Vertical Semiconductor (Vertical), a semiconductor company spun out from the Massachusetts Institute of Technology (MIT), announced the closing of an $11 million seed funding round led by Playground Global. The investment will accelerate the development of vertical gallium nitride (GaN) transistors designed to power the next generation of AI chips in data centers. Additional participation came from JIMCO Technology Fund, milemark•capital, and Shin-Etsu Chemical.
The rapid expansion of AI workloads has placed immense pressure on data center infrastructure, with power delivery emerging as a key limitation. Vertical’s vertical GaN transistors address this challenge by enabling energy conversion closer to the chip, significantly reducing power loss and heat generation. This advancement increases energy efficiency by up to 30% and cuts the power footprint of AI data center racks by half.
“The pace of AI is not only limited by algorithms. The most significant bottleneck in AI hardware is how fast we can deliver power to the silicon,” said Cynthia Liao, CEO and co-founder of Vertical. “We’re not just improving efficiency, we’re enabling the next wave of innovation by rewriting how electricity is delivered in data centers at scale.”
Originating from over a decade of research at MIT’s Palacios Group, a globally recognized GaN research laboratory, Vertical’s transistor technology leverages gallium nitride for enhanced power density and efficiency compared to traditional silicon. Through a proprietary vertical design, power transfer from source to chip becomes faster and more efficient. The company demonstrated the technology on 8-inch wafers using standard silicon CMOS manufacturing processes, ensuring compatibility with existing semiconductor infrastructure and scalability for devices ranging from 100 volts to 1.2kV.
“The Vertical team has cracked a challenge that’s stymied the industry for years: how to deliver high voltage and high efficiency power electronics with a scalable, manufacturable solution,” said Matt Hershenson, Venture Partner at Playground Global. “They’re not just advancing the science – they’re changing the economics of compute.”
With a prototype under development and key commercial milestones approaching, Vertical Semiconductor aims to begin early sampling of its first packaged prototype devices by the end of the year, followed by a fully integrated product release in 2026.