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Jon Peddie Research (JPR), the leading research and consulting firm for graphics and AI technologies, has released its latest report on AI, the Photonic AI Processors report covering developments during the third quarter of 2025.
Data centers power artificial intelligence, and AI is breaking data centers. GPU clusters now consume hundreds of watts per chip, and scaling compute faster than efficiency has become unsustainable. Photonic AI processors address this at the physics level — replacing electrons with photons to perform AI matrix operations faster and at a fraction of the energy cost.
This report covers seven companies building photonic compute processors. Four of the seven companies are German, French, or British. The US contingent, Lightmatter and Neurophos, are the best-funded. Overall, the companies have received over $1.1 billion in funding.
The Photonic AI Processors report defines photonic AI processors and how they are used. It outlines two distinct product categories: photonic compute processors, where light performs arithmetic, and photonic interconnects, which move data between conventional chips and replace copper wires.
"In electronic AI processing, avoiding latency means staying in memory,” said Dr. Jon Peddie, president of Jon Peddie Research. “In photonic AI processing, avoiding latency means staying out of it."
While the companies covered in the main body of this report focus on classical photonic AI acceleration (matrix multiplication, inference, HPC), a distinct set of players is building photonic quantum computers that use single photons as qubits and linear optical elements to implement quantum gates and entanglement. These systems target quantum simulation, optimization, and cryptography workloads, not near-term neural network acceleration, and operate on much longer commercialization timelines. Nonetheless, they have attracted over $2.6 billion in investment.
“This is an exciting and opportune time for investors as well as public companies to get involved in this emerging market,” said Peddie. “It’s not yet gold rush days, and highly leverageable bets can still be made.”
