for bringing semiconductor manufacturing back to U.S. soil. Taiwan President Lai Ching-te assured that Taiwan has not faced external pressure from the U.S. during TSMC’s investment decisions and pledged government support for the company’s domestic expansion.

While Taiwan maintains its dominance in the global semiconductor industry, concerns about over-reliance on the island, particularly amid rising tensions with China, have prompted discussions about diversifying production sites. TSMC’s expansion into the U.S. is seen as a potential solution to address supply chain risks for American technology companies.

Despite these developments, Trump recently called for the repeal of the 2022 bipartisan law that provides $52.7 billion in U.S. subsidies for semiconductor manufacturing, suggesting the funds should instead be used to pay off national debt.

Allegro MicroSystems Rejects Onsemi’s $6.9 Billion Takeover Offer

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Allegro MicroSystems (ALGM.O), a semiconductor solutions provider, has rejected a $6.9 billion takeover offer from Onsemi (ON.O), deeming the proposal “inadequate.” Onsemi’s offer of $35.10 per share, made public on Wednesday, was seen as insufficient by Allegro’s board, which had previously turned down an offer from Onsemi priced at $34.50 per share.

Allegro, based in New Hampshire, confirmed it had received the offer in February and after careful review, decided to reject it. The company did not elaborate further on the rejection. Onsemi, for its part, did not respond to requests for comment on the matter.

Onsemi’s bid came as part of its strategy to weather the ongoing slump in automotive chip demand, but Allegro, which supplies power management systems for both electric vehicles (EVs) and traditional vehicles, is expected to avoid the same market weakness. Allegro has also recently appointed Mike Doogue as CEO, with expectations that the company will return to revenue growth following nearly five quarters of decline, according to data from LSEG.

Onsemi had planned to fund the acquisition through a mix of committed financing, cash, and a revolving credit facility. The offer represented a 31% premium over Allegro’s closing stock price on Wednesday. Allegro’s shares had surged 22% earlier in the week following reports of Onsemi’s interest in a takeover.

With a market capitalization of approximately $4.93 billion, Allegro remains an attractive target for potential acquirers despite rejecting the current offer.