By: Deanna Grunfeld, Aliza Goldberg and Isaac Sigron

Koch Disruptive Technologies, LLC and subsidiaries (KDT) is leading a $50 million round in Teramount, a company building scalable fiber-to-chip interconnects for AI and high-performance computing.

At KDT, we believe the next frontier in AI isn’t just about compute power, but data movement. As explained in our recent piece, The Silent Bottleneck in AI Infrastructure, interconnects, particularly the links that move data between AI accelerators (XPUs), are becoming a limiting factor for high-performance AI data centers. 

At the same time, the cost of interconnect inefficiencies is growing. Today, up to 30% of LLM training time, and thus cost, is attributed to network latency and suboptimal data movement, while only 70% is spent on actual compute.[1] This number is only expected to worsen with newer generations of AI accelerators.

Traditional copper-based interconnects are reaching physical limits and can’t deliver the bandwidth, power efficiency, or latency needed to support next-generation AI workloads. As a result, the industry is shifting to a new infrastructure known as Co-Packaged Optics (CPO), where optical interconnects are integrated directly onto an advanced chip package, thereby replacing copper links needed to move data between XPUs. 

CPO opens an entirely new domain for innovation, and one of the most fundamental challenges to solve is redefining how light enters and exits the chip package. The Fiber Array Unit (FAU), which connects the optical fibers to the chip, is central to this challenge and accounts for ~40% of total CPO cost. Improving the FAU is critical to making CPO both scalable and cost-effective.

However, existing FAU solutions fall short for CPO - they use precise alignment processes which are costly and slow, lack compatibility with advanced package requirements such as a large number of fibers and thermal stability, as well as manufacturing ease to scale. In other words, without a scalable fiber-attach solution, CPO can’t move from prototypes to production. 

That’s why we invested in Teramount. Teramount’s Universal Photonic Coupler (UPC) changes how optical fibers connect to chips. Instead of requiring nanometer-precise alignment or active alignment processes, Teramount’s patented self-aligning technology expands fiber assembly tolerances and allows for detachable connectivity based passive alignment that simplifies the process, making fiber attachment reliable, repeatable, and ready for high-volume manufacturing.

Teramount’s UPC technology unlocks:

• Serviceability – Teramount’s detachable connectors allow fibers to be connected and disconnected, simplifying maintenance and improving uptime
• Reliability in real-world conditions – works under heat and mechanical stress, critical for data center environments
• Scalability – supports many fibers in tight spaces, enabling the bandwidth needed for AI systems for next generations
• Easier and less costly production – eliminates the need for special or active alignment tools, reducing cost and simplifying manufacturing
• Compatibility with existing processes – integrates with standard semiconductor design, manufacturing, testing and packaging flows, accelerating time to production
• Future scale – Utilized unique optical design of wide-band surface coupling technology that enables wafer-level testing while at the same time enabling multi-wavelength signals to support interconnect bandwidth roadmap-based Wavelength Division Multiplexing (WDM)

The bandwidth limitations of existing interconnect infrastructure are making hyperscalers move quickly to adopt CPO. Industry consensus points to commercial deployment of CPO by 2027–2028. That timeframe requires packaging solutions to be in place years earlier. Teramount is the first solution that is both ready and practical for real-world AI systems. 

As such, we are proud to announce we are leading Teramount’s $50 million financing, with participation from AMD, Samsung, Hitachi, and Wistron – strategic investors whose participation reflects the growing opportunity for CPO interconnects across the ecosystem. This funding will accelerate Teramount’s transition to volume production and help them solidify their position in the market.

Teramount is led by an exceptional team, including CEO Dr. Hesham Taha, who has deep experience in photonics and advanced packaging and CTO Dr. Avi Israel, the inventor of the core architecture and an industry expert in optical coupling. The chairman of the board, Dadi Perlmutter, was a former EVP, Chief Product Officer at Intel and brings decades of system-level leadership and go-to-market execution. 

Fiber attach is not the flashiest part of the stack, but it’s essential to making CPO manufacturable and scalable. We are confident this bet will enable a key infrastructure shift in AI systems, and we’re proud to support the team bringing it to market.

About KDT

Koch Disruptive Technologies is a venture capital firm partnering with principled entrepreneurs who are building high-growth companies that have the potential to transform industries. KDT has a flexible mandate to make investments at any stage of a company's life cycle, from seed to late-stage growth. KDT is a Koch company, one of the largest privately held companies in the world, with annual revenues that have exceeded $125 billion and operations in more than 50 countries. KDT helps its partners unlock their full potential by bringing them Koch's capabilities and network, structuring unique capital solutions, and embracing a long-term mutual benefit mindset. For more information, visit www.kochdisruptivetechnologies.com.

About the Authors:

Isaac Sigron leads Koch’s investments in data infrastructure globally with over 10 years of investment experience. Isaac focuses on picks and shovels solutions for the gold rush of our time – the mass adoption of Artificial Intelligence (AI). He is a Managing Director at Koch Disruptive Technologies (Israel), Ltd, an affiliate of KDT.

Aliza Goldberg is an Investment Professional at Koch Disruptive Technologies (Israel), Ltd., covering data infrastructure, particularly technology in interconnect, power delivery, and hardware systems that support AI workloads.

Deanna Grunfeld is an Investment Professional at Koch Disruptive Technologies (Israel), Ltd., covering AI infrastructure and deep tech, including semiconductors, optics, and software tools.

[1] CommScope, “Cabling Considerations of AI Data Centers,” White Paper WP-117872-EN, June 2023.