The biggest ever European semiconductor venture funding round will support further expansion of manufacturing in the UK, creating hundreds of jobs.
The investment means Pragmatic Semiconductor – which manufactures flexible integrated circuits – can accelerate expansion to meet growing global demand for its world-leading products.
This includes building 3rd and 4th fabrication lines at its Pragmatic Park facility in Durham.
Over the next five years, the company – headquartered in Cambridge – anticipates building at least eight manufacturing lines in the UK, creating over 500 highly skilled jobs in Cambridge and the North East.
Each line can produce billions of chips for novel, fast-growing applications across multiple sectors including consumer, industrial and healthcare.
There is particular emphasis on providing item level intelligence to trillions of fast-moving consumer goods via smart packaging that will improve reuse and recycling, transform waste management, and contribute towards a circular economy. Other use cases include wearables, sensors and flexible controllers.
Pragmatic is recognised as a world leader in flexible integrated circuit technology. Founded in 2010, the company has revolutionised semiconductor fabrication with ultra-low-cost, flexible integrated circuit (FlexIC) technology that makes it quick and easy to embed intelligence almost anywhere.
FlexICs are thinner than a human hair and, invisibly embedded in objects, enable novel solutions that are simply not possible with conventional electronics.
With rapid cycle times that substantially accelerate time to market, Pragmatic’s foundry provides high-volume fabrication at a fraction of the cost of silicon, with a significantly lower environmental impact.
The company has built a large-scale manufacturing facility, Pragmatic Park, in Durham. Housing the UK’s first state-of-the-art 300mm fab, it has set the standard for smart, sustainable semiconductor manufacturing. When fully operational, it will be the highest-volume semiconductor manufacturing facility in the UK.
The majority of the investment secured (over 70%) is from UK investors attracted by the significant opportunities for Pragmatic’s technology in new applications, as well as the potential of Pragmatic’s flexible integrated circuits to replace mainstream silicon chips in a wide range of uses.
The significantly lower carbon footprint of Pragmatic’s semiconductor manufacturing compared to traditional silicon chip fabrication has also been cited by investors as a key factor.
CEO David Moore said, “This successful Series D round is a clear testament to the massive opportunity for our innovative technology to enable item-level intelligence in virtually any object on the planet.
“Our global customers value our ultra-thin and flexible form factor, our breakthrough low cost of customisation and rapid production cycles, as well as the lower environmental footprint compared to silicon.
“Scaling our manufacturing capacity on the UK’s first ever 300mm wafer production lines at our site in Durham will enable us to deliver hundreds of billions of chips to customers worldwide over the coming decade.”
He added, “We also see demand from customers for our unique Fab-as-a-Service deployment model. This is a modular semiconductor manufacturing approach that provides customers with access to an efficient, localised and secure supply of chips through a dedicated production facility wherever they need it.”
The first close of Pragmatic’s Series D funding round secured investment of £162m. The company is planning a limited second close for key investors, of which £20m ($25m) additional investment is already allocated.
M&G’s Catalyst and UK Infrastructure Bank co-led the funding round with participation from new investors including Northern Gritstone, Latitude and MVolution Partners, and existing investors such as British Patient Capital, Cambridge Innovation Capital and Prosperity7 Ventures (the diversified growth fund under Aramco Ventures).
John Flint, CEO of UK Infrastructure Bank, said: “The Bank has an important role to play in unlocking finance to scale up domestic supply chains, like semiconductors, which are critical to the UK’s transition to net zero. Our investment in Pragmatic backs a British business to accelerate development of a first-of-a-kind technology which not only cuts the carbon emissions of semiconductor production, but which will drive growth in the local economy in the North East.”
Niranjan Sirdeshpande, Global Head of Investments, M&G Catalyst Strategy, said: “The UK is blessed with a rich seam of enterprising and disruptive tech firms, but significant amounts of patient capital are needed to help companies like Pragmatic to expand and hone their operations – this is where M&G can help.
“We developed Catalyst to play a leading role in enabling businesses to scale their operations, provide expertise and partner with them all the way to success. Long term capital put to work in this way not only supports economic growth but can capture value for people’s pensions and savings as we transition to a more sustainable economy.”
Erik Langaker, Pragmatic’s chairman, added: “In a challenging investment environment, this capital raise is a fantastic recognition of the strength of the company and the value of its unique technology. With this funding, Pragmatic will be able to scale its foundry capacity to produce billions of chips to meet the demand from global, blue-chip organisations that are developing innovative new use cases only possible because of Pragmatic’s flexible integrated circuits.”