Tech sovereignty has become a looming priority for a number of nations these days, and now, with the demand for compute power at its highest level yet thanks to uptake of newer technologies like artificial intelligence, a startup working in semiconductors has received a major boost in aid of that effort for Germany and Europe.
Black Semiconductor, which is developing a new kind of chip-connecting technology based on graphene, has raised €254.4 million (around $ 273 million at today’s rates), in a combination of private and public funding.
The sum is one of the largest to date raised by a European startup working in semiconductors. Black is a spin-out from the University of Aachen co-founded by brothers Daniel and Sebastian Schall (respectively the CEO and CFO).
Daniel Schall said in an interview that the plan is to use the funding to continue its R&D efforts, to build out a “pilot” production facility in Aachen, hire more engineers and other staff from around the world (its staff currently numbers a modest 30), and to hone the earliest stages of its business development, which will involve working directly with major chip manufacturers across the rest of Europe, such as ASML in The Netherlands, to ramp up production in volume; but also the cloud computing and other “hyperscaler” technology companies that are some of the biggest buyers of chips.
Schall said that if all goes to plan, the startup expects to be producing its first commercial, volume-ready products in seven years, by 2031.
The company is not yet ready for commercial prime time, and they are working in a groundbreaking area which in theory has yet to be ramped into commercial production and thus comes with the risk that it might not. All the same, Schall visibly squirmed and laughed a little when I asked him if he thought of his startup as “deep tech.”
“The answer is yes,” he eventually answered. “I just want to add a philosophical point here. We are paranoid with making sure that we don’t overlook anything. Because the problem is you don’t know what you don’t know. And sometimes strange stuff happens in these machines… but you still have to solve it within the given time and budget. And we have to solve it in a certain time horizon.”
The funding, a Series A, is important not just for its size but also because of the intention behind it.
A full €228.7 million of the sum is coming from Germany’s federal government and North-Rhine-Westphalia, a combination of equity and funding based on the “Important Project of Common European Interest” provision, an €8.1 billion piece of state aid that the European Commission carved out in 2023 specifically for big technology swings like this one.
“Sovereignty in Europe is a big topic, and we have a technology that puts us ahead of the curve,” Daniel said in an interview. “What we do is brand new, we’re not running after somebody. We have an opportunity to do something very brand new here. And that’s really exciting.”
And that’s a bet the state is willing to take for the eventual return.
“Faster chips are crucial, especially for AI applications, and Black Semiconductor’s project is very promising,” said Robert Habeck, Germany’s Minister for Economic Affairs and Climate Action. “Their courage and perseverance have paid off, making them the only start-up among 31 projects in the IPCEI Microelectronics initiative.”
The remaining €25.7 million is coming in the form of a more classic equity round. Porsche Ventures and Project A Ventures are co-leads, with participation from Scania Growth, Capnamic, Tech Vision Fonds, and NRW.BANK. Vsquared Ventures, Cambium Capital, and Onsight Ventures, the fund started by Hermann Hauser, the co-founder of ARM, had previously backed Black with around $ 6.6 million of seed funding in 2020, and they are in this more recent round as well.
While companies building and operating data centers are one obvious customer segment, so too are the customers of those data centers. Porsche’s interest underscores how one sector, automotive, has become a major buyer of technology to build out their systems both in connected vehicles, not just for autonomous functions but diagnostics and other services, and in the cloud-based systems that help those vehicles operate.
“Our lead investment in Black Semiconductor together with Project A represents a great opportunity, harnessing photonics technology seamlessly integrated into conventional chips for a variety of industries, use cases and future AI applications,” said Patrick Huke, Partner and Head of Porsche Ventures, in a statement. “Fueled by a combination of public and private investors, the Black Semiconductor team is now in a great position to build a strong semiconductor business within Europe, strengthening not only our domestic competitiveness but also the overall European chip ecosystem.”
Schall said his interest in understanding why electronics works the way they do extends back to his childhood when he first started to pull radios apart to understand how they worked. That led to an interest in the transistors in the radios, and by the time he was in university, much deeper interest in semiconductors.
At Aachen, working with graphene, the atom-thick carbon allotrope, he and his team came up with a concept of using the material, which is optimal for photonics, to connect chips.
His logic for focusing on chip connectivity, he said, was not just because there are already many companies building excellent and always-improving chips (an area presently dominated by Nvidia and its GPUs) but also because the connectivity part has not been definitively solved, especially in situations where hundreds or thousands of chips might be working together.
With most of the chip connectivity efforts these days focused on silicon-based photonics, and the wider ecosystem for semiconductors extending typically to more than 100 providers, Schall said, he saw an opportunity to break completely new ground by commercializing his research.
“The problem is efficiency. In the end that’s the main problem: efficiency in computation,” he said.
Given the costs of operating data centers for cloud computing providers, offering technology that could help reduce those costs becomes potentially important not just for improving margins but also scaling to meeting data usage needs, one reason why Black is actively speaking with potential customers in the ecosystem, to understand their needs and secure interest, even before the technology is being shipped.
“We admire Daniel and Sebastian’s unwavering commitment to pushing the boundaries of what’s possible today, which aligns closely with AWS’ builder mindset,” said Stefan Hoechbauer, Managing Director, AWS Germany and Europe Central, in a statement. “AWS has helped more startups launch, build and succeed than any other cloud provider, and the commitment to continue to be that trusted partner remains strong as ever. This funding announcement is a testament to the technological ambition and demonstrated competence of the Black Semiconductor team.”
Black Semiconductor is not disclosing its valuation. We’ve asked and will update as and when we learn more.
