The maturation and scale of the silicon photovoltaic industry have resulted in a decline in attention from corporate and venture funding for solar-related start-ups. Mercom Capital reports a tepid $1.7 billion in corporate funding, a year-on-year drop of 71%, and $174 million in venture funding – a quarter-on-quarter drop of 57%. The drying up of available funding has led to a fairly sparse landscape of solar start-ups with a handful of remaining companies developing innovative technologies in each area of the solar taxonomy. While the quantity of start-ups has decreased as low-cost crystalline silicon panels pour out of China, the potential impact of those that remain could still prove to be as dramatic a disruptor to the solar industry as solar is to the broader power industry. In this light, Lux Research has determined five solar start-ups we spoke with this year that have achieved the most progress: Continue reading
What They Said
Today gallium nitride (GaN) power electronics developer Transphorm announced it acquired an exclusive license to the GaN IP from Furukawa Electric; the Japanese firm also became an investor in Transphorm and expressed willingness to have “further technical collaboration… as a strategic partner.” We spoke with Transphorm’s President and co-founder Primit Parikh in advance of the announcement, and he argued that the deal makes the California-based start-up the “dominant player” in GaN intellectual property, with rights to more than 650 patents and applications. Primit also emphasized that the firm believes that “now is the time for GaN.” He said the company expects commercial products making use of its GaN devices, such as solar inverters, power supplies, and adapters, to be coming to market in 2014, as it scales up products at its exclusive GaN foundry, Fujitsu Semiconductor’s high-volume fab, following its 2013 deal with Fujitsu (client registration required). With GaN-based devices becoming a commercial reality, he said Transphorm’s IP war chest will allow it not only to defend its position, but also be aggressive in enforcing product IP to give its customers an edge, as well – though Primit emphasized that it sees as its first priority growing the GaN market.
What We Think
Transphorm clearly has a strong patent position, with ample IP gained from its founding at UC Santa Barbara, its own internal development work, acquisition of Fujitsu’s GaN business, and other licensing deals like its agreement with Cree, in addition to what it’s gained today. More importantly, its funding, technology, and partnerships put it in a strong position to take a leading role in the GaN device market, which we do indeed see taking off over the next several years, reaching $1.2 billion in sales for 8% market share in 2020, with ample room to grow beyond then (see the report “Beyond Silicon: Plotting GaN and SiC’s Path within the $15 Billion Power Electronics Market” — client registration required). That said, as Primit acknowledged, the GaN space is not yet mature, and successfully launching products and taking market share from silicon-based devices will have to take precedence over dividing the spoils from GaN success. Transphorm still needs to execute well to stay ahead of other GaN start-ups like Efficient Power Conversion (client registration required) and GaN Systems (client registration required), as well as internal efforts at major players like International Rectifier and Sumitomo Electric. Its IP war chest will help it negotiate the inevitable cross-licensing deals from a position of strength as GaN comes to the market, but won’t substitute for excellent product and market development.
Furukawa Electric may be the even bigger beneficiary of the deal; as the announcement notes, it has had research on GaN since the 1990s, but it hasn’t been able yet to commercialize the technology on its own. Many companies fantasize about converting orphaned IP to revenue, but in practice, patent licensing isn’t an easy road; companies that are successful in turning patents into a steady revenue generator, such as IBM, typically also do significant custom development work along with licensing. Transferring technology to a start-up can be a excellent and relatively low-cost route to a royalty stream, but finding a company like Transphorm that’s well-positioned (and well-funded) to bring technology to market requires a stroke of luck. While Furukawa Electric will be glad to benefit from its past research and development (R&D) investments if Transphorm is indeed successful, clients with their own unused patents should be cautious about counting on a similar strategy – while keeping a sharp eye out for the right opportunity, should it arise.