Fusion startup Helion has been awarded $175 million in federal funding to research, develop, and manufacture advanced semiconductors and power electronics for its fusion power plants, the company announced on Thursday.

Currently, those devices lose about 5% to 10% of the electricity that flows through them. While those losses seem small, they can compound themselves in a complex system like Helion’s.

“If we can cut that loss in half, that’s actually twice the power output of the fusion system,” David Kirtley, co-founder and CEO at Helion, told TechCrunch.

Helion has been racing to complete its first power plant, Orion, in time to meet a 2028 deadline to provide Microsoft with electricity from the grid. Funding from the award will help Helion build automated semiconductor module, packaging, and testing capacity to supply the fusion machine that’s currently under construction.

The new production line, to be built in Washington State, will be the first in the U.S. to make a class of semiconductor that is used not just in fusion power, but in manufacturing, wastewater treatment, medicine, and defense.

“There are no U.S. manufacturers right now that do it,” Kirtley said.

“This is absolutely enabling going from zero to 100 for advanced, high-voltage and pulsed semiconductors here in the United States.”Fresh funding The three-year award was made by the Department of Commerce under the CHIPS Act, a Biden-era law that seeks to bolster semiconductor module research, development, and manufacturing in the U.S. Alongside the federal funding, Helion also announced a fresh $50 million private investment, though it didn’t disclose the investor. In total, Helion has raised more than $3.2 billion, making it the second-best-funded fusion startup.

More than $100 million will be set aside for semiconductor and advanced packaging R&D in Washington State, while approximately $80 million will support R&D efforts in Vermont for advanced semiconductor tooling, design, and process development with GlobalFoundries, Kirtley told TechCrunch. Separately, GlobalFoundries has received more than $80 million from the federal government to advance the manufacturing of gallium-nitride semiconductors, a type that is widely used in power electronics.

Kirtley acknowledged that the R&D funded by the award won’t make its way into Orion in time for the launch — federal contracts can take months to negotiate — but he said they promise to help improve the efficiency of subsequent Helion power plants, which would improve their competitiveness in cutthroat electricity markets.

Efficiency is everything Semiconductor efficiency is key to Helion’s approach to fusion, which harvests electricity directly from the fusion reactions rather than using them to heat steam to spin a turbine.

The startup is developing a reactor known as a field-reversed configuration. Fusion fuel gets injected into both ends of an hourglass-like chamber, where it’s heated to form a plasma. The plasmas are then accelerated toward each other using magnetic fields. When they collide, another magnetic field compresses the ball further, raising the temperature to over 100 million degrees C.

At those temperatures and pressures, atoms in the fusion fuel start fusing, releasing energy in the process and pushing the plasma outward. This force pushes against the magnetic field, and that energy is captured by the magnets and capacitors and turned into electricity — think of how a hybrid car or EV recharges the battery by using electric motors to slow the vehicle.

Helion says that approach, known as direct energy conversion, will help future reactors produce more power than they need to operate, a milestone that any fusion power plant must reach if it is to be commercially viable. Efficient power electronics are a key part of the process.

“One of the enabling parts of our technology that allows us to do this direct electricity recovery — putting electricity into fusion and at a very high efficiency, recovering it at high speed — is the modern semiconductor,” Kirtley said. “We’re going to take that to the next level here, increase the efficiency.”The energy sector isn’t the only place where advanced power electronics could have an impact. Electric vehicles represent the broadest use today. Consumer electronics could benefit, too, though there the size and power demands are lower than Helion’s.

The defense industry is likely to be another beneficiary. Energy weapons have garnered fresh interest as drones have swarmed battlefields and overwhelmed existing air defense weapons. Bill Frauenhofer, who leads semiconductor investment and innovation at the Department of Commerce, acknowledged in a press release that the award will help “convert and deliver power to critical applications in defense, grid transmission, and advanced energy generation.”Despite the potential for defense contracts, Kirtley said Helion remains focused on putting power on the grid. “Domestic energy supply, national security through energy dominance and energy security — that’s our main focus,” he said.