Cameron McAulay CA on how tech is changing the future of energy
With a new Nasdaq listing and demand for energy efficiency soaring, Transphorm’s semiconductors could be set to go into overdrive. CFO Cameron McAulay CA talks to Ryan Herman about gallium nitride’s potential to change the way we store energy
On 23 February, Cameron McAulay CA was at the Nasdaq in Times Square, New York. He and his colleagues had travelled from California to ring the bell for the close of trading and to mark the occasion of Transphorm, a leading manufacturer of high-voltage power semiconductors, being “uplisted” on to the second biggest stock exchange in the world. It was a significant milestone, not just for a company that was founded 15 years ago, but also as the culmination of two years’ work for McAulay, its CFO.
The semiconductor is the product on which Silicon Valley’s fortunes were built. Transphorm differs from its many competitors by using the chemical compound gallium nitride (GaN), something that could have a profound effect on the energy sector as we try to reduce consumption along with our reliance on fossil fuels.
Speaking with CA magazine, McAulay presents two power adaptors – one uses a silicon semiconductor; the other, which is both significantly smaller and five times more powerful, GaN. “It’s more power efficient and has more power density. This means, when swapping silicon semiconductors for GaN ones in any power supply, you can get much more power out of the same size supply unit, or the same power out of a smaller unit,” says McAulay. “And we’ve got semiconductor products that can go from power adaptors all the way to cars, which is like going from 45W to 10kW or more.”
Because silicon-based chargers heat up as they are used, they lose more power than the more efficient GaN-based ones. McAulay says: “Across every application, we reduce those energy losses and increase power. Our technology provides a lighter and more effective solution.”
Applying that technology to electric vehicles (EVs) is where Transphorm hopes to make the great leap forwards, both financially and environmentally. A GaN on-board charger would be quicker to charge and increase driving range, perhaps overcoming the single biggest factor behind “EV hesitancy” – namely the distance an EV can travel without needing a charge point.
As McAulay says: “In America, everyone drives cars. I live in San Jose, which is 270 miles from Transphorm’s HQ in Santa Barbara. That’s not an easy journey to make in an EV right now. When someone produces a car that has a 500–600-mile drive range, and it’s relatively cost-effective, that’s going to be an absolute game-changer.
“California’s Governor, Gavin Newsom, is talking about having only electric vehicles within a pretty short period [by 2035]. And for companies like us who can help to make that change happen, it’s a great opportunity.”
From the ground up
While GaN-based semiconductors are more expensive to produce than silicon ones, and its use in EV chargers is still in development, GaN adoption is increasing rapidly in adaptors and datacentre and crypto-mining power supplies, for example. Transphorm’s Nasdaq listing will be crucial both for exposure and for enabling McAulay to go out and sell the business’s products.
“A lot of my time is spent talking to investors and analysts to make sure people understand the strength of our story and the company’s potential. We’re growing, but there’s still a long way to go,” he says. “And there are huge markets where we can displace silicon. So listing on Nasdaq is a wonderful way to give us a broader platform to spread the story and to talk more about Transphorm.
“A lot of work was done to raise money to shore up the balance sheet and to make sure that we’ve got a really solid financial platform, because one of the things they’re not looking for is companies with ‘going concern’ issues. You have to be able to address such areas: do you have a good compliance structure? Do you have a strong, independent board? Do have you have a good cash position and balance sheet? Are you growing as a business?
“We raised $60m (£46m) over the latter part of 2021 through a combination of strategic and institutional investments and loan conversions. That allowed us to go back to Nasdaq and say we have this really good financial platform that we can use to invest in the business, invest in people, invest in capital and grow.”
McAulay’s passion for the growing business is informed by nearly 20 years in semiconductor manufacturing, which has taken him from Greenock to California. “I worked with National Semiconductor in Scotland, where the CEO was a CA called Don Macleod. It had a programme that each year gave one of the team an opportunity to come out to Silicon Valley. That was too good to pass up.”
So McAulay packed his bags to go and work in the company’s San Jose offices. “National Semiconductor did a great job of growing people. I worked in manufacturing and the product line and the internal audit group. Then, after a stint at KLA, I got the chance to join Transphorm as CFO in 2015. It was a KKR-backed company [the private equity firm invested $70m shortly before McAulay joined]. I knew about GaN and its capabilities. And again, I just couldn’t say no.”
Right now, however, every company making semiconductors, be they silicon or GaN, faces one huge challenge. Even though more than one trillion semiconductors were shipped in 2021, it wasn’t enough to meet the demand, largely because of supply chain issues caused by Covid-19.
McAulay explains, “Silicon is plentiful. Gallium and nitrogen are plentiful. The challenge has been in normal components of semiconductors, such as the core materials used for the power transistor packages. Part of my job at this point is planning ahead in the supply chain because what used to be a 12-week lead time is now a 25–35-week lead time. What we have to do is keep feeding the demand that the company has and keep growing the revenue.
“Semiconductor sales are going up 20% year on year, and you’re seeing more companies pour money into capital expenditure to grow capacity. And we’re no different. So, we’re ordering much earlier than we otherwise would have done, because we want to continue to grow despite the challenging circumstances. And I think it will be challenging – certainly for the short term, at least.”
Surging fuel prices may have consequences for Transphorm and the semiconductor industry, potentially fuelling interest in GaN as an alternative to silicon and accelerating investment in and adoption of both EVs and GaN batteries.
The pandemic has also built resilience into Transphorm. Its plan to go public was made six weeks before the US started imposing Covid restrictions. For McAulay, it meant keeping a cool head, providing clarity and drawing on his experience and training as a CA.
“What you learn from going through that process with ICAS is a bedrock of behaviours,” he says. “Even when I was at a smaller firm, I was learning how to communicate finance to non-finance people. I still call on that every day. That ability to communicate with any part of the business is a very important one.
“Another thing I still take from becoming a CA is you have to really make sure you understand the business and the environment you work in. The CA isn’t just an accounting qualification, it’s also a business qualification. At the time I was going through qualification, I underestimated that value.
“Then, moving to the US brought out a certain side in me, to be a bit more gregarious, which is a good thing. People here are more inclined to share their views. But the mindset of ‘getting things done’ is no different in Scotland than it is in the US.”
With investment pouring into the company and the sense that long-term global winds are blowing in its favour, Transphorm could be the perfect place to test that can-do mindset. “We’ve all worked so hard to get to this point and it’s now a case of taking things forward to the next level,” he says. “I’ve got no doubt that we’ve got the product to do it and we’ve got the team to do it.”