Transphorm of Goleta, California, claiming to "redefine energy efficiency" by "eliminating terawatts of power waste from the electrical grid," has completed a $25 million Round D from Quantum Strategic Partners, a private investment fund managed by Soros Fund Management, as well as previous venture investors Kleiner Perkins Caufield & Byers, Google Ventures, Foundation Capital and Lux Capital.

Behind that breathless language lies a startup building an energy-efficient Gallium Nitride (GaN) power conversion module. Pretty salty language for a power converter.

This brings Transphorm’s total capital raised from all rounds to $63 million. Transphorm will use the funding to "continue solving the multi-billion dollar power waste problem, which occurs whenever electricity from the grid is converted into usable electric power" -- as well as fighting for truth, justice and the American Way.
Umesh Mishra, CEO of Transphorm, in a press release added this hype nugget: "Transphorm is sparking a revolution in energy efficiency, paving the way for the mass production of consumer, commercial and industrial technology products designed for optimum electrical efficiency.”  

Gallium nitride power conversion is not a new field. What Transphorm has to do is figure out how to do it at scale, inexpensively, while charting an independent intellectual property course.

Michael Kanellos reported on the company earlier this year. He noted that the company says its power modules eliminate up to 90 percent of all electric conversion losses, but added: "What it doesn’t highlight as much is that current power modules are around 90 percent efficient. Transphorm, in other words, takes you from 90 to 99 percent. A true achievement, but phrasing it that way takes out some zing."

Kanellos also said, "The company also said it could save hundreds of terawatt-hours of energy a year -- New York City only uses 50 terawatt hours. True enough, and a great meme, but unrealistic."

Transphorm is addressing the power electronics market, a sector that Vinod Khosla recently said is the area which can most transform the smart grid. You can read Mr. Khosla's diatribe in its entirety here.

Transphorm works in gallium nitride and is addressing motor drives, power supplies and inverters for solar panels and electric vehicles. 
The Advanced Research Projects Agency-Energy (ARPA-E) awarded Transphorm $2.95 million to invent normally-off GaN switches while moving their GaN platform to low-cost silicon substrates. Transphorm launched its first product, a power diode based on its GaN technology. Transphorm also introduced a 600-volt GaN transistor, which displaces legacy silicon-based power conversion technology and claims to reduce switching losses by up to 95 percent. Transphorm recently demonstrated a 100 KHz 3-phase 2 kW inverter. 

The company essentially has created a semiconductor platform for making power converters -- AC to DC power converters, DC to AC converters, AC to AC chips and DC to DC chips -- out of gallium nitride, the same semiconductor material behind white-light LEDs. Right now, converters are made out of silicon and can be 85 percent to 90 percent efficient, i.e., 85 percent of the AC power that gets injected into them comes out as DC power. The rest gets converted into waste heat.

Transphorm claims it can boost that figure to the upper-90-percent range.

"Inverters are everywhere. We can make power conversion cheaper and easier," said Randy Komisar, a partner from Kleiner, Perkins who predicted that Transphorm's technology could have three times the impact that digital lighting will have.

Michael Kanellos added this after speaking to the CEO:

Getting a new type of semiconductor to market is never easy. In fact, it is one of the most difficult tasks in the technology business. Just ask Rambus, which tried to introduce a new type of computer memory to the world in the '90s. Or IBM, which touted super-speedy germanium semiconductors for years. Or Intel, which has been talking about ovonics memory since 1970. 

Transphorm's chips depend on materials, processes, circuits and a module that are unique to the company. Transphorm plans to build a factory to make its own chips. It will not be able to rely on third-party foundries for some time.

"There will be a time for foundries, but the time is not now. It is still slightly mysterious," he said.

The company's prototype factory in Santa Barbara will allow it to meet its targets through 2012 but after that it will need to expand. 

Then there is customer inertia and reluctance. Transphorm will have to show reliability data and volume manufacturing commitments. No server maker is going to want to have to delay a line of computers because their supplier of power conversion chips came up short one quarter. Imagine the chatter in Detroit if an EV maker had to recall a car because of a faulty AC converter.  

Gallium nitride is also not easy material to work with. "You cannot mine GaN. It has to be grown on foreign substrates," said Mishra. What's more, the substrate in some situations can actually degrade the material.

To the company's credit, it understands these issues. Despite the celebrity name recognition that Kleiner and Google have, Mishra says the company will crawl before it will walk. It is targeting very specific vertical customers at the moment. First, it will go after servers. Then Transphorm will go after PV inverters, electric motors and auto makers.