A yr after being pushed out of Intel, Pat Gelsinger continues to be waking up at 4 a.m., nonetheless within the thick of the semiconductor wars — simply on a distinct battlefield. Now a normal companion at enterprise agency Playground International, he’s working with 10 startups. However one portfolio firm has captured an outsized share of his consideration: xLight, a semiconductor startup that final Monday introduced it has struck a preliminary deal for as much as $150 million from the U.S. Commerce Division, with the federal government set to change into a significant shareholder.
It’s a pleasant feather within the cap of Gelsinger, who spent 35 years throughout two stints at Intel earlier than the board confirmed him the door late final yr owing to a insecurity in his turnaround plans. However the xLight deal can also be shining a highlight on a pattern that’s making folks in Silicon Valley quietly uncomfortable: the Trump administration taking fairness stakes in strategically necessary corporations.
“What the hell happened to free enterprise?” California Governor Gavin Newsom requested at a talking occasion this week, capturing the unease that’s rippling by means of an trade that has lengthy prided itself on its free-market ideas.
Talking at one among TechCrunch’s StrictlyVC occasions at Playground International, Gelsinger — who’s xLight’s govt chairman — appeared unbothered by the philosophical debate. He’s extra centered on his wager that xLight can resolve what he sees because the semiconductor trade’s greatest bottleneck: lithography, the method of etching microscopic patterns onto silicon wafers. The startup is growing large “free electron lasers” powered by particle accelerators that would revolutionize chip manufacturing. If the know-how works at scale, that’s.
“You know, I have this long-term mission to continue to see Moore’s law in the semiconductor industry,” Gelsinger stated, referencing the decades-old precept that computing energy ought to double each two years. “We think this is the technology that will wake up Moore’s law.”
The xLight deal is the primary Chips and Science Act award beneath Trump’s second time period, utilizing funding earmarked for early-stage corporations with promising applied sciences. However right here’s the factor — the deal is at the moment on the letter of intent stage, that means it’s not finalized and particulars may nonetheless change. When pressed on whether or not the funding may find yourself being double the introduced quantity — or probably not materialize in any respect — Gelsinger was candid.
“We’ve agreed in principle on the terms, but like any of these contracts, there’s still work to get done,” he stated.
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The know-how xLight is pursuing is fairly severe in each scale and ambition. The corporate plans to construct machines roughly 100 meters by 50 meters — concerning the dimension of a soccer discipline — that may sit outdoors semiconductor fabrication crops. These free electron lasers would generate excessive ultraviolet mild at wavelengths as exact as 2 nanometers, way more highly effective than the 13.5 nanometer wavelengths at the moment utilized by ASML, the Dutch large that completely dominates the EUV lithography market.
“About half of the capital goes into lithography,” Gelsinger defined of the whole semiconductor trade. “In the midst of a lithography machine is mild. . . [and] this means to maintain innovating for shorter wavelength, increased energy mild is the essence of with the ability to proceed to innovate for extra superior semiconductors.
Main xLight is Nicholas Kelez, whose background is uncommon for the semiconductor world. Earlier than founding xLight, Kelez led quantum laptop improvement efforts at PsiQuantum (a Playground International portfolio firm) and spent twenty years constructing large-scale X-ray science services at nationwide labs together with SLAC and Lawrence Berkeley, the place he was Chief Engineer for the Linac Coherent Gentle Supply.
So why is that this viable now when ASML deserted an identical strategy nearly a decade in the past? “The difference was the technology wasn’t as mature,” Kelez defined. Again then, solely a handful of maximum ultraviolet lithography (EUV) machines existed, and the trade had already sunk tens of billions into the incumbent know-how. “It just wasn’t the time to take on something completely new and orthogonal.”
Now, with EUV ubiquitous in modern semiconductor manufacturing and present mild supply know-how hitting its limits, the timing appears higher. The important thing innovation, in response to Kelez, is treating mild like a utility quite than constructing it into every machine. “We go away from building an integrated light source with the tool, which is what [ASML does] now and that fundamentally constrains you to make it smaller and less powerful,” he stated. And as a substitute, “We treat light the same way you treat electrical power or HVAC. We build outside the fab at utility scale and then distribute in.”
The corporate is aiming to provide its first silicon wafers by 2028 and have its first industrial system on-line by 2029. However there are, naturally, hurdles, together with, probably, ASML itself. Although the outfit is speaking with xLight about integration, it hasn’t formally dedicated to purchasing the know-how.
“We’re working very closely with them right now to basically design how we integrate with an ASML scanner,” Kelez stated. “So we’re working with both them, as well as their providers, [like] Zeiss, who does their optics.”
When requested whether or not Intel or different main chipmakers have dedicated to buying xLight’s know-how, Gelsinger stated they haven’t. “Nobody has committed yet, but the work is going on with everybody on the list that you would expect, and we’re having intense conversations with all of them.”
The aggressive panorama is heating up too. In October, Substrate — a semiconductor manufacturing startup backed by Peter Thiel — introduced it raised $100 million to develop U.S. chip fabs, together with an EUV device that sounds awfully just like xLight’s strategy. Gelsinger doesn’t see them as direct competitors although. “If Substrate is successful, they could be a customer for us,” he stated, providing that Substrate is concentrated on constructing a full-stack lithography scanner that may finally want a free electron laser, which is precisely what xLight is growing.
Gelsinger’s relationship with the Trump administration provides one other layer to the story. He introduced up xLight to Commerce Secretary Howard Lutnick again in February, earlier than Playground funded the startup and earlier than Lutnick was confirmed, pitching it as an organization that would assist convey chip manufacturing again to the U.S.
The association has drawn criticism from some who view the administration’s strategy as state capitalism, with the federal government selecting winners and losers. However Gelsinger is unapologetic, framing it as essential for nationwide competitiveness. “I measure it by the results,” he stated. “Does it drive the results that we want and that we need to reinvigorate our industrial policies? Many of our competitive countries don’t have such debates. They’re moving forward with the policies that are necessary to accomplish their competitive outcomes.”
He pointed to power coverage as one other instance. “How many nuclear reactors are being built in the US today? Zero. How many being built in China today? 39. Energy policy in a digital AI economy equals the economic capacity of the nation.”
For xLight, the federal government stake comes with minimal strings connected. The Commerce Division gained’t have veto rights or a board seat, says Kelez. “No information rights, nothing,” Gelsinger provides. “It’s a minority investment, in a non-governing way, but it also says we need this company to succeed for national interest.”
xLight has raised $40 million from buyers together with Playground International and is planning one other fundraising spherical in January. In contrast to fusion or quantum computing startups that want billions, Kelez stated xLight’s path is extra manageable. “This is not fusion or quantum,” he stated. “We don’t need billions.”
The corporate additionally signed a letter of intent with New York to construct its first machine on the New York CREATE website close to Albany, although that settlement additionally wants finalization.
For Gelsinger, xLight is clearly extra than simply one other portfolio firm. It’s an opportunity to cement his relevance within the semiconductor trade that he helped construct, even when his strategies put him at odds with Silicon Valley’s conventional ethos.
Requested about navigating his ideas within the present political surroundings, Gelsinger retreated to a extra technocratic view of company management — one the place the cash is from the U.S. authorities, administrations are short-term, and CEOs should stay above the fray.
“CEOs and companies should neither be Republican or Democrat,” he stated. “Your job is to accomplish the business objective, serve your investors, serve your shareholders. That is your objective. And as a result, you need to be able to figure out what policies are beneficial on the R side or what policies are beneficial in the D side, and be able to navigate through them.”
He added individually of that $150 million from the Trump administration, “Taxpayers will do well.”
When requested if working throughout 10 startups is sufficient for somebody who used to run Intel, Gelsinger was emphatic. “Absolutely. The idea that I can now influence across such a wide range of technologies — I’m a deep tech guy at the core of who I am. My mind is so stretched here, and I’m just grateful that the Playground team would have me to join them and let me make them smarter and be a rookie venture capitalist.”
He paused, then added with a smile: “And I gave my wife back her weekends.”
It’s a pleasant thought, although anybody who is aware of Gelsinger’s popularity as a workaholic would possibly surprise how lengthy that association will final.
