A Bold Second Act: US Government Takes Stake in Startup Led by Former Intel Chief
The race to secure America’s position at the forefront of the global semiconductor industry just took a dramatic and deeply personal turn. The US government, through the Commerce Department, has agreed to invest up to $150 million in xLight, a fledgling chip startup led by a familiar face in the tech world: Pat Gelsinger, the former Chief Executive of Intel.
This is far from a typical government grant. Under the arrangement, the investment comes with a significant catch: an equity stake for the US government that could make it xLight’s single largest shareholder. The deal underscores a growing, and controversial, strategy of using taxpayer funds from initiatives like the CHIPS and Science Act not just to subsidize production, but to buy a piece of the action in strategically vital US technology companies.
For Gelsinger, this marks a swift return to the semiconductor spotlight. He was removed as Intel’s CEO late last year following a period of weak financial performance and manufacturing delays, but he is now the executive chairman of xLight. In a recent statement, he described the company’s mission as “deeply personal,” signaling a renewed commitment to driving US chip innovation.
So, what exactly does xLight do? The company is tackling one of the most complex and critical bottlenecks in modern chip manufacturing: Extreme Ultraviolet (EUV) lithography. EUV machines are the multi-million dollar tools essential for etching the microscopic patterns that define the most advanced chips, and the Dutch company ASML currently holds a global monopoly on their production.
XLight isn’t trying to build the entire machine. Instead, its focus is on improving a crucial component: the high-powered lasers that create the EUV light. The startup is developing a free-electron laser prototype that uses particle accelerator technology, aiming to create a far more energy-efficient and precise light source. The hope is to integrate this light source into ASML’s systems or future competitors, potentially pushing the limits of chip density down to the 2-nanometer process node. This technical leap could restore momentum to the industry’s foundational rule of innovation, known as Moore’s Law.
The federal government’s move into corporate ownership is raising eyebrows on Wall Street and in Silicon Valley. Critics see it as a form of state capitalism, creating an uncomfortable environment for venture capitalists who are suddenly competing with the US Treasury. Proponents, including Commerce Secretary Howard Lutnick, argue that the investment is a necessary measure for national security, supporting a “technology that can fundamentally rewrite the limits of chipmaking.”
This deal follows the administration’s earlier, and even larger, move to take a nearly 10% equity stake in Intel itself in August of this year. By now injecting up to $150 million into xLight, a startup operating at the cutting edge of manufacturing R&D, the government is doubling down on its direct ownership strategy across the entire domestic chip supply chain.
The message is clear: the US is not just funding the construction of new fabrication plants. It is strategically investing in the intellectual property and core technologies needed to keep the country technologically competitive. For Pat Gelsinger, it’s a high-stakes opportunity to prove he can deliver on the promise of innovation, with the ultimate backer now sitting in Washington.