Vertical Semiconductor has agreed to receive a maximum of $73 million in funding from the US Department of Commerce, as stated in a Letter of Intent. This money will be allocated for the advancement and production within the US of vertical gallium nitride (vGaN) power transistors.
The aim is to enhance the country’s position as a leader in artificial intelligence power infrastructure and high-performance computing. This news was reported on September 24th. According to the funding agreement, the Department of Commerce will possess a minority, non-influential, and non-voting share in the company.
GaN, a wide-bandgap material, can manage greater power amounts than silicon, resulting in GaN-based chips that are more efficient and long-lasting compared to silicon-based ones. In contrast to customary Gallium Nitride, which is constructed laterally on silicon or sapphire substrates, vertical Gallium Nitride semiconductors have a 3D structure allowing them to transmit electricity vertically through the GaN substrate.
By enabling the current to pass through the chip instead of across its surface, the device’s voltage capacity can be increased without enlarging its size. Vertical Semiconductor, in partnership with commercial collaborators, is working on a groundbreaking 2.5MW AI rack that aims to cuts energy losses by 30%, reduces physical footprint by 50%, and transforms unused electricity into computational power.
As a result of the project, the firm will be able to utilize its vGaN transistors throughout the entire AI data center power chain, resulting in enhanced performance improvements at both the grid and compute levels. According to Cynthia Liao, CEO and co-founder of Vertical Semiconductor, “Power is the most crucial constraint in the development of AI infrastructure.” The CHIPS R&D award will expedite Vertical Semiconductor’s R&D and commercialization efforts for vertical Gallium Nitride, leading to an increase in American compute capacity within current power limitations.
Bill Frauenhofer, the head of semiconductor investment and innovation at the Department of Commerce, commented that the CHIPS R&D awards would facilitate groundbreaking advancements in power semiconductor devices and essential materials. Enhancing home-based R&D in these fields will bolster America’s capability to generate and transmit power for the electrical grid, sophisticated data centers, defense mechanisms, and nascent fusion energy.”.
Vertical Semiconductor, a company focused on GaN research, was established in 2024 by Liao, Josh Perozek, and Tomas Palacios, who are associated with MIT’s Palacios Group. In October 2025, the company secured $11 million in seed funding, with Playground Global leading the round and JIMCO Technology Ventures, Milemark Capital, and Shin-Etsu Chemical participating.
This news falls under the IT Hardware & Semiconductors category.
