Black Semiconductor nabs $273M in Germany to supercharge how chips work together

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 thanks to the 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 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 raised by a European startup working in semiconductors so far. Black was spun-out from the University of Aachen, co-founded by brothers Daniel and Sebastian Schall (respectively the CEO and CFO). 

Daniel Schall said the funding would go towards R&D, building a “pilot” production facility in Aachen, hiring engineers and other staff (it has a modest 30 employees), and honing its business development. The company wants to work directly with major chip manufacturers across the rest of Europe, such as ASML in The Netherlands, to ramp up production in volume, as well as cloud computing and other “hyperscaler” companies that are some of the biggest buyers of chips.

Schall said if all goes to plan, the startup expects to produce its first commercial, volume-ready products in seven years, by 2031.

The company is not yet ready for commercial prime time, and it is working in a groundbreaking area that, in theory, has still to be ramped into commercial production and therefore 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. The problem is, you don’t know what you don’t know. 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 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 told TechCrunch. “What we do is brand new; we’re not running after somebody. And that’s really exciting.” 

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 from a more classic equity round. Porsche Ventures and Project A Ventures co-led the fundraise, which also saw participation from Scania Growth, Capnamic, Tech Vision Fonds and NRW.BANK. Vsquared Ventures, Cambium Capital and Onsight Ventures (a fund started by ARM co-founder Hermann Hauser) previously backed the startup with around $6.6 million of seed funding in 2020, and they participated in the Series A as well. 

Companies building and operating data centers are one obvious customer segment for Black Semiconductor, as are the customers of those data centers. Porsche’s interest underscores how automotive companies have become major buyers of technology to build systems both for connected vehicles and the cloud-based tech that helps 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,” Patrick Huke, partner and head of Porsche Ventures, said 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 electronics goes back to his childhood, when he first started pulling 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, a much deeper interest in semiconductors. 

At Aachen, working with graphene, the atom-thick carbon allotrope, Schall and his team came up with the 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.

Most chip connectivity efforts these days are focused on silicon-based photonics, and the wider ecosystem for semiconductors typically extends to more than 100 providers, so Schall saw an opportunity to break 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 cost of operating data centers, offering technology that could help mitigate those expenses becomes important not just for improving cloud providers’ margins but also for scaling to meeting data usage needs. That’s one reason 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 of AWS Germany and Europe Central, in a statement.

Black Semiconductor is not disclosing its valuation. We’ve asked and will update as and when we learn more.