A Leeds-based technology startup has raised £23 million to speed up the commercial rollout of its light-powered computer chips. This could strengthen the UK’s position in the global race to develop next-generation artificial intelligence hardware.
Optalysys will use the funding to scale its photonic computing technology and expand operations in the United States. The investment round was led by Northern Gritstone and supported by the UK government’s National Security Strategic Investment Fund.
Optalysys is developing chips that process and transmit data using light rather than electrical currents flowing through copper wires, a technology known as photonics. The approach drastically reduces energy consumption, generates significantly less heat and enables data to be processed securely while encrypting it.
In contrast to conventional semiconductor companies, Optalysys develops its chips itself, but outsources production to specialized foundries. These include facilities at the University of Southampton as well as partners in Belgium and Singapore. Another location is planned in New York state.
Nick New, founder and CEO of Optalysys, said building manufacturing facilities in-house would be prohibitively expensive and unrealistic given the dominance of players like TSMC.
“Attempting to compete directly with the traditional semiconductor giants would be futile,” New said. “But in photonics, where the next generation of processing will emerge, the costs are far lower. This gives the UK a real opportunity to become a world leader in photonic computing.”
The company’s immediate commercial focus is secure computing. Because photons allow data to be processed in transit and encrypted, sensitive information can be analyzed by AI systems without being exposed. This capability is becoming increasingly important in finance, defense and critical infrastructure, according to New.
“In financial services, for example, transactions can be processed confidentially, making this technology suitable for mainstream banking in a way that traditional AI systems are not,” he said.
Optalysys has no revenue yet, but launched its first commercial secure computing product last year and will begin shipping to customers in the coming weeks. New believes secure computing will support the next phase of AI and cloud infrastructure.
“Where companies like Nvidia laid the foundation for today’s AI boom, we can do the same for the next generation of AI and secure computing,” he said.
The company is also targeting AI data centers, where tens of thousands of graphics processors generate intense heat and consume large amounts of power. As AI models like ChatGPT become more prevalent, the industry is increasingly constrained by power availability.
Light-based compounds do not generate heat like electric currents, significantly reducing cooling needs and overall energy requirements. New said this efficiency advantage could prove crucial as data centers become the world’s largest consumers of electricity.
“Any significant reduction in energy consumption of this magnitude saves enormous amounts of money and resources,” he said.
Optalysys currently employs just over 50 people across Leeds, Bristol and the US and plans to hire a further 35 people as it scales. The company is also establishing a commercial base in San Francisco to deepen its presence in the US market and tap into American investment networks.
With geopolitical concerns rising around chip supply chains and AI infrastructure, investors believe photonic computing could offer the UK a rare chance to take global leadership in a strategically important technology.
