The Trump administration has agreed to invest up to $150 million in xLight, a semiconductor startup focused on advanced chip-making technology, in exchange for an equity stake. The Commerce Department's funding, derived from the 2022 Chips and Science Act, marks the first such award in President Trump's second term and is expected to position the government as xLight's largest shareholder, according to a report by The Wall Street Journal. The deal remains preliminary and subject to change.
This investment represents the third instance under the Trump administration where the U.S. government has taken an equity position in a private startup. Previously, the government secured stakes in publicly traded companies including Intel, MP Materials, Lithium Americas, and Trilogy Metals, in addition to two rare earths startups last month.
Palo Alto, California-based xLight, a four-year-old company, is developing particle accelerator-powered lasers designed to create more powerful and precise light sources for chip manufacturing. The technology aims to operate at 2-nanometer wavelengths, significantly more advanced than the 13.5-nanometer wavelengths utilized by ASML, the Dutch company currently holding a near-monopoly on extreme ultraviolet lithography machines. Pat Gelsinger, former Intel CEO and executive chairman of xLight, indicated that the technology could boost wafer processing efficiency by 30% to 40% while reducing energy consumption. Nicholas Kelez, a veteran of quantum computing and government labs, serves as xLight's CEO. Playground Global led the startup's $40 million funding round earlier this year.
The strategy of government equity stakes has generated discussion within the venture capital community. Sequoia Capital's Roelof Botha, for instance, has noted concerns regarding government involvement. Commerce Secretary Howard Lutnick has publicly stated that these partnerships are critical for national security and technological leadership, asserting that they could "fundamentally rewrite the limits of chipmaking." While critics continue to debate the nature of taxpayer-funded equity stakes, even skeptics acknowledge the prevailing geopolitical realities driving such industrial policies, as stated by Botha at a recent industry event.
