Ultrasound brain-computer interfaces now have a US-listed industrial supply chain. Butterfly Network (NYSE:BFLY) will become the exclusive chip-based ultrasound partner to Merge Labs under a multi-year Butterfly Embedded licensing agreement announced on 1 September 2026. Merge Labs, the OpenAI-backed neural interface startup that launched in January 2026 with a US$252 million seed round, will build its neural interface on Butterfly’s Poseidon Family of Ultrasound-on-Chip. Financial terms include upfront payments, milestones, hardware purchase commitments, technology access fees, and future royalties on any commercial sales. Specific dollar figures were not disclosed. Butterfly retains the right to license the same technology to other companies in the field.
What is in the deal
The exclusive scope covers CMOS-MEMS chip-based ultrasound specifically. Merge will build its own custom neural interface technologies and systems on top of the Poseidon chip family. Butterfly’s Embedded programme licenses its ultrasound-on-chip architecture to third-party device builders across healthcare and other markets; the roster of other Embedded licensees is not disclosed in the release.
Butterfly Network President, CEO and Chairman Joseph DeVivo said: “We’re pleased to partner with Merge Labs and proud they’ve selected Butterfly as their exclusive platform for research and development. We’re committed to supporting their team as they advance this work from research toward commercialization. BCI is one of the most exciting and rapidly evolving areas of innovation today, with ultrasound emerging as an increasingly important modality. We’re excited about the role Butterfly can play in helping move the field forward.”
Merge Labs co-founder Tyson Aflalo said: “We believe ultrasound has tremendous potential to enable a new generation of neural interfaces. Our goal is to take the fastest and safest path to building the best technology possible, while enabling valuable R&D on downstream applications along the way. Butterfly has built a semiconductor-based ultrasound platform with the performance, flexibility, and commitment to innovation that can help us move quickly toward that goal.”
Sam Altman, a named Merge Labs co-founder, was not quoted in the release.
The two companies
Butterfly Network is a US-listed medical device company headquartered in Burlington, Massachusetts, carrying a market capitalisation of approximately US$2.10 billion on the day of the announcement. Its flagship medical product is the Butterfly iQ3 single-probe portable ultrasound. Three additional business lines run alongside iQ3: Compass AI (enterprise workflow), Butterfly Garden (SDK and AI marketplace), and Butterfly Embedded (chip licensing). The common technology across all four lines is Butterfly’s semiconductor Ultrasound-on-Chip architecture.
Merge Labs launched in January 2026 with a US$252 million seed round backed by OpenAI, Bain Capital, Interface Fund, Fifty Years, and Gabe Newell. The release carries a New York dateline; the company’s registered headquarters is not publicly disclosed. Named co-founders are Tyson Aflalo, Sam Altman, Alex Blania, Sandro Herbig, Sumner Norman, and Mikhail Shapiro. Shapiro is a Caltech faculty member. Blania is co-founder of the World / Worldcoin identity project. Altman is CEO of OpenAI.
Ultrasound versus other BCI modalities
Ultrasound is one of several less-invasive neural interface modalities in active commercial development. Named ultrasound operators now include Merge Labs (via Butterfly’s Poseidon), Gestala in China (RMB 570 million-plus round in August 2026), and Sisun Tech in China (flagged in earlier InsideBCI Google Alerts digests). Nudge, the focused-ultrasound neuromodulation startup co-founded by Coinbase co-founder Fred Ehrsam and Quintin Frerichs, sits in a related but distinct focused-ultrasound neuromodulation category rather than in ultrasound sensing.
Ultrasound is distinct from every other named BCI modality. It is not coherent-optical, which is the modality DARPA’s Firefox programme targets under BTO program manager Dr Pedro Irazoqui (100 channels, 50-micron spatial, 100-microsecond temporal, through-skull; InsideBCI covered on 20 August 2026). It is not electrical measurement, which is the modality used by intracortical operators (Neuralink, Paradromics, Blackrock, StairMed WRS02) and epicortical operators (Precision Neuroscience, ABILITY Neurotech, Weiling Medical, CorTec Brain Interchange). It is not electrical stimulation, which is the modality used by therapeutic-neuromodulation operators (Medtronic, Abbott, Boston Scientific, NeuroPace, Motif Neurotech).
Butterfly as component supplier
The Butterfly Embedded licensing model positions Butterfly as an upstream component supplier to third-party device builders, distinct from its own end-user medical product line. By licensing Poseidon chips into the BCI category through Merge Labs, Butterfly gains royalty exposure to the BCI category’s commercial trajectory without building its own BCI device. If ultrasound BCI reaches scale in the coming years, Butterfly captures value the way a CMOS-image-sensor supplier captures value from smartphone camera scale without building phones.
Butterfly’s inaugural BCI Innovation Summit is scheduled for 2 September 2026, one day after the Merge Labs announcement. The Summit is invite-only. Whether additional BCI-cohort Embedded licensees are named on or around that date will indicate whether Butterfly’s chip supply is spreading across the ultrasound BCI category or remains a single-partner arrangement.
Not disclosed
Specific dollar figures for the upfront payment, milestone schedule, hardware purchase commitment, technology access fee, and royalty rate are not disclosed. Merge Labs’ regulatory pathway, clinical timeline, target patient population, product name, and headquarters are not disclosed. Other named Butterfly Embedded licensees in the BCI category are not disclosed in this release. The full agenda and attendee list for Butterfly’s 2 September BCI Innovation Summit are not public.
What to watch
Watch whether Butterfly names additional BCI-cohort Embedded licensees on or around the 2 September Innovation Summit. A second or third named licensee would confirm Butterfly’s positioning as the ultrasound-chip supplier to the category rather than as a single-partner arrangement.
Watch whether Merge Labs discloses its specific product architecture, target indication, and regulatory pathway within the coming quarters. The US$252 million seed and now the exclusive Butterfly chip supply establish the industrial base. The clinical and commercial disclosure is the next milestone.
Watch whether Butterfly files an SEC 8-K on the Merge Labs deal. No material-event 8-K had been filed as of the press-release publication. The absence of an 8-K would suggest Butterfly’s counsel does not classify the deal as material at this stage.
Watch whether other ultrasound BCI operators disclose their own chip supply arrangements in response. The Chinese ultrasound BCI cohort in particular is unlikely to source from a US-listed chip supplier and will need a domestic Chinese CMOS-MEMS ultrasound-on-chip alternative.