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Chemicals used in air conditioning, freezers and refrigeration have long hurt the environment by destroying the ozone layer and polluting water sources, but technology is starting to change the way we keep cool.

Phononic, a startup based in Durham North Carolina using a material called bismuth telluride to make so-called cooling chips, on Wednesday (July 21) said it raised $50 million (S$68 million) from Goldman Sachs Asset Management. (GSAMB.UL)

When electricity runs through the chip the current takes heat with it leaving one side of the chip to cool and the other to heat up, said Tony Atti, Phononic co-founder and CEO.

The chips can be as small as a fraction of a fingernail or as big as a fist depending on how much coolants are needed and have been used to create compact freezers for vaccine transportation or for ice-cream at convenience stores like Circle K, he said. A more recent and fast growing use is to prevent overheating in lidars, laser-based sensors in autonomous cars, and optical transceivers for 5G data transmission, said Atti.

"The historical refrigerants that had been used for vapor compression systems, they are both toxic and global warming contributors," said Atti. While the global warming impact had been reduced, refrigerants still had issues with toxicity and flammability.

Atti said while the bismuth telluride powder itself is toxic, when it is processed into a semiconductor wafer and made into a chip, it is "benign" and can be recycled or disposed as its meets all chip safety and disposal standards.

The cooling chips are manufactured in Phononic's own factory in Durham and for mass production the company is working with Thailand based Fabrinet (FN.N) . The freezers for vaccines and ice-cream are built in China by contract manufacturers and carry the brands of Phononic's customers or in some cases are co-branded, he said.

The funding will be used to build out high-volume manufacturing and to expand Phononic's markets and product line.

Atti declined to share the latest valuation of Phononic but said it was "north of half a billion dollars". Previous investors include Temasek Holdings (TEM.UL) and private equity and venture capital firm Oak Investment Partners.