Episode Transcript
Julia: Hello and welcome to the Be Inspired series. I'm Julia Hoggart, the CEO of the London Stock Exchange. In this series we get to interview founders, CEOs and senior leaders from UK listed companies and private companies from around the world to understand their journeys. And today, I'm absolutely thrilled to be joined by Dave Moore, who is the CEO of Pragmatic Semiconductor, and really just to dive in and understand the story of what is already a remarkable company. So welcome to the Stock Exchange Dave. It's great to have you here.
Dave: Thank you, Julia. It's a real pleasure to be with you today.
Julia: So, let's start, actually, with what Pragmatic does. It's a word that can mean lots of things, so what is Pragmatic Semiconductor?
Dave: Absolutely, glad to. So, Pragmatic Semiconductor is a UK based, world leader in flexible semiconductor chip technology. Founded in 2010, we're headquartered in Cambridge where I live now with my family, but with our manufacturing up in the North East in Durham, where we are ramping the UK's first ever 12-inch or 300-millimetre wafer fabrication facilities. We'll get into that a little bit more later.
Julia: Yes, absolutely.
Dave: The company has been on an amazing journey of innovation. It's bringing together thin film technology with state-of-the-art semiconductor processing. And what we do, we develop and manufacture flexible, ultra-thin, low cost and ultra-low carbon, very sustainable semiconductor technology. And that allows us to take that as chips and embed it in virtually any physical object on the planet.
Julia: This is something that came out of Cambridge University as well, I think, or certainly the Cambridge ecosystem. Is that right?
Dave: So the company was headquartered very quickly after it was founded in 2010 in Cambridge. The initial technology came out of some work in the University of Manchester and some other places. But essentially the company has been on an amazing journey of innovating the technology. Proof points on what is very disruptive in terms of the use cases it services, but also in terms of how it's sustainably manufactured. And now really looking at scaling up production to service global customer demand right from here in the UK.
Julia: We'll get into that, but let's kind of follow up with, how did you get to Pragmatic? What's your journey in this sector? And I get the sense that you've been in this world for quite some time.
Dave: Yeah, I am let's just call it a veteran of the semiconductor industry.
Julia: I wasn't implying that, but I get you.
Dave: You know it used to be a conversation killer, but now it's not because everyone thinks about chips all the time Julia. But I'm born and bred in Dublin, but then spent almost all of my career in Silicon Valley in the Bay Area in California. So I have that hybrid accent that confuses people all the time right now. Pragmatic came kind of little out of left field, you know I was exploring opportunities in the Bay Area. I was introduced to Pragmatic. I met with some of the investors and the chairman of the board. I just found it was a really, really exciting opportunity for many reasons.
Julia: So let's dig in a little bit about why it was exciting.
Dave: You know, when you look at the semiconductor industry, obviously chips top of mind in so many ways. It's a massive, massive industry. It'll be a trillion dollars in revenue, probably ahead of 2030 at this point. And like I said, it's been through a series and waves of incredible innovation and I think it underpins every element of our daily lives today in terms of transformation of industries. AI of course. But there are gaps too in terms of what silicon alone can do, and there's a lot of opportunity for alternatives to silicon. And so that's really where Pragmatic sees its opportunity. There is an opportunity to bring a more capital efficient form of production. A more sustainable, lower carbon footprint approach. A new form factor, which enables you to embed it seamlessly into all kinds of interesting use cases and examples. And overall the opportunity is considerable for Pragmatic to ramp into areas in consumer, industrial, healthcare and beyond.
Julia: And so is this pure play silicon in the way we think of it, or is this something different?
Dave: It's something very, very different in many ways. It uses a lot of the similar process steps that you would see in silicon, but it uses them in a very different way and with different materials. So what Pragmatic is doing is bringing together thin film technology which has been around and is used in display technology and other areas, it's bringing that together with state of the art, high volume 300 millimetre wafer manufacturing. And so I've actually got a show-and-tell. Sometimes it's easier just to show. So this here is one of our 12 inch wafers that's come off our Durham fab. So you can see it's 12 inches wide. Now on each of these wafers you could have 50,000 chips. On this particular one we've got one of our products here which is, you know there's probably about 10,000 chips on here. And so you can see it's extremely flexible. Extremely thin and light. Which means that it's incredibly suitable for a lot of really exciting applications where that form factor really lends itself well.
Julia: How it needs to be moulded or moved or...
Dave: Exactly. And so what we're doing from our fabrication standpoint is we are taking a more sustainable capital-efficient approach to manufacturing the FlexICs, that's what we call them 'Flexible ICs'. And that form factor and that low cost and that low carbon footprint opens up opportunities at scale in a wide range of use cases.
Julia: I think until a lot of people actually see up front how our chips get made nowadays, or how our semiconductors get made. We think of chips and you think of this solid thing for a start. And we think of them as initially quite big, because the things that we see kind of ourselves as normal consumers are probably still quite big in some regards. And then you realise that you're manufacturing these wafers that then can have thousands, tens of thousands of individual components on them that can be turned into chips. I mean it is quite remarkable what advanced manufacturing in this country is doing. I've seen other advanced manufacturers where we think of manufacturing output as a big warehouse, you know, with these big forklifts moving kit around, and you have advanced manufacturers where the size of a dining table would be a large amount of inventory.
Dave: Yes.
Julia: It's fascinating in terms of how much we've moved on and what manufacturing in this country really is nowadays I guess, and you're a prime example of that.
Dave: Yeah, and I think what really is so unique, too, you know, so we are ramping production of these 300-millimetre wafer prep production facilities in Durham in the North East. But Pragmatic Park, where we're housing that fabrication Julia, is an extinct ceramic pipe factory. So it's a 16,000 square metre extinct pipe factory. And inside is a state of the art wafer fab process and it's only 20 metres by 30 metres, so 600 square metres. But yet we can manufacture billions of these FlexIC's from that one line per year.
Julia: And that's an evolution of a shift in manufacturing, but it's manufacturing all the same and it's high-quality jobs and it's innovation happening in the UK. In the same way that that ceramic manufacturer would have been kind of cutting edge at the time when it was being done.
Dave: Absolutely.
Julia: And the logic for choosing the North East?
Dave: The North East has an amazing legacy of industrial talent, semiconductor talent, we have people at our Pragmatics Park site that have 30 years plus experience in semiconductor manufacturing. Also too I think, you know, we're incredibly proud of our UK heritage. I think being able to be headquartered in Cambridge with access to some of the most intensive innovation there is in the world, really. And then to be able to then kind of parlay that into expanding our manufacturing in the North East I think, has got a really high sense of return for us. Obviously we're investing significantly up there in the North East. We are adding a new line this year. By the end of the year, we'll be the largest manufacturer by wafer volume in the UK. And obviously creating a lot of jobs up there.
Julia: And they're very highly value-added jobs as well.
Dave: Absolutely. And the thing about manufacturing too, advanced manufacturing, there's lots of studies, lots of numbers out there, but for every one direct job we create, there's probably about five to six additional jobs in the ecosystem. So a tonne of economic engine development I think comes with this as well.
Julia: And this is an illustration of a model that I'm starting to see across the UK of this great innovation coming out of our universities and then parlaying it into advanced manufacturing in sites where we had other forms of classical manufacturing in the past. And being able to reinvigorate those areas and those industries. And let's get into the sustainability piece of it. Talk me through how one would understand the sustainability of your product versus alternatives?
Dave: It comes through in a few ways. I think fundamentally, as we discussed earlier, you see a lot of the similar steps process-wise that you might see in a silicon fab. But the difference for us is that there's far fewer. So I like to say we're simplifying semiconductor manufacturing, Julia, it doesn't make it easy.
Julia: I was going to say.
Dave: These films are like you know, nanometers thick. At the same time, what it means is we can, in tens of steps, produce a wafer versus the many hundreds of steps that you might have. Also the fact that in silicon processing typically you need higher temperatures, 5,000 degrees plus. We're doing most of our processing at much, much lower temperatures. So all of that combines to involve needing less energy.
Julia: Just overtly the process needs less energy.
Dave: The process needs less energy, less water, less harmful chemicals.
Julia: Can you talk me through the water bit? In simplified terms that don't necessarily go over my head and possibly our viewers' heads. How's the water component, water usage, how does one think about that?
Dave: It's there for a lot of the processing steps need to be done in conjunction with water and the water has to be ultra-pure. So highly processed water so we avoid particles and other contaminants coming into the process. But certainly on the advanced silicon node side the water demands are so extreme. One of the most intensive in the world in terms of manufacturing. Because we have fewer steps, we go from raw materials to that wafer that I showed you out in just days versus three to six months for silicon. Which allows us to be really agile, service customer needs very quickly. But it also means you've got less intensity for less time. It means an order of magnitude lower carbon footprint. And that's become increasingly important. At a sustainability level, too, there's our manufacturing being more sustainable, but there's also the kind of the solutions that we can enable with the technology. And so a big focus in bringing through smarter packaging for reuse, for example, being able to apply that to smart labels in apparel, cosmetics, food and beverage. Food freshness detection. So I think 30% of food being wasted is something that we can have a really big impact too. So there's the fact that we're inherently more sustainable from the ground up which is unique. But also too I think for us, what's most exciting is our vision is to empower innovation but for a sustainable future, and I think that's really important too.
Julia: Let's get into the use cases, but there's this intersection between sustainability and use case that I hadn't really kind of worked through in my mind before, which is the more efficient you can make the manufacturing process, the swifter you can make it. The more you can put something which feels like a very expensive, high value product into things that might seem more liminal I guess in a sense. Or things that you don't use as often or as permanently, but to do much more value-added things without having a greater carbon footprint than you would have done otherwise. So you just open up a use case set that we haven't had before.
Dave: That is exactly it, and then the piece of that too is to think of going from billions of physical items to hundreds of billions to even trillions of items. On one hand the economics need to work. The form factor is helpful when you picture embedding it into various goods seamlessly and robustly.
Julia: You were talking about clothing and I was just thinking, I mean my daughter is infinitely more focused on, she may buy something, but then she wants to put it on a website and sell it, but she equally wants to know that the thing that she's buying on the reverse is exactly the thing she thought it was. And I guess you could trace it from the original manufacturer all the way through to the people who'd had it and the confirmation that it was in fact that item all the way through?
Dave: Absolutely. The track and trace across the supply chain so you can know where the materials came from that actually made the article of clothing. I think for the reuse secondary markets, those things need authentication to be able to identify counterfeits, and so being able to do that with a tap of the phone across the entire life cycle of the article is the key. I think when you go beyond that into even just packaging and waste reduction in packaging. Having consumers be able to engage and understand how they can reuse packaging, recycle it and track and trace that across the supply chain is incredibly important too.
Julia: You've got the recycle and the sustainability component, but you've also got the flexibility component. Can you talk us through that a bit? How does one envisage it, if you're thinking, I mean, we've seen the movement of that wafer, but can you bring it to life in sort of practical terms?
Dave: Absolutely. You know in the most simplest examples, we're talking about something that's so ultra-thin you can embed it very seamlessly. So when you think about those smart labels, that smart packaging, being able to embed it seamlessly is incredibly important. I think in healthcare there are a lot of applications around just wearable health monitors for well-being. So the technology is great for connecting, but it's also great for sensing. So temperature sensing, humidity sensing. There's some things you just can't do with a rigid, hard chip. So picture wearables, where basically you need to be able to flex into very constrained spaces. AR or VR or glasses where you've got that really tight space you need to bend around the arm of the glasses. Those are areas where the technology is simply just unique. There's no one else today able to do the kind of analogue digital processing we can do in a flexible technology like Pragmatics.
Julia: Now if we talk about the runway and the roadmap, it would be remiss of me as we're sitting in the London Stock Exchange not to talk about the financing piece of all of this. And I think you kind of give the lie to the challenge that it's hard for British business to find financing and backing and find financing and backing from the UK, because I think that's exactly what you've had. How would you talk about your journey? And a bit about where you think you want to go next over the next period of time. Feels to me like kind of the sky's the limit, really, so it feels very exciting.
Dave: The opportunity is certainly massive in terms of the market opportunity, and in many cases it's there for the taking. Certainly our Series D fundraise that we announced end of '23, that was the largest ever European venture capital raise for semiconductors. So we were thrilled with that in what was a challenging environment. We were very, very, very encouraged by the fact too that over 70% of the funding was from UK sources.
Julia: Which is great.
Dave: Yeah, fantastic, fantastic and great for the company. I think great for great for the UK as well. We had M&G and UK Infrastructure Bank who are now the National Wealth Fund co-lead the round, but we had a significant follower and new investor interest both from the UK and abroad. The opportunity we've talked about, you know semiconductors are a huge opportunity. They've never been more strategic too. So our ability to, so I mentioned the fact that our manufacturing is really compact in terms of the fabs, they are just 600 square metres, they need less intensive resources. The other thing about that is that it's inherently localizable, and so certainly our investors looked at the opportunity for it to bring a very disruptive approach, a very capital efficient.
Julia: But also to create in a sense semiconductor security in a range of places around the world as a consequence of that ability to modularise the production.
Dave: Absolutely. I mean we've seen obviously, first of all we saw supply chain challenges and imbalances in COVID that impacted all of us in our daily lives. I think obviously the geopolitical tensions that led to various Chips Acts in the US and the EU in Japan to invest in domestic sources of supply. And then of course recently with the trade tensions and tariffs. All this is driving an opportunity and demand for new sources of supply. And the fact that we can be orders of magnitude more capital efficient for the right applications, really does set up a significant opportunity for us to service that demand in unique ways co-located with customers around the world as needed.
Julia: I mean, it's a remarkable story. Let's finish on one point. If you were to project forward five years, what would you like to see? What's your vision for what Pragmatic would be at that point?
Dave: I think, you know, our vision is to empower innovation and bridge the physical and digital worlds for a sustainable future. And so what I really do love most about Pragmatic and everyone who works for us and with us, is there is a deep passion for the opportunity to do that sustainably. And so that impact is something that speaks to us all and so clearly as I look five years out, I want the technology to have had that impact. It underpins solutions to some of our greatest environmental challenges by reducing waste. It made healthcare more accessible and more affordable to more people, especially in the developing world. I think ultimately in terms of the technology we will want to have scaled you know, significantly. We will want to be able to service global customer demand and we will want to have advanced the technology forward. There's so many exciting applications.
Julia: This is the thing I find in all of these Be Inspired series, is this sense of purpose. That there's always a thread of intense purpose at the heart of all of these things. And to have such a purposeful company in such an important sector, doing such remarkable cutting-edge things with a very British play. And it's wonderful so backed by British financing, is a perfect note to end and just a great thing to be able to say that we have in this country. I think we should do more to just amplify the existence of Pragmatic and the fact that it's there and it's something to be very proud of for the UK. So thank you for everything you and your teams are doing. Thank you for joining us today. And thank you for the story, because it's a remarkable story and exactly what the Be Inspired series is about.
Dave: Thank you for the kind words, Julia, and thank you for opportunity to be with you today too.
