Shares in EnSilica jumped as much as 9% when markets opened on Monday after the London-listed chipmaker struck a new deal with UCL spinout Oriole Networks.

The contract, which EnSilica said “commences this month with material non-recurring engineering revenues”, will see Ensilica design and supplyOriole’s photonics controller chips used in its optical network switch products, in a bid to make data centres more efficient.

James Regan, Chief Executive Officer of Oriole, said: “Our optical switching technology is set to revolutionise high-performance computing and data centres by significantly reducing energy consumption and enhancing speed.

“This partnership of two UK companies will accelerate our mission to create the fastest and most energy-efficient networks, driving the next generation of machine learning applications.”

It comes after Plural, the investment group run by government AI advisor Ian Hogarth, led a £16.9m round into London startup Oriole using light to train large language models (LLMs). Hogarth became a director of the company in August.

Oriole Networks, a spinout from University College London, has raised a total of $35m this year, having previously raised £10m in March.

Founded in 2023, Oriole Networks aims to make generative AI faster and more sustainable with advanced photonics technology.

The company claims it can use light to create networks of AI chips to combine their processing power. Oriole Networks said this approach can train LLMs up to 100 times faster with a fraction of the power required for traditional methods, currently one of the biggest challenges to scaling the generative AI sector.

Oxford-based EnSilica last week warned it would not be able to continue trading for another twelve months unless it continued to receive funds from existing customers as well as seek external funding from shareholders or lenders.

“[The] situation gives rise to a material uncertainty…that may cast significant doubt on the entity’s ability to continue as a going concern and in such circumstances it may therefore be unable to realise its assets and discharge its liabilities in the normal course of business.”

But EnSilica’s board said it was confident it would be able to continue trading for another twelve months after signing a number of new contracts with customers and refinancing debt agreements totalling £6m on more favourable terms. EnSilica had already raised more than £5m from shareholders in May of this year.

The company today reported revenues of £25.3m for the year to end May, a rise of more than a fifth on the previous year, while posting losses of £0.2m compared to a £1.7m profit in 2023.

The firm, which develops ASIC chips as well as cryptography, radar and communications systems, said it expected to benefit from a growth in demand for domestic supplies of chips amid fears of global supply disruption.

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