The race to produce more chips has begun, and Europe is in it. ASML, the Dutch company that has a near monopoly on manufacturing the machines used to make chips, will soon cease to be an isolated success story.

Like its American counterpart, the European Chip Law aims to encourage the semiconductor industry, partly thanks to state subsidies. One of the beneficiaries is QuantumDiamonds, a German startup that applies a novel approach to chip inspection.

With the approval of the European Commission, the German Federal Ministry of Economics and the State of Bavaria have granted it 76 million euros in non-dilutive financing. The startup will use it to establish a new facility for the production of semiconductor test equipment in Munich as part of a $178 million investment plan it had already announced.

QuantumDiamonds, a spin-off from the Technical University of Munich (TUM), has also raised a €15 million capital round led by venture capital firm World Fund, TechCrunch has learned exclusively. The company declined to disclose its valuation but said its round was also backed by Bayern Kapital and existing investors including Creator Fund, Earlybird, First Momentum, IQ Capital, Onsight Ventures and UnternehmerTUM.

CEO Kevin Berghoff told TechCrunch that raising the round was a fairly quick process, as QuantumDiamonds was able to demonstrate customer traction. “We work with almost everyone in the chip ecosystem,” he said. With huge demand for all types of chips, there is equal demand for solutions to speed up the manufacturing process and improve performance.

By compressing a defect detection process that typically takes weeks into a two-minute inspection that doesn’t stop production lines, QuantumDiamonds says it can help companies like Taiwan-based Foundries and Korea’s Memory Makers save hundreds of millions of dollars.

This means its hardware typically pays for itself in a couple of months, Berghoff said. It also leaves room to cover the subscription fee the startup charges for on-site support and for its software, which interprets the data and typically gives customers a strong indication of what they need to address in their manufacturing process.

Behind the scenes, this is one of the first real use cases for quantum technology: unlike chips, quantum sensing is already operational in its ability to generate magnetic fields that detect defects with high precision, and that’s all customers care about. “They don’t care about anything that’s quantum,” Berghoff said with a laugh.

Presumably, they don’t care about diamonds either, but in case you’re wondering, they’re synthetic. What QuantumDiamonds do is take advantage of their smaller properties to observe how electricity flows through the chips. Compared to current inspections, which look at the top layer of a chip with a kind of microscope, this has the advantage of detecting defects in all layers, without destroying the chip in the process.

This capability could be particularly relevant as chips have more and more layers. Startups like Semron have been developing 3D chips, and the industry seems to agree that this is the way forward for AI data centers, Berghoff said. “The thing is, transistors can’t get smaller, so to get the same power and calculation, you have to start adding more and more layers.”

Large competitors, including “100 billion market cap U.S.-based inspection companies,” will likely adapt at some point, but QuantumDiamonds has first-mover advantage, Berghoff said. “There are no American or Asian companies that have shipped those tools.” The startup has already left the laboratory and is on its way to moving from its clients’ laboratories to their factories: the semiconductor manufacturing plants.

“What we have now is a tool for a laboratory environment, where you do sample-based testing and test maybe one in a million chips,” Berghoff said. “What we now aim to do is also perform high-throughput testing, which means 100% quality control can be done in the factory itself.”

These machines are expensive, although it depends on how you compare them, Berghoff said. “We’re in the single-digit millions for lab tools. And the high-performance system could cost $10 million to $15 million; but it wouldn’t be anywhere near the ASML machines that [cost] maybe 400 million dollars. It is expensive, but for them we are quite cheap.”

The comparison could work in other ways. “[QuantumDiamonds] can become Europe’s next ASML,” wrote Daria Saharova, managing partner of the Global Fund, in a statement. That’s venture capital optimism for you, but it could also play out differently. “ASML also wants to do more [when it comes to] inspection, so they are a typical company that could buy us at some point,” Berghoff said candidly, although ASML recently said it is not very interested in mergers and acquisitions.

For now, QuantumDiamonds may be more like another company in the Global Fund’s portfolio: IQM, the Finnish quantum company that recently went public. Both companies come from Europe’s deep tech breeding ground and aim to leverage European support and funding to go global.

QuantumDiamonds is still early in its journey, but 2026 has been a year of international expansion for the startup, which opened a regional center in Taiwan and completed its first commercial deployments in both Taiwan and the US, where it installed a system at Eurofins EAG laboratories in Sunnyvale, California.

However, its new funding will also create jobs in Munich, where most of its 70-person team is based. That’s also where Berghoff and his co-founder and CTO, Fleming Bruckmaier, plan to double their engineering team over the next 12 months, tapping into affordable talent with both quantum and semiconductor expertise. “We have what we need here to ship overseas,” Berghoff said.