The U.S. government has committed to investing up to $150 million in xLight, a semiconductor startup pioneering advanced chip-making technologies. This recent funding is notable as it positions the federal government as a significant equity stakeholder in the company, marking the third instance of such investments under the Trump administration.
According to a report from The Wall Street Journal, the Commerce Department will channel this investment to xLight in exchange for a substantial equity stake, likely establishing it as the startup’s largest shareholder. This initiative is funded through the 2022 Chips and Science Act and represents the first award under this act during President Trump’s second term, although the agreement remains in its preliminary stages and could be subject to modifications.
The federal government’s previous investments include stakes in major publicly traded companies like Intel, MP Materials, and Lithium Americas, among others. This trend has raised questions among venture capitalists about potential conflicts when private companies compete against government-backed startups, particularly during board meetings.
xLight, based in Palo Alto, California, aims to innovate within semiconductor manufacturing by developing particle accelerator-powered lasers, which are massive machines capable of producing powerful and precise light sources essential for chip production. If successful, xLight could disrupt the dominance of ASML, the Dutch company that currently holds a monopoly on extreme ultraviolet lithography machines.
Leading xLight is CEO Nicholas Kelez, a seasoned professional in quantum computing, who is assisted by executive chairman Pat Gelsinger, former Intel CEO. Gelsinger has expressed that this venture is personally significant for him and believes it could lead to advancements far beyond ASML’s capabilities. While ASML operates at wavelengths around 13.5 nanometers, xLight aims to target an impressive 2 nanometers, potentially enhancing wafer processing efficiency by 30% to 40% while consuming less energy.
Commerce Secretary Howard Lutnick has emphasized that this partnership is intended to strengthen national security and maintain technological leadership. However, critics remain divided on whether such taxpayer-funded investments signify a forward-thinking industrial policy or a manifestation of state capitalism intertwined with patriotic motives. Nonetheless, many acknowledge that these initiatives are essential as the U.S. navigates competition with other nations employing similar strategies to bolster their strategic industries.
