Startup gets CHIPS Act funding for diamond-cooled servers
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The U.S. government has earmarked more than $36 billion in funding under the CHIPS Act, the vast majority of which has gone to large incumbents like Intel, Micron, and Samsung.
- Now a VC-backed startup is getting in on the action.
Driving the news: Akash Systems announced this morning that it has secured $18.2 million in non-dilutive grants, plus $50 million in combined federal and California state tax credits.
- The Oakland-based company produces artificial diamond substrates that it puts on GPUs and other semiconductors, in order to more quickly cool them, and then packages those chips inside of servers for a variety of end market.
- It also has a smaller business making "diamond-cooled" satellite radios for use in space missions.
- Akash previously raised around $18 million from VC backers like Khosla Ventures, Founders Fund, and Kearny Jackson.
Behind the scenes: Akash spent more than a year trying to secure the funding, including successful negotiations with local labor unions that the company believed would carry sway with the Biden administration.
- CEO Felix Ejeckam says the effort was made because the funding is nondilutive, but added that it also came against the backdrop of a venture capital industry that's not always supported semiconductor startups.
- "The CHIPS Act got started because [private investors] decided hardware wasn't worthy enough to back, and the pandemic laid bare the problems with that," Ejeckam explains. "Plus, the U.S. is trying to compete with countries like China that do lots of direct grants to build out their semiconductor and infrastructure sectors."
Zoom out: House Speaker Mike Johnson said before the election that a GOP House would seek to repeal the CHIPS Act, although he then tried to walk it back.
- Ejeckam and fellow Akash co-founder Ty Mitchell didn't directly comment on Johnson's threat, but did note that they hope to break ground within a month (i.e., before Trump takes office).
- Trump himself has criticized the CHIPS Act, but hasn't made definitive statements about its future.
The bottom line: The CHIPS Act is onerous for startups to access, but Akash may have shown a path for companies willing to put in the time.
