Bill Derasmo and Dr. Raj Talluri, CEO at Enovix, explore the challenges and market demands driven by AI applications and the need for better battery performance in electric vehicles.
Host Bill Derasmo welcomes Dr. Raj Talluri, CEO at Enovix. Dr. Talluri, who holds a Ph.D. in electrical engineering from the University of Texas at Austin, leads Enovix in pioneering 100% active silicon batteries. These batteries address the limitations of current technology, especially in consumer electronics. The conversation covers Enovix's future plans, including a new factory in Malaysia, and explores the challenges and market demands driven by AI applications and the need for better battery performance in electric vehicles (EVs). Tune in to discover how Enovix's innovations are set to impact various industries.
Battery + Storage Podcast: Storing Gravitational and Hybrid Energy, With Dr. Raj Talluri, Enovix
Hosts: Bill Derasmo
Guest: Dr. Raj Talluri
Recorded: 8/30/24
Bill Derasmo:
Hello, and welcome back to the Troutman Pepper Battery + Storage Podcast. I am your host, Bill Derasmo, partner at Troutman Pepper. As we record today, we are into the back-to-school year part of the calendar. By the time you listen to this, I hope you or your children are off to a great start to the new school year.
Today, I am pleased to have with me Dr. Raj Talluri, the CEO of Enovix. Welcome to the program, Raj.
Raj Talluri:
Thank you very much. It's really my pleasure to be here to talk to you guys about the Enovix.
Bill Derasmo:
Well, great to have you on today. You have been the president and CEO of Enovix since January of 2023. Before that, you held several senior management positions at a number of other corporations such as Micron, Qualcomm, and Texas Instruments. You also have a Ph.D from University of Texas Austin. College football is kicking off in earnest this weekend, by the way. But why don't I give you a chance to introduce yourself and let us know how your career journey led you to Enovix.
Raj Talluri:
Yes, absolutely. That'd be my pleasure. I did my Ph.D work at UT Austin in electrical engineering. At that time, it is mostly in computer vision, image processing and those kinds of topics. I started my career at Texas Instruments. I worked there for about eight years in the research labs. Worked on many different programs. I was there for almost 16 years, and when I left TI, I moved from research to the business side, and I was running a fairly large, close to a billion-dollar division on making processors into smartphones. It's called the [name inaudible 0:01:33] processor.
Then I was recruited by Qualcomm. At Qualcomm, I started working on application processors, again in the smartphone space. I managed the application processor technology called Snapdragon, which is in quite a few Android smartphones. I think your listeners might be quite familiar with that. Then I also ran the IoT division there. From there, I was about nine years at Qualcomm, and then I was five years in Micron. I was running the mobile division, which sold the NAND and DNA into mobile phones.
Now, that's about 30 years of building chips for various consumer electronic applications. What I realized over that time period was that we've built some tremendous processors, tremendous memories and displays, and NAND devices, that really changed the experience of the smartphones, which we all love dearly, and other consumer electronic devices. But what I was finding out towards a later part of that my journey was that the bigger limitation now for us to have the next generation experience of the smartphones was really the battery because the processors run really fast and they do great things and memories are very fast and so on. Displays are really good. The cameras are fantastic.
But to really get the full performance out of those devices, the battery has become the limiting factor. So, I felt like this stage of my career, I should work on improving the battery technology so that all these chips that we built so far and continue to build will deliver the user experience that we all want. With the AI and Generative AI and machine learning applications coming to the phones now, the need for the battery life and the need for high-performance batteries is just only growing more and more.
So, that's how I ended up at Enovix. I will say a little bit more about Enovix, but it's a very – it's a truly differentiated company in terms of making 100% active silicon batteries, and that is only company that I know of that's making 100% active silicon batteries, and they have an advantage that they can deliver much higher energy density in the same form factor.
Bill Derasmo:
Well, thank you for walking through all that. I wanted to start by mentioning that we've had a wide variety of companies discussed in this program. We've had folks from other organizations as well. Enovix is a bit more mature than a number of maybe some of the recent companies we've had on. Enovix is a listed company on NASDAQ, stock ticker symbol, ENVX. Maybe we could just start with a quick discussion and understanding some of the story may have preceded your time as CEO of the company. But maybe we could just touch on the process of moving from a VC back company all the way to a publicly traded company on NASDAQ.
That must have been an exciting and maybe some days, scary journey, but if you could just touch on what that's like as a CEO for you, of sort of a newly listed company, relatively speaking, what that's like, and just share with our audience. Because I think a lot of people are interested in that investor, corporate side of things.
Raj Talluri:
Yes, absolutely. So, I'll say a little bit about the company first. I mean, the company has been there for almost over 16 years now. I think started by a few people from IBM. They had this vision that if you replace the graphite in a lithium-ion battery, which is the anode material, predominantly right now, ever since the lithium-ion could of batteries have been invented. With silicon, you can actually get much higher energy density because silicon has the ability to store much higher amount of lithium than graphite.
So, that is actually one of the key reasons why the energy density of batteries hasn't grown up a lot because traditionally all the batteries have been still with graphite. Now, it's not that easy to replace graphite with silicon because silicon, when you put in a battery, it takes a lot of lithium from the cathode and it deposits in the anode, but it tends to swell up and become really big like a balloon. You have to stop that silicon from selling and constrain it.
The company came up with some very clever ways to make silicon not swell through different ways of constructing the battery. That innovation is what really, has a promise of delivering much higher energy density. That was when the company went public, when they figured out how to actually do that. That was about, I guess, in ‘21 or so. And I was hired as a CEO last January to scale the company to the next level. Now, that we got the technology in a reasonable place, my job is to now build factories and build batteries at scale that really get into the customer markets, of which I have a lot of experience in scaling and running large businesses.
Now, it's a publicly traded company. Now, it went IPO before my time, so I wasn't quite there for that. But we're an early stage company. We don't have a lot of revenue, but our market cap is sizable. That means there's a lot of expectations from the street on the promise of the company and what we can deliver. My challenge is to manage the street expectations and continue to deliver the technology and get to secure to the next level where the evaluation we get is justified and continues to grow.
Bill Derasmo:
Yes, and the market cap and the materials I saw is over a billion dollars. So, I think there are high expectations, but well found that it seems. Maybe we could talk about that. You walk through the advantage of the silicon and explain to me, for the uninitiated, what you mean by active silicon. I’m the only one that has 100% active silicon because I think a lot of people may not know that off the cuff, so to speak.
Raj Talluri:
Understood. So, maybe I'll step back a little bit and talk about how lithium-ion batteries kind of work in a very simple way. I mean, there's a cathode and an anode and a separator and an electrolyte in a lithium-ion battery, and when you charge the battery, the lithium from the cathode goes and deposits itself on the anode. Traditionally, that's been a graphite. And graphite holds that lithium, when you discharge the battery, the lithium ions move back from the graphite anode to the cathode, and that's when you get current into the circuit you're powering. That's the basic concept of how lithium ion battery works, as I'm sure your listeners are familiar.
Now, what happens is when the lithium ions go from the cathode to the anode, if it spends graphite, it kind of sticks in the interstellar spaces. There's a bunch of spaces in the molecular, the cellular structure of the cathode itself, of the anode itself in graphite. That's where the lithium deposit itself and then comes back when you discharge it.
Now, when you use silicon, it actually combines, the lithium actually combines with silicon and forms some lithium, silicon, some kind of an amalgam, if you will. So basically, now it's a combination of silicon and lithium. Now, we it’s actually chemically combined. The silicon actually gets bigger or grows in size. That's the reason. It doesn't just sit there. It actually combines.
Interestingly, when you discharge it, silicon actually gives the lithium back, most of it anyway, so that the battery does work. But the biggest problem is this swelling of the silicon anode on charging that has to be contained. What Enovix does is we don't make batteries like jelly load batteries, and how traditional batteries are made, with anode and a cathode rolled into a big jelly roll. We actually slice the anode, slice the cathodes, the really thin strips, and stack them, one on top of the other. If you go to our website, enovix.com, you actually see some small videos that show you how that is done.
Then once we stack them, we're able to now put a mechanical constraint around it and hold it down so that the silicon doesn't down so that the silicon doesn't swell inside our battery. That is the main reason why we get that advantage. When I say active silicon, we don't use pure metal silicon. We use some compound of silicon, like silicon oxide, a silicon carbon, and so on, because those are actually much more stable and hold lithium much better.
Bill Derasmo:
Well, thanks for walking through that. I actually did go to your website, and I saw that the slicing. Now, I understand what you were talking about on the website, and I appreciate that. Well, it sounds like the company is involved in some very, I guess, product lines. So, talk to me about it, because I think on this podcast anyway, we haven't talked a lot about, like, I saw an investor presentation that you guys had there for smartphones, essentially, and we haven't talked as much about that part of the battery space. A lot of times we talk about grid scale batteries, or we talk about mobility, EVs. I know you're involved in some of that, especially with the EVS. But talk to me about some of these different product lines that maybe we haven't given as much attention on this podcast too.
Raj Talluri:
Yes. So, when you have a battery technology that actually just produces much higher energy density battery than conventional batteries, as you can imagine, the applications are many. I mean, we could sell them into headsets. We could sell it into AR, VR devices which is becoming very popular. Cell phones, like smartphones, computers, IoT devices, and the applications of this technology are also there in EVs.
But we, as a company, decided to focus on the first market that we will enter with our batteries is consumer electronics. The reason for that is in consumer electronics, I feel that there's really a need for a much better battery because all of us, I can easily motivate it by all of us have smartphones that we use and we all have this anxiety that the phone's going to run out of battery if we use it heavily. We all charge it in the night, but many times it goes out, you don’t get a full charge through the day, because as the applications now are coming in more and more, with 4k video, bigger cameras with all the AI-enabled use cases, the batteries are struggling to keep up.
So, we felt like that's an area if we provide a better battery, it just has a huge impact on the product and there's a lot of value to be unlocked. Just to give you a quick feel for your users, something like a ChatGPT now consumes much more battery than YouTube. It's actually stunning how much these large language models consume battery capacity. As that technology, the Gen AI technology get integrated into all the apps that we like to use, like social media apps and so on, the battery draw is only going to be more and more. So, there's a huge advantage to providing a much better battery.
Actually, something that people may not realize is that if you actually look at the smartphone batteries, over the last, I don't know, couple of decades, they've grown very little in terms of capacity. I mean, initially the batteries were like, let's say 400, 500 milliamp hours. Today they're more like 6,000 milliamp hours. That is quite a bit of a growth. But what you'll find out is that growth came from making the battery bigger. Because as the size of the smartphone got bigger, as a display got bigger, the battery size itself got bigger, and that is so we got more capacity.
Now, unfortunately, the phone has gotten so big, you can’t make it any bigger because it would not fit in your pocket. So now, you find that the energy density increases much, much lower, much less so. For example, you know, from the ‘14 smartphones to ’15, 2023 smartphones to 2024 smartphones, we saw in the premium tier, the energy density went up by like 2% which is really, really low. Whereas Enovix technology has the potential to provide up to 20% to 30% increase in energy density from generation to generation, because we're able to replace graphite with silicon.
So, that is the story that we can provide much better energy density in the same space without them making the battery much bigger.
Bill Derasmo:
Well, that's the headline, right? It’s energy density is the key, and you guys have your secret sauce, the use of silicon as you walk through, and you walk through in great detail on how it works inside the battery. So, that's really the story, I think, at the heart of the story for you guys. That's really interesting, just in general, for the audience, to hear about smartphones and to hear about the challenges of increasing battery capability and life. I didn't realize that the improvements for batteries have been incremental and they really need to be exponential at this point.
I'll add one more point that I think a lot of our audience will understand because of the macro issues associated with it. But AI is a tremendous, just almost has an insatiable appetite for energy. We're seeing it at the grid scale. The story in the industry, almost the only thing you ever hear about now is how we have tremendous load growth on the system because of the need for increased data center capacity. Why do we need to increase data center capacity? Well, because of the growth of AI. So, that's sort of the macro level. And you're talking about at the more micro level, at the smartphone level, just demands that it puts for energy.
So, it's very interesting to see how these ripples through, and it's rippling through down to the consumer product level. That's just to bring the story full circle, and I appreciate you walking through all that. Again, it sounds like you guys have a good story to tell, as far as the use of silicone anodes. But in terms of EV batteries, how are you playing in that space?
Raj Talluri:
Yes, absolutely. So, just to round out your comment on storage and cloud versus, I guess, we call it the edge, which is where these things terminate. What I've found is that whenever there's innovation that comes in on the cloud, whether it is storage or whether it is energy density or whether it's AI, it just quickly flows down into the edge because of – you don't want to – like Gen AI applications, for example, you don't want to upload all your search windows, everything that you do, all your pictures onto the cloud for private reasons. You actually want to do some of the processing on the edge. So, the same AI technology that actually works in the cloud, you will need to run it on the edge in some applications.
That's why whenever these technologies come, they have impact both on the cloud and on the edge and that's kind of what we're seeing. Smartphone is just one application. I mean, PC is the same thing. All the IoT devices and the big market that's coming up is AR, VR headsets. They’re exactly, even more pronounced, because not only AI, but the process, the memories have to be on all the time and create this great user experience. So, there the batteries –you've seen the, I guess, the Apple Vision Pro, barely last two hours before you have to charge the battery. For a $4,000 device, that's a pretty big problem there.
Yes, so I think applications for our technology quite a few, and we're super excited by that. Now, what we're finding in EVs is slightly different. There, yes, energy density is important, but actually what's even more important is the ability to start to charge the car really fast. Because what's happening now is people are not going out and putting bigger and bigger batteries in EVs, because now you find stations to charge the batteries coming up quite fast, everywhere in the infrastructure. But you go to the stations when you start charging, you have to sit there for an hour, two hours before they're fully charged. Whereas when you're filling gas, you just fill gas and leave in 10 minutes. That is the problem that needs to be solved now.
Now, the problem there is the conventional batteries in the existing EV market, when you charge them, they heat up really fast. That's the reason why it takes so long to charge them. Our battery, the way we construct it, has an advantage that we get rid of heat really, really quickly. We have the ability to charge much faster than a traditional battery architecture, and that's the kind of advantage we are seeing now for our architecture in that space. Then they use slightly different materials, maybe not silicon anodes, maybe some other form of silicon. Maybe some people even use lithium.
We are material agnostic. Our architecture itself lends itself to fast charge capability and also lend itself to holding down materials that expand from not expanding. So, that's the attraction that we are seeing from some of our customers in the EV space, is the ability to charge really quickly and not heat up as much.
Bill Derasmo:
It makes sense. That to me is one of the number one issues, really, in terms of the EV batteries, is fast charging, right? I mean, the range anxiety and then it's like, “Well, okay, but if I have the charge, how long is it going to take me to do it?” So, I think people are interested in electric vehicles, but they've run into some of these basic problems. It sounds like that is the important issue, is fast charging. With that, now you say you're sort of technology agnostic, so just walk me through how your system beats that fast charging issue?
Raj Talluri:
Yes, what happens is that, when we put the anodes and the cathodes into these really thin strips and stack them, we are able to get rid of the heat from the center of the cell to the periphery of the cell much, much faster than a rolled jelly roll because of the way our electrodes are stacked. Again, there is some information on our website about that.
It's just that when you roll, when you jelly roll a cell, they're all wound up like that so the heat doesn't come out as quickly. But whereas for us, the short of distance to go out, and we have mechanical constraints that holds a cell down, which is metallic, and that dissipates the heat too. Those are like the two big reasons why we're able to charge much faster because we can get into the heat much quickly.
Bill Derasmo:
Yes. You mentioned that at the outset when we started talking about it, is that the problem is the batteries heat up too much under conventional technologies if you try to charge too fast. So, I understand that issue now a lot better too. So, I appreciate that explanation. It's probably interesting for you as an engineer with a Ph.D in engineering when you have to explain this stuff to a lawyer like me. But it's a good test, right? If you could explain it to somebody like me, then you can explain it to anybody. So, appreciate all those explanations.
Raj Talluri:
No, I always felt, if you understand something well, you can explain it very simply.
Bill Derasmo:
Well, it sounds like you guys are at the bleeding edge of on a lot of these issues. Who are some of the companies or parts of the industry who you're working with right now, Enovix, is?
Raj Talluri:
Yes. We work with all the top cell phone makers. We've sent them all samples of our – most of them are samples of our battery and then various stages of testing them. We've sent it to quite a few PC makers. We've sent it to a couple of automakers. So, the batteries are all in various stages of testing and validation at our customers. Now, we're just in the process of, building out our factory. We're actually building it in Malaysia, in Penang. I just came back from it. We had a grand opening last month, actually earlier this month, and we are in the middle of producing cells from there.
We are a small factory here in Fremont, California, more like a pilot line to kind of prove out the technology. But our high-volume manufacturing is in Penang, and we hope to get samples from there to our customers, in third quarter or fourth quarter. Then, we expect those to, after testing and validation go to production sometime next year. So, it’s just at the cusp of getting to scale.
Bill Derasmo:
Excellent. So, working with a lot of different OEMs, as they say, original equipment manufacturers. Usually, when we think of OEMs, I think of auto companies, but I guess in this case, it's the cell phone companies as well, or smartphone companies, but that all makes sense. I saw your headquarters in Fremont, California and you got the factory in Malaysia. I thought you also had a presence in India, maybe?
Raj Talluri:
Yes. We had just recently started a development site, an R&D site in India, just early stage in Hyderabad. We can hire a lot of very good electrochemists in India because they have some very strong schools in science and technology. So, we are there, we are working on electrochemistry and we're also working on some ways to improve the cycle time of how quickly we make a make a battery. Because we have a lot of data on how these materials interact to produce the right energy density, and we are finding now that we can build models and even machine learning models to predict what kind of materials we should use next to get even higher energy density and better cycle life and so on.
So, that's the work we're doing in India is more like an R&D facility. Super excited by that. I was just there last month. We built some really strong teams there. We also have a facility in Korea, in Nonsan, where we acquired a company that makes traditional graphite batteries. But these batteries actually, they also have coating capability, which is what is something that's needed. Because when we get the silicon anodes and silicon in cathodes, we get them as powder form, and we have to code them on top of electrodes. That's the facility that coats them for us. Then we ship them to Malaysia, and that's where we make the batteries.
Bill Derasmo:
Interesting. So, what about battery separators? Do you guys have proprietary technology for the separator? Or do you work with third parties on the separator?
Raj Talluri:
We work with third parties. We actually buy the separators. We buy the cathode powders. We buy the anode powders. We buy the electrolytes. We actually buy all the materials and go into the battery. We're a battery manufacturer. But our know-how is how to take all those different materials and put them together in this architecture to get the best energy density.
Bill Derasmo:
Okay, interesting, interesting. Now, do you have your eye on the United States Inflation Reduction Act, domestic content type incentives? Have you given some thought as part of your business strategy?
Raj Talluri:
We have, but the way we manufacture the batteries is still fairly – we don't make materials. We make batteries. So, in that sense, there's a lot more people involved and infrastructure. For us, it made more sense to have a factory outside in Asia because all the materials that go into the battery come from Asia and we actually ship the battery store Asian OEMs. So, it's made more sense to actually have it there. But we do have a lot of R&D in the US. In Fremont, we have many, many Ph.Ds working on this. So, manufacturing, but we have a lot of R&D.
Bill Derasmo:
Sure, excellent. Excellent. Well, I really appreciate you spending some time with us today. I know you must be very busy and as you scale up this company, as you mentioned. Really appreciate you taking the time. Thanks for being on our program and I'll give you a chance if you want to add anything before we wrap up.
Raj Talluri:
Thank you so much. It's really my pleasure to be here and I've been super excited by the technology we're building and hopefully we’ll have a huge impact on smartphones, computers, IoT devices, and in time, cars. Really fun journey we are on and I really appreciate having the opportunity to talk to your audience about that.
Bill Derasmo:
Well, thanks again, and certainly it's timely because we're going to need this energy density as we try to deal with the challenges that AI are going to present in terms of energy demand. So, we really appreciate it, and we'll leave it there. Until next time, thanks very much.
Raj Talluri:
Thank you. Bye-bye.
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