Transphorm of Goleta, California, which is innovating in electric power conversion, just completed a $35 million Round E led by Innovation Network Corporation of Japan (INCJ) and Japan's NIEC, a manufacturer of power management semiconductors. Existing investors Quantum Strategic Partners, an investment fund managed by Soros Fund Management, Kleiner Perkins Caufield & Byers, Google Ventures, Foundation Capital, and Lux Capital also participated in the funding round.

INCJ is a partnership between Japan's government and 27 major firms, including Sharp, Sumitomo Electric, Toshiba and GE Japan. NIEC invested and entered a business relationship with Transphorm. This round brings Transphorm’s total capital raised to more than $100 million. 

The startup is building an energy-efficient gallium nitride (GaN) power conversion module. 

Gallium nitride power conversion is not a new field but Transphorm is looking to achieve it at scale, inexpensively, while charting an independent IP path. The company has said its power modules can eliminate up to 90 percent of all electric conversion losses. Transphorm looks to address power conversion in servers, motor drives, power supplies and inverters forsolarpanels and electric vehicles. 

Low-cost power conversion is accomplished today with silicon, and good silicon-based power converters can operate with efficiencies in the high-90-percent range. Attempting to displace silicon in power and semiconductor applications remains a daunting task. But the market is enormous and the potential energy savings are huge.

"Silicon has reached its limits in power conversion. It has reached its physical limit. We are using gallium nitride to move away from the path set by silicon," said Umesh Mishra, Transphorm's CEO, in an earlier interview.

The power electronics market is a sector that VC Vinod Khosla believes can most transform the smart grid. (Here's Khosla's viewpoint on power electronics.)
 
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's first product was 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. 

Transphorm has claimed that it was "the first to successfully deliver qualified high-voltage (600V) GaN products." 

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. GaN has its own material ecosystem, which Transphorm might be able to leverage.

Getting a new type of semiconductor to market is never easy and betting against silicon is never a great bet. Transphorm's chips depend on materials, processes, circuits and a module that are unique to the company. Additionally, gallium nitride is not easy material to work with. "You cannot mine GaN. It has to be grown on foreign substrates," said Mishra in an earlier interview.

The company 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.