Vertical Semiconductor, a deep-tech startup spun out of the Massachusetts Institute of Technology (MIT), has raised $11 million in seed funding to commercialize its breakthrough vertical gallium nitride (GaN) transistor technology. The funding round was led by Playground Global, with participation from JIMCO Technology Ventures, milemark•capital, and Shin-Etsu Chemical.
The new funding will advance the development of Vertical’s power conversion systems designed to deliver more efficient, compact, and sustainable power for AI data centers.
As artificial intelligence continues to drive exponential growth in computational demand, data centers are facing unprecedented strain on their power infrastructure. Power delivery — not just processing speed — has become a primary bottleneck in scaling AI workloads. Vertical Semiconductor’s vertical GaN platform addresses this challenge by pushing energy conversion closer to the chip, dramatically reducing power loss, heat generation, and overall energy consumption.
According to the company, its technology enables up to 30% higher energy efficiency and can shrink the power footprint of AI data center racks by as much as 50%. This improvement enables operators to integrate more compute into existing infrastructure, reducing both operational and cooling costs — a critical advantage as global demand for AI power continues to rise.
Vertical’s innovation builds on a decade of research from MIT’s Palacios Group, a leading GaN research laboratory. Traditional silicon-based power electronics struggle with heat and efficiency at high voltages, but GaN, a wide-bandgap semiconductor, offers much higher energy density.
Vertical’s proprietary architecture enhances this advantage by using a vertical transistor structure rather than the conventional lateral one. The result is faster, higher-voltage, and more efficient power delivery that can be produced using existing semiconductor manufacturing tools.
The company has already demonstrated successful fabrication of its vertical GaN transistors on 8-inch wafers using standard silicon CMOS processes. This milestone paves the way for cost-effective scaling and integration with existing chip production ecosystems. Vertical plans to begin early sampling of packaged devices by the end of 2025 and aims to deliver a fully integrated solution in 2026.
With the backing of Playground Global and other strategic investors, Vertical joins a growing wave of companies focused on the intersection of power electronics and AI infrastructure. The firm’s technology positions it to play a key role in the next phase of computing efficiency, particularly as the global AI ecosystem shifts toward higher performance and sustainability standards.
KEY QUOTES:
“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. 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.”
Cynthia Liao, CEO and Co-Founder, Vertical Semiconductor
“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. They’re not just advancing the science – they’re changing the economics of compute.”
Matt Hershenson, Venture Partner, Playground Global
