Microsoft

Lace, a Norway-headquartered chipmaking equipment startup which is backed by Microsoft, has raised US$40 million in funding to further develop a technology that could enable significant advances in semiconductor design and manufacturing, the company said on Monday.

To make cutting-edge chips, manufacturers such as Taiwan Semiconductor Manufacturing and Intel employ a process called lithography that uses light to draw complex circuits that form the foundation of advanced artificial intelligence chips.

Manufacturers use light-based lithography systems made by the Dutch company ASML which dominates the market - as they race to shrink chip components and squeeze in more features to boost the computing horsepower on a limited area of silicon.

The field has drawn fresh interest from investors and governments as a new round of startups emerges, some of which aim to compete with the Dutch firm.

Lace has developed a new approach. Instead of light, Lace’s engineers have made a form of lithography that uses a helium atom beam. With that, the Norwegian company will be able to create chip designs that are 10 times as small as what is currently possible, CEO Bodil Holst told Reuters in an interview.

“Our technology is a way that can potentially expand the roadmap and be an enabler for doing things that would not have been possible otherwise,” Holst said.

The main advantage of the helium atom beam is the industry could create features such as transistors, the building blocks of modern chips, an order of magnitude smaller to an “almost unimaginable” degree, according to John Petersen, Scientific Director of Lithography at Imec, a research and innovation hub for the chip industry.

The beam Lace will use to make chips is about the width of a single hydrogen atom, or 0.1 nanometer. ASML’s lithography tools use a beam of light that is about 13.5 nanometers; a human hair is about 100,000 nanometers wide.

Smaller transistors and other features would give chipmakers the ability to ramp up the performance of advanced AI processors well beyond the current capabilities. Lace’s technology would enable chip manufacturers to print wafers at what is “ultimately atomic resolution,” Holst said.

The Bergen-headquartered company’s Series A funding round was led by Atomico with additional investments from Microsoft’s venture arm M12, Linse Capital, the Spanish Society for Technological Transformation and Nysnø.

Lace, which declined to comment on its overall valuation, has developed prototype systems and aims to have a test tool in a pilot chip fabrication plant, or fab, around 2029. The company presented its findings in an invited research paper at a scientific lithography summit in February.

(Reporting by Max A. Cherney and Stephen Nellis in San Francisco; Editing by Muralikumar Anantharaman and Nick Zieminski)