By Amrith Ramkumar and Robbie Whelan

The Trump administration has agreed to inject up to $150 million into a startup trying to develop more advanced semiconductor manufacturing techniques in the U.S., its latest bid to support strategically important domestic industries with government incentives.

Under the arrangement, the Commerce Department would give the incentives to xLight, a startup trying to improve the critical chip-making process known as extreme ultraviolet lithography, the agency said in a Monday release. In return, the government would get an equity stake that would likely make it xLight's largest shareholder.

The Dutch firm ASML is currently the only global producer of EUV machines, which can cost hundreds of millions of dollars each. XLight is seeking to improve on just one component of the EUV process: the crucially important lasers that etch complex microscopic patterns onto chemical-treated silicon wafers. The startup is hoping to integrate its light sources into ASML's machines.

XLight represents a second act for Pat Gelsinger, the former chief executive of Intel who was fired by the board late last year after the chip maker suffered from weak financial performance and a stalled manufacturing expansion. Gelsinger serves as executive chairman of xLight's board.

"I wasn't done yet," Gelsinger said in an interview Monday. "This is deeply personal to me."

Many current and former government officials have been critical of Gelsinger for overpromising when he was Intel CEO, then not delivering after the government agreed to give the company several billion dollars of grants and other subsidies.

The xLight deal uses funding from the 2022 Chips and Science Act allocated for earlier stage companies with promising technologies. It is the first Chips Act award in President Trump's second term and is a preliminary agreement, meaning it isn't finalized and could change.

"This partnership would back a technology that can fundamentally rewrite the limits of chipmaking," Commerce Secretary Howard Lutnick said in the release.

Some analysts have criticized the administration's strategy of directly investing in companies like Intel, dubbing the approach state capitalism and accusing government officials of picking winners and losers. Lutnick has said it makes sense to spur critical industries and bring in other private-sector partners.

The startup's plan is audacious. XLight plans to build massive "free electron lasers" powered by a particle accelerator to create a more powerful and precise light source for use in chip fabrication plants, or fabs. Each machine will be about 100 meters by 50 meters in size, and will be installed as a utility-scale solution, meaning outside the fab walls. The $150 million investment will help xLight meet its goal of producing its first silicon wafers by 2028, Gelsinger said.

The company's chief executive is Nicholas Kelez, who previously worked at a quantum computing firm and at government research labs. XLight raised $40 million this summer from investors including Playground Global, the venture firm where Gelsinger is now a general partner.

The most-advanced lasers used by ASML currently produce extreme ultraviolet light at a wavelength of around 13.5 nanometers. XLight's lasers are targeting much more precise wavelengths, of down to 2 nanometers. If the company is able to achieve this level of precision, it could help chip makers inscribe even smaller microscopic lines into silicon wafers.

This could help the semiconductor industry continue down the trajectory described by Moore's Law, which dictates that the number of transistors per chip -- and therefore the computing power of a chip -- should double every two years.

"We are here to wake up Moore's Law," Gelsinger said. "It's been taking a nap."

Gelsinger said the new technology could improve efficiency in processing wafers by as much as 30% to 40%.

"If this company that's successful, we will change semiconductors," he said. "We can improve the economics of today's EUV and enable tomorrow's EUV."

The xLight announcement underscores the growing enthusiasm inside the Trump administration for ideas about how to bolster U.S. advanced semiconductor manufacturing.

In October, Substrate, a semiconductor manufacturing startup backed by investor Peter Thiel, said it had raised $100 million to try to develop U.S. chip fabs, including an EUV tool similar to xLight's. And the Commerce Department has been pressing chip makers like Taiwan Semiconductor Manufacturing to expand their investments in the U.S.

Gelsinger said he brought up xLight to Lutnick in February, before he joined the startup and before Lutnick was confirmed by the Senate in his role. Gelsinger said he described it in a phone call as a company that could help with the administration's goal of bringing more chip manufacturing processes back to the U.S. (Most advanced chips are today manufactured in Asia.)

"He was very intrigued," Gelsinger said.

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com and Robbie Whelan at robbie.whelan@wsj.com

(END) Dow Jones Newswires

December 01, 2025 20:09 ET (01:09 GMT)

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