German next-generation chip firm bags $274 million in funding as Europe ramps up semiconductor push

Black Semiconductor, a startup aiming to create next-generation chip technology, on Wednesday said it raised 254.4 million euros ($274 million), mainly from the German government, in a further sign that Europe is ramping up its push in the critical components.

The German Ministry of Economic Affairs and the Germany state of North Rhine-Westphalia invested 228.7 million euros of public funds. Porsche Ventures and venture capital firm Project A led the remaining 25.7 million euro equity portion of the funding.

Black Semiconductor said the money will be used to build a pilot production facilty in Aachen, Germany, with the aim of mass-production in 2031. The startup will also look to grow its headcount from 30 to 120 employees by 2026.

The investment in the Germany semiconductor company, backed by public finances, underscores Europe's ambition to keep up with the U.S., which has unlocked billions of dollars of funding to boost manufacturing of chips on its shores.

Europe is home to some important semiconductor companies, such as ASML in the Netherlands, but has never had a strong position in manufacturing. Asian companies such as TSMC in Taiwain and South Korea's Samsung dominate chip production.

"Germany understood, and the whole European Union understood, that it's important to have a say on the table and sovereignty doesn't mean that you have to copy everything into Europe that doesn't make any sense but that you can put something on the table," Black Semiconductor CEO Daniel Schall told CNBC's "Squawk Box Europe" on Wednesday.

"What we can do in Germany and in Europe is on the design side," Schall added, discussing Europe's strength in the semiconductor supply chain.

Black Semicondcutor is looking at next-generation technologies. Different chips typically need to communicate with each other in a device or data center. Black Semiconductor is looking to use graphene to connect many chips together, to allow communication. The system would use light rather than electricy to transmit data, which the company says would boost the efficiency and speed of chips.

Graphene is known as a light but strong material and a good electricity conductor.

"We are ahead of the game," Schall said, touching on why the German government decided to invest in the company.