Italy backs 2D Photonics with €211M grant to tackle AI's data bottleneck
What's the deal? Italy has awarded a €211M ($249M) grant to 2D Photonics Group's subsidiary CamGraPhIC to develop graphene-based optical technology for AI data centres. The European Commission-approved state aid is one of the largest public investments ever made in an Italian deep-tech startup.
The funding will go towards industrialising CamGraPhIC's optical interconnect platform and building a pilot manufacturing facility near Milan, scheduled to become operational in 2028. The project is expected to create over 150 jobs in photonics engineering, materials science, and semiconductor manufacturing.
2D Photonics, spun out of a partnership between theUniversity of CambridgeDealroom has a profile for this one. Try Dealroom → and Italian research institute CNIT, completed a €25M Series A in March 2025. Its backers include the NATO Innovation FundDealroom has a profile for this one. Try Dealroom →, Sony Innovation FundDealroom has a profile for this one. Try Dealroom →, Bosch VenturesDealroom has a profile for this one. Try Dealroom →, CDP Venture CapitalDealroom has a profile for this one. Try Dealroom →, and Join Capital.Dealroom has a profile for this one. Try Dealroom →
Why now? Today's AI systems aren't held back by computing power — they're bottlenecked by how fast data moves between chips, accelerators, and memory. Existing electrical and silicon photonic interconnects can't keep up with larger models and denser hardware, consuming more power and generating more heat.
"Compute keeps getting faster, but data movement hasn't kept pace," said chief executive officer Ben Jensen. "Graphene-based optical technology offers a way to move vastly more data using far less power."
Demand for data centre optimisation tech is surging. Lumentum Holdings said last week its order books are full through 2028. Both LumentumDealroom has a profile for this one. Try Dealroom → and rival Coherent received $2B each from Nvidia last month.
What could go wrong? Graphene photonics is still in the research phase — the Milan facility's purpose is to bridge the gap to real-world production. Moving from lab breakthroughs to high-volume manufacturing is notoriously difficult in deep tech, and the 2028 timeline leaves room for delays.
The grant's conditions haven't been disclosed, and 2D Photonics will need to prove it can compete against well-funded incumbents in silicon photonics that already have established production lines.
The signal: Europe is placing big bets on homegrown deep tech to stay relevant in the AI infrastructure race. While US tech giants pour hundreds of billions into data centre buildouts, this grant shows European governments are willing to back hardware-level innovation — not just regulate it. If graphene photonics delivers on its promise, it could reshape how AI systems handle data at the physical layer.
Sources:
Bloomberg
Investegate via RNS
Investing.com
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