The Trump administration is injecting up to $150 million into xLight, a semiconductor startup developing particle accelerator-powered chip manufacturing technology, making the U.S. government likely the company's largest shareholder. The unprecedented Chips Act deal marks a controversial expansion of Washington's direct equity investments in private tech companies, sparking fresh debate about state capitalism in Silicon Valley's traditionally libertarian ecosystem.
Uncle Sam just became a venture capitalist, and Silicon Valley doesn't quite know what to make of it. The Trump administration's decision to pump up to $150 million into xLight represents the government's most aggressive foray yet into startup equity, transforming Washington from policy maker to cap table participant.
The Wall Street Journal broke the story Monday, revealing that the Commerce Department will likely become xLight's largest shareholder through funding from the 2022 Chips and Science Act. It's the first Chips Act award under Trump's second term, though the preliminary deal could still change.
This isn't Washington's first rodeo with equity stakes. The administration has already taken positions in public companies like Intel, MP Materials, Lithium Americas, and Trilogy Metals, plus two rare earths startups last month. But xLight represents something different - a direct bet on unproven technology from a four-year-old company trying to rewrite the rules of semiconductor manufacturing.
The Palo Alto startup wants to build particle accelerator-powered lasers the size of football fields to create more powerful and precise light sources for chip production. If successful, it could challenge ASML, the Dutch giant that's held an absolute monopoly on extreme ultraviolet lithography machines since going public in 1995. ASML's shares have surged 48.6% this year, reflecting the company's stranglehold on cutting-edge chip manufacturing.
Leading xLight's audacious mission is CEO Nicholas Kelez, a quantum computing veteran, and executive chairman Pat Gelsinger, the former Intel CEO who got ousted last year after his manufacturing revival plans stalled. "I wasn't done yet," Gelsinger told the Journal, describing the effort as "deeply personal" to him.
Gelsinger's involvement runs deeper than wounded pride. He's a general partner at Playground Global, which led xLight's $40 million funding round this summer. Now he's betting that particle accelerators can leapfrog existing technology - while ASML's machines operate at 13.5-nanometer wavelengths, xLight is targeting 2 nanometers with promises of 30% to 40% efficiency gains plus dramatic energy savings.
