A Kanata firm that makes transistors that help electric and autonomous vehicles run more efficiently has landed millions in funding from one of the world’s leading automakers.
GaN Systems recently announced the new infusion of capital led by BMW i Ventures, the investment arm of the German high-performance car manufacturer. Existing investors BDC Capital, Chrysalix Venture Capital, Cycle Capital Management, RockPort Capital and Tsing Capital also contributed to the round.
Company officials would not divulge the size of the latest investment, but several media outlets have valued it at more than C$40 million.
It’s the latest funding win for GaN Systems, a rapidly growing west-end firm that specializes in high-speed semiconductors made of gallium nitride. GaN, as it’s commonly known, is a byproduct of aluminum and zinc production known for its incredibly high heat capacity and conductivity.
“When everybody in the automotive industry sees that BMW is putting such a vote of confidence with GaN, it’s tremendous. It does wonders for us in the other marketplaces, too, because BMW’s brand is known globally.”
Besides being fast, gallium nitride semiconductors are also much more energy-efficient than their silicon counterparts. While traditional silicon-based transistors bleed up to 10 per cent of their energy in the form of heat, GaN says its products lose just one to two per cent of their energy during the power conversion process.
That efficiency advantage over silicon has grabbed the attention of a host of carmakers, including BMW, that are planning to shift more of their production to electric vehicles and, eventually, self-driving cars with sensors that will be constantly transmitting and receiving data from the cloud – a process that requires a great deal of energy.
“That’s kind of the whole revolution that we’re helping drive,” GaN Systems CEO Jim Witham told OBJ recently. “We’re in a revenue growth stage. I didn’t want to get financial investors, I wanted to get strategic investors. BMW was a perfect fit for that, and I’m really happy to have them lead our round. Electric vehicles are clearly a part of the future.”
Batteries used in most current hybrid vehicles generate such intense heat the cars require separate coolant tanks. But because gallium nitride semiconductors generate less heat in the form of lost energy, coolant tanks would no longer be as necessary.
That’s a major incentive for BMW to invest in GaN’s technology. The Munich-based automaker is aiming to boost sales of its electric cars by two-thirds this year to 100,000 vehicles, with the long-term goal of expanding the share of electric cars and hybrids to as much as 25 per cent of its total sales by 2025.
“GaN Systems’ power transistors have created new possibilities for engineers to build the power electronics demanded by today’s systems,” BMW i Ventures managing director Uwe Higgen said in a statement.
“Gallium nitride-based transistors have become, in my opinion, the next big stepping stone in miniaturization. We have seen systems one-quarter of the size while providing better efficiency than traditional silicon-based alternatives. With GaN, any system that needs power can become smaller, lighter and more efficient. These capabilities are particularly relevant in the automotive sector.”
In addition to growing its sales and marketing teams, GaN Systems plans to use the latest cash injection to beef up its R&D and engineering components in an effort to make its semiconductors even smaller, faster and more efficient.
GaN proponents say the technology will allow electronics manufacturers to produce lighter, thinner flat-screen TVs and tablets, among a myriad of other applications such as high-tech medical devices and wireless charging systems. GaN transistors also make it more efficient for data centre providers to store and transmit massive amounts of information in the cloud.
As the number of mobile devices and other technology with data-heavy applications continues to multiply, the GaN market is expected to grow exponentially. In a report last year, London-based information services firm IHS Markit predicted sales of GaN semiconductors would rise from roughly $10 million in 2015 to $600 million by 2025.
“Energy is the No. 1 operating expense item for data centres,” Mr. Witham said. “The data centre guys love GaN transistors because they save energy instead of wasting it as heat and having to cool it. There’s a huge data centre play for GaN transistors.”
The latest funding round follows a $20-million series-C round in 2015 that helped GaN Systems grow to about 30 employees. Since then, the firm has nearly doubled its headcount to more than 50, with 34 of those based at its head office in Kanata and the rest employed at sales outposts in Asia, Europe and the United States. GaN Systems’ second-largest office is in Taiwan, where its transistors are manufactured by a contractor.
The company says it’s the world’s top producer of GaN transistors, though the field is limited to just a handful of competitors in large part because the production of gallium nitride requires a specially equipped foundry.
One of those facilities just happens to be right here in Ottawa at the National Research Council.
“In some respects, when we go out to big customers around the world, they’re surprised that the best power transistors in the world come from a company headquartered in Ottawa,” Mr. Witham said.
“But the combination of the entrepreneurship in Ottawa, the engineering talent in Ottawa and, for us specifically, having a GaN reactor at the NRC in the early days where we could prove out our technology and show that it was superior to the other ways of doing it, those three pillars allowed us to become the company that’s the leader in GaN.”
The decade-old company won’t reveal its annual revenues, but Mr. Witham says sales are more than doubling each year. Staying one step ahead of the competition is the firm’s foremost challenge, the CEO added – not to mention fending off makers of traditional silicon transistors that are still “fighting hard for their business.”
In the company’s battle to remain the market leader, securing the endorsement of BMW’s investors is worth far more than any dollar figure on a cheque, Mr. Witham said.
“BMW is known throughout the automotive industry as being a technology leader,” he said.
“Their engineering is top-notch. When everybody in the automotive industry sees that BMW is putting such a vote of confidence with GaN, it’s tremendous. It does wonders for us in the other marketplaces, too, because BMW’s brand is known globally. It’s pretty exciting times for the company, and it’s exciting that Ottawa is a hub of where that’s all happening.”