According to the company's verbal pitch to potential investors and written financing plan, semiconductor startup XLight, which focuses on advanced laser development, is in discussions with two investment firms aiming to raise $350 million. This comes just weeks after the company secured a substantial investment from the U.S. Department of Commerce.

Extreme ultraviolet (EUV) lithography, which uses ultraviolet beams to imprint microscopic circuit patterns onto chips, is a core process for manufacturing high-end AI server chips. XLight aims to develop an alternative technological pathway to EUV, with the goal of significantly reducing the manufacturing cost and production timeline for top-tier AI server chips. The company plans to sell this technology to ASML, whose EUV lithography machines are essential for producing the critical wafers needed for chip systems by NVIDIA and other leading chip design firms.

ASML has not yet invested in XLight. However, its CEO, Christophe Fouquet, stated in a May interview with tech media outlet TechCrunch: "We are working with them to help them validate their technology, which we see as our responsibility. But this technology still has a long way to go before it is realized." (A single ASML lithography machine can cost hundreds of millions of dollars, with associated factory construction costs reaching tens of billions.)

XLight was founded in 2021 by Nicholas Kellett, former Chief Product Officer at quantum computing startup Psi Quantum. The company has informed potential investors that it plans to invite ASML to participate in this funding round, alongside other invited investors including wafer fabrication giant TSMC (which uses ASML equipment), chip designer Intel, and memory chip manufacturer Micron Technology.

XLight's financing pitch materials indicate that New York-based investment firm Broadhaven Bay Capital Management and Boston-based Bain Capital are in talks to co-lead this $350 million funding round. The target valuation for the company in this round is currently undisclosed.

Earlier this month, XLight secured a government investment: it received $150 million from the U.S. Department of Commerce and the National Institute of Standards and Technology under the U.S. CHIPS and Science Act. Following this infusion, the U.S. government is likely to become one of XLight's largest shareholders. The company's total funding raised to date is approximately $200 million. Playground Global, the venture capital firm of former Intel CEO Pat Gelsinger, invested in XLight last year, and Gelsinger now serves as the startup's Executive Chairman.

The company states it is currently building its first prototype testing facility in Albany, New York, with the goal of developing its first operational lithography light source device by 2028. Documents presented to potential investors show that XLight has signed non-binding letters of intent with several lending institutions, which have committed to providing $4.2 billion in project loans for the construction of its first seven production facilities. However, the locations and operational timelines for these factories have not yet been publicly disclosed.