A year after leaving Intel, Pat Gelsinger is refocusing his energy on the future of semiconductors. Now a general partner at venture firm Playground Global, Gelsinger is involved with ten startups, but xLight, a company developing novel lithography technology, is receiving particular attention after securing a preliminary agreement for up to $150 million in funding from the U.S. Commerce Department. This investment marks a shift, however, as it includes the government taking an equity stake in the strategically vital firm.
The potential government investment has sparked debate in Silicon Valley, raising questions about the role of the state in free enterprise. California Governor Gavin Newsom recently questioned the precedent, asking, “What the hell happened to free enterprise?” The deal highlights a growing trend of government intervention in crucial technology sectors, a move that departs from traditional industry norms.
The xLight Bet: Revolutionizing Semiconductor Lithography
Gelsinger, serving as executive chairman of xLight, believes the startup addresses a critical bottleneck in semiconductor manufacturing: lithography. This process, essential for etching intricate patterns onto silicon wafers, currently relies heavily on technology from Dutch firm ASML. xLight is pioneering the development of massive “free electron lasers” powered by particle accelerators, aiming to surpass existing capabilities in precision and power.
According to Gelsinger, the goal is to ensure Moore’s Law – the observation that the number of transistors in a dense integrated circuit doubles about every two years – continues to hold true. He contends that xLight’s technology holds the key to sustaining this pace of innovation, which is fundamental to ongoing advancements in computing power.
While the agreement with the Commerce Department is substantial, it remains preliminary. Details are still under negotiation, and the final amount of funding could differ from the initial announcement. Gelsinger acknowledged the possibility of changes, stating, “We’ve agreed in principle on the terms, but like any of these contracts, there’s still work to get done.”
A New Approach to Light Sources
xLight’s technology proposes a drastic departure from conventional lithography. Current systems, including ASML’s EUV machines, integrate the light source directly into the scanner. xLight, conversely, envisions creating utility-scale light sources located *outside* fabrication plants (“fabs”) and distributing the light as a service. This approach, led by CEO Nicholas Kelez, aims to create more powerful and scalable light sources.
Kelez, whose background is in building large-scale X-ray science facilities, explained that the timing is now favorable, “The difference was the technology wasn’t as mature…It just wasn’t the time to take on something completely new and orthogonal.” This shift is occurring as existing EUV technology reaches its limits and the need for higher resolution techniques intensifies.
Competition and Collaboration
The company’s plan is ambitious, with a target of producing initial silicon wafers by 2028 and deploying its first commercial system by 2029. Interestingly, xLight is not positioning itself as a direct competitor to ASML, but rather as a potential collaborator. They are actively working with ASML and other optics providers, like Zeiss, to integrate their technology into existing semiconductor manufacturing processes.
However, other companies are pursuing similar lithography innovations. Substrate, a Thiel-backed startup, recently announced its own efforts to develop U.S.-based chip fabrication capabilities, including a potentially competing EUV approach. Gelsinger views Substrate as a potential customer for xLight’s light source technology, suggesting a degree of complementarity between the two companies.
Government Investment and Future Outlook
The U.S. Commerce Department’s pending equity stake in xLight is relatively straightforward, according to Kelez. It does not include board representation, veto rights, or information access, being described as a “minority investment, in a non-governing way.” The aim is to support a company deemed crucial to national competitiveness in the semiconductor industry.
Gelsinger defends the government’s involvement, arguing that it’s a necessary step to revitalize U.S. industrial policy and close the gap with competitors like China, which is aggressively investing in its own semiconductor capabilities. He stated, “CEOs and companies should neither be Republican or Democrat….Your job is to accomplish the business objective,” emphasizing the need for pragmatism in a rapidly changing geopolitical landscape.
xLight is currently preparing for another fundraising round in January, hoping to build on the momentum of the Commerce Department’s potential investment. The company anticipates needing less capital than other advanced technology ventures like those in fusion or quantum computing. The finalization of the funding agreement with the government and securing commitments from major chipmakers remain key milestones. Industry observers will be closely watching xLight’s progress toward demonstrating the viability of its innovative lithography technology and its role in shaping the future of semiconductor manufacturing.