Pitch deck: How Black Semiconductor secured €250 million - Business Insider

Information of note mentions competition to Black Semiconductor

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Who are your biggest competitors?

The industry has accepted that optics are "coming" in the field of semiconductor technology. Silicon photonics is the first step. Our solution is more elegant, cheaper and more energy-efficient. Specifically, companies such as IR AyarLabs, Light Matter and Celestial AI are our competitors."

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The hardware business follows different rules than software development. Especially when it comes to financing. An Aachen startup has taken advantage of a special advantage.

The Aachen-based startup Black Semiconductor has secured a total funding of 254.4 million euros. Financing of this amount has already existed in the past, but that of the semiconductor startup is somewhat different: Of the sum, 228.7 million euros come from public funds of the Federal Ministry for Economic Affairs and Climate Action and the state of North Rhine-Westphalia. In addition, 25.7 million euros in equity will flow from investors such as Porsche Ventures, Project A Ventures, Scania Growth, Capnamic and other venture capital firms. This financing is intended to drive the build-up of production capacities and the development of a new generation of graphene-based chips.

Founded in 2020 by brothers Daniel and Sebastian Schall, Black Semiconductor specializes in the production of fiber-optic microchips. They began at the non-profit research center AMO in Aachen, which is affiliated with RWTH Aachen University, where Daniel Schall earned his doctorate.

More efficient through light

Black Semiconductor's goal is to increase the performance of chips through optical circuits. This technology uses light to transmit data in optical fibers, which significantly improves communication between chips and enables barrier-free networking. This represents a significant advancement over traditional methods, which reach their limits when it comes to communication between a large number of chips.

The development of this technology has taken several years. A turning point for the company was the Corona pandemic, which increased the interest of European politicians in optical chip technology. The brothers do not see themselves as competitors to large international chip manufacturers, but as part of an ecosystem that enriches the entire value chain of the semiconductor industry.

Advantage: The location – and the efforts in the EU to become more independent

The latest round of funding is expected to enable Black Semiconductor to develop a new generation of chip technology from research to mass production by 2031. A second location in Aachen is also planned to expand production capacities and create high-tech jobs in the region.

With this funding and the support of government and private investors, Black Semiconductor is well positioned to strengthen the European semiconductor value chain and contribute to Europe's technological sovereignty.

Daniel, an investment of this amount from the state is unusual. What makes Black Semiconductor so important?

This is where the sovereignty efforts at the European level come in handy. We are at the forefront with our technology and do not have to run behind. We can now establish something new in Europe, with a material – graphene – that was also discovered here.

The question of location is certainly important. Is it your goal to only manufacture in Germany and Europe in the future?

It would be nonsensical to rule out everything else, since the semiconductor industry is international. However, we would like to manufacture in Europe. Sovereignty means that you can make a relevant contribution. Our technology can be used in a variety of ways, both in the high-performance compute sector and in the automotive sector.

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Why did you take the path of taking money from the state instead of from "regular" VCs or venture debt?

Capital intensity is one of the main reasons and Germany has the opportunity to be a pioneer with its investment. To transfer the idea from research to production, you need industrial plants that are very capital-intensive. Government support helps to overcome this hurdle. Venture capital is rather less suitable for the construction of a factory.

What do you do with the capital?

We are building a production plant that is compatible with the semiconductor industry, with a wafer size of 300 millimeters, i.e. the current state of the art. In this way, we are developing a technology that enables more efficient computing networks, which is particularly important for AI applications.

How do you envisage further financing?

Funding from the EU project has been secured for seven years. However, we will continue to raise capital every two years, probably in the conventional VC style.

Do European investors understand your business?

Yes, the competence is available in Europe. There are investors who are interested in high technologies and recognize the potential. The funds are getting bigger and the capital is there.

Is there the right know-how for your business? How important is the location?

We deliberately chose Aachen because it is a center for 2D materials and photonic technology. There are many other centres in the area, such as Leuven, Ghent, Eindhoven and Nijmegen. The main task in the next few years is to transfer the technology from research to production. To do this, we need specialists who understand photonics and technology.

What about the availability of chip designers?

It's difficult to get chip designers because they usually work at big companies like Microsoft, Intel, or Meta. We try to convince them with our new technological approach.

What are the benefits of your technology? Can you say something about specific areas of application?

It's about how we can make AI applications more efficient. Optical systems enable better linking of individual chips, which leads to higher efficiency. This is particularly interesting for operators of large data centers and ultimately also for end users. Currently, energy demand is one of the major cost factors.

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Do you already have your first customers or declarations of intent?

Yes, we have interested parties from the automotive sector and are working on partnerships for special connectivity solutions. Cooperation is also part of the funding, and we already have initial customer interest.

The chip giants TSMC and Intel want to produce in Germany, Apple designs in Germany. Is hardware now back in vogue after the software hype of recent years?

Hardware has always been important, even if it wasn't always noticed. The hardware industry has always provided advancements that the software industry has been able to take advantage of. Now that the hardware is reaching its limits, it is becoming a big topic again.

Who are your biggest competitors?

The industry has accepted that optics are "coming" in the field of semiconductor technology. Silicon photonics is the first step. Our solution is more elegant, cheaper and more energy-efficient. Specifically, companies such as IR AyarLabs, Light Matter and Celestial AI are our competitors.

So you want to both design and produce chips?

In the beginning, we will create designs ourselves and make the photonics. We leave the electronics to the experts. Later, we could either act as a foundry – i.e. as a pure contract manufacturer – or sell our own systems as IDM (Integrated Device Manufacturer).