Vertical Semiconductor, a startup spun off from the Massachusetts Institute of Technology (MIT), announced on Wednesday that it has raised $11 million to commercialize a chip technology aimed at providing more efficient power for artificial intelligence servers. Vertical utilizes gallium nitride (GaN) material for chip production. GaN is an alternative to silicon and is becoming central to a project led by chip designer NVIDIA, which aims to redesign auxiliary chips within AI data centers to facilitate power transmission and convert electricity to the form needed by NVIDIA's chips. Currently, some AI data centers consume electricity comparable to that of entire cities. However, a substantial amount of power is lost as heat when converting the high-voltage electricity supplied from power plants into the low voltage required by microchips. This issue has sparked a wave of investment as market interest in technologies aimed at "reducing power loss" has surged. Matt Hersenson, a partner at the leading venture capital firm Playground Global, stated in an interview: “This power isn’t being used for computational tasks; it’s being directly converted into heat.” Established chip manufacturers such as Renesas, Infineon, and Power Integrations are also collaborating with NVIDIA to develop GaN-based power chips for AI data centers. Vertical plans to launch a chip prototype this year and achieve mass production next year. They are employing a distinctive technical approach that is expected to make their chips smaller and produce less heat. In most current GaN chips, transistors, which serve as the fundamental building blocks, are arranged horizontally. As implied by the company’s name, “Vertical,” they are stacking the various components of transistors vertically, allowing for higher integration of the chip and more compact designs. This technological route originates from research at MIT, led by Professor Tomas Palacios, co-founder of Vertical, with further development by Joshua Perozek, whose doctoral research focused on this technology. Cynthia Liao, who joined Vertical from MIT's Sloan School of Management to serve as CEO, stated that the startup aims to compete with established companies by offering a key advantage: over time, their solution is expected to save more costs for data center owners compared to existing mature technologies. Liao remarked in an interview, “We firmly believe that our next-generation solution is highly competitive—it offers not just incremental improvements, but a genuine leap forward.”