GaN Systems raises $150m for EV push

November 18, 2021 // By Nick Flaherty
GaN Systems raises $150m for EV push
GaN Systems in Canada has raised $150m from existing investors including BMW and added automotive supplier Vitesco as a Tier One strategic partner alongside investment fund Fidelity.

“Gallium nitride (GaN) has really reached a tipping point,” said Jim Witham, CEO of GaN Systems. “Electrification is really driving power electronics, and with the IoT, sensors everywhere, it all requires power. Growth has been tremendous and now is the time to really accelerate the growth.”

“The lead investor is Fidelity, with $4tn of assets under management so it’s a pretty big statement that institutional investors are seeing this big change in power and they are trying to figure out how to put money to work,” he said.

The company had previously raised $20m from investors including BMW iVentures who were part of the new round alongside a new strategic investor in Vitesco, the powertrain spinout of Tier One supplier Continental.

“We have been working with Vitesco for some time on on-board chargers (OBC), DC-DC converter and inverters for electric vehicles,” he said. “With customers in automotive the obvious first place is the OBC and DC-DC converter for the weight reduction and cost reduction, then the inverters. These use a lower frequency so the gap between GaN and silicon does narrow, but most of the time driving is stop and start and that favours the fast switching of GaN.”

“There’s two main areas for the investment. It gives us the resources to execute on rapid market growth for the products and the business we have today. The second is new products to expand the portfolio. Phone chargers have pretty much gone GaN, audio, data centre power, and we are seeing moves into automotive with BMW and this Vitesco announcement,” he said.

"Application engineering and sales need to be close to your customer and the European automotive and EV market is very strong so there’s obviously some investment in that area. Clearly in Europe our business is bigger in industrial and automotive and it's a big focus for us as these are our two biggest markets. It’s really a global business and we will definitely be investing in being close to our customer."

The chip shortage has put more focus in the board room on where the chips come form and how easy it is to scale up production. “Frankly this semiconductor shortage has really helped us out as it has raised the conversation to the C-suite executive level. We use TSMC and they own the machines, we do all the tests on the devices. In general our partners put on the capacity, and GaN capacity additions come in small dollar chunks, compared to a SiC billion dollar factory that takes years to come online.”

Other GaN companies such as Navitas and Transphorm have gone public via reverse mergers to raise funds. Navitas raised $400m last month from its merger and IPO while Transphorm raising $33m from recent share placings.

“I see a lot of benefits having a nice big private round, we can really concentrate on customers and growing the revenue line and really take advantage of this tipping point so it was a conscious decision for us to go to Fidelity,” said Witham.

“What I am trying to is build a great company, taking advantage of this transition and one of the things you have to do is you have to have the capital to get it done. We’ve been very frugal in making sure we don’t overspend early. We wanted to make sure there was a really momentum and customers had voted with their purchase orders," he said.

“We have the broadest portfolio and we do the highest powers and it takes five or six years to build the relationships with companies such as BWM, Toyota and Vitesco and we knew that, and its paying off now," he added.

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