Pragmatic Semiconductor secures £182m ($231m) investment led by M&G and UK Infrastructure Bank

Largest ever European semiconductor venture funding round supports further expansion of manufacturing in the UK.

Cambridge, December 6, 2023 -- Pragmatic Semiconductor, the world leader in manufacturing flexible integrated circuits, today announced that it has completed a first close of its Series D funding round, securing an investment of £162m ($206m). 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).

The investment will enable Pragmatic to accelerate its expansion plans in the UK to meet the growing demand for its unique technology from customers worldwide. This includes building its 3rd and 4th fabrication lines at its Pragmatic Park facility in Durham. Over the next 5 years Pragmatic anticipates building at least 8 manufacturing lines in the UK, creating over 500 highly skilled jobs in the North East and Cambridge.

Each line is capable of producing billions of chips that enable countless novel, fast-growing applications across multiple sectors including consumer, industrial, healthcare and beyond. Of particular interest is providing item level intelligence to trillions of fast-moving consumer goods via smart packaging that will improve reuse and recycling, transforming waste management, and enabling a circular economy. Other use cases include wearables, sensors and flexible controllers.

The majority of the investment secured (over 70%) is from UK investors who have been 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 use cases. In addition, the significantly lower carbon footprint of Pragmatic’s semiconductor manufacturing compared to traditional silicon chip fabrication was cited by investors as a key factor.

Commenting on the funding, David Moore, Pragmatic’s CEO 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.”

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.”

About Pragmatic Semiconductor

Pragmatic is the world leader in flexible integrated circuit technology. Founded in 2010, the company is revolutionising 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, our foundry provides highvolume 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 sets the standard for smart, sustainable semiconductor manufacturing. When fully operational, it will be the highest-volume semiconductor manufacturing facility in the UK. Pragmatic is headquartered in Cambridge, UK, with manufacturing operations in the North East.

Pragmatic was advised on the Series D funding transaction by the dedicated Venture & Growth Banking team at Lazard and by leading global technology law firm Wilson Sonsini Goodrich & Rosati. Analysis of historical semiconductor venture funding rounds conducted by Lazard based on data from Pitchbook.

www.pragmaticsemi.com

About UK Infrastructure Bank

The UK Infrastructure Bank was announced as part of the Government’s National Infrastructure Strategy in 2020 and launched in June 2021. The Bank’s objectives are to help tackle climate change and to support regional and local economic growth.

The Bank is operationally independent from Government and projects are assessed by the Bank and approved through an Investment Committee.

About M&G

M&G has a rich heritage of investing in private markets. Through a range of strategies in its £74 billion Private Markets business, it invests in real estate, infrastructure and private companies. It launched Catalyst in 2021 – it is a £5 billion purpose-led flexible private markets strategy which invests in innovative solutions to some of the world’s biggest environmental and social challenges on behalf of the £129 billion Prudential With-Profits Fund and its circa 5 million customers. M&G plc is also a signatory of to the Mansion House Compact.