[DigitalToday reporter Chi-gyu Hwang] Second-year startup Lumilens, which develops optical interconnect technology for data centers, has raised more than $700 million at a $5.5 billion valuation, the Wall Street Journal (WSJ) reported on Wednesday.

The investment was jointly led by Atrades Management, Bain Capital Ventures, MeritTech, Seligman Ventures and Spark Capital, the report said. Lumilens' total funding has topped $900 million.

Lumilens has started shipping equipment to an unnamed large hyperscaler data center, and the contracts are worth billions of dollars over the next few years, WSJ reported.

As companies install more GPUs in data centers, quickly transferring information between processors is becoming a bigger challenge. Lumilens aims to address this by using optical interconnects that transmit information with light instead of electrical signals carried by wires.

Most GPUs are connected with copper wiring. Copper wiring is cheap and stable, but becomes less efficient the more data it must send over longer distances.

Optical technology has long been expected to replace copper, but high costs have been cited as a drawback.

Ankur Singla (앵쿠르 싱글라), Lumilens' CEO, said, "Optical equipment is several times more expensive than copper, so it is hard to justify adoption unless the performance improvement is large. Copper is much cheaper now and will continue to be cheap, and the goal is to narrow this gap."

With that in mind, Lumilens is focusing on manufacturing as well as chip design.

Lumilens is developing optical products for scale-out, which connects server racks, and for scale-up, which connects chips within a rack. Its first product, an optical transceiver, is a small device that converts electrical signals into light and sends data through optical fiber. It has already been shipped to hyperscalers and is being used with their in-house AI chips.

In addition to Lumilens, Lightmatter, founded in 2017, raised $850 million in 2024 at a $4.4 billion valuation. Celestial AI, founded in 2020, also pursued a similar approach to Lumilens before being acquired by Marvell for $3.25 billion in February.