The Trump administration has recently announced a significant investment of up to $150 million in xLight, a semiconductor startup focused on developing cutting-edge chip-making technology. This move marks the third instance of the U.S. government taking an equity stake in a private startup, following a controversial strategy that has seen Washington become a major shareholder in American companies.
According to a report by The Wall Street Journal, the Commerce Department is set to provide funding to xLight in exchange for an equity stake that is likely to make the government the startup’s largest shareholder. This funding comes from the 2022 Chips and Science Act and represents the first Chips Act award in President Trump’s second term. However, the deal is still in its preliminary stages and subject to change.
This investment in xLight follows previous government equity investments in companies like Intel, MP Materials, Lithium Americas, and Trilogy Metals. Additionally, two rare earths startups received funding from the Commerce Department in exchange for equity last month, further expanding the government’s involvement in the private sector.
The decision to inject funds into xLight has sparked mixed reactions in Silicon Valley, known for its libertarian ethos. Some venture capitalists have expressed concerns about the implications of government-backed startups competing against privately funded companies. However, xLight is pursuing an ambitious goal in semiconductor manufacturing by developing particle accelerator-powered lasers to create more powerful and precise light sources for chip production.
The startup’s CEO, Nicholas Kelez, a quantum computing and government labs veteran, is leading this endeavor with the support of executive chairman Pat Gelsinger, the former Intel CEO. Gelsinger, who is also a general partner at Playground Global, led xLight’s recent $40 million funding round and is deeply committed to the company’s success.
xLight aims to challenge the dominance of ASML, a Dutch company with a monopoly on extreme ultraviolet lithography machines. By targeting 2 nanometers compared to ASML’s 13.5 nanometers, xLight’s technology could significantly improve wafer processing efficiency while reducing energy consumption.
Both Kelez and Gelsinger will be sharing insights at JS’s upcoming event, where the government’s involvement in xLight is likely to be a topic of discussion. Commerce Secretary Howard Lutnick emphasizes that this partnership is essential for national security and technological leadership, suggesting that it could revolutionize chipmaking capabilities.
While critics question the use of taxpayer-funded equity stakes, acknowledging the geopolitical implications, others recognize the necessity of industrial policy in a competitive global landscape. As nations like China leverage state capitalism to advance strategic industries, the U.S. is adapting its approach to ensure long-term competitiveness and security in key sectors.
