Aiming at key EUV technology! The U.S. government bets on laser startup xLight: up to $150 million for the largest shareholder position

Against the backdrop of escalating global semiconductor competition, the U.S. government is attempting to reshape the advanced manufacturing supply chain by targeting the most critical and core technological aspects.

According to the latest official disclosures, the Trump administration has decided to invest up to $150 million in the laser chip startup xLight, marking the first investment from the funding of the CHIPS & Science Act during Trump's second term. Under the agreement, the Department of Commerce will acquire equity in the company and is expected to become its largest shareholder.

xLight's goal is not to create an entire lithography machine, but to break through the most difficult and critical part of the current extreme ultraviolet (EUV) lithography system—the laser. Currently, only ASML from the Netherlands can produce EUV lithography machines for advanced chip manufacturing, with each device costing hundreds of millions of dollars. Within this complex system, the highest technical barrier and the greatest research and development difficulty lies in the laser used to generate the 13.5 nanometer wavelength EUV light source.

U.S. Secretary of Commerce Howard Lutnick stated that this collaboration will support a technology that can "fundamentally rewrite the limits of chip manufacturing." This investment marks a significant increase in the U.S. government's direct investment in strategic semiconductor manufacturing technology.

Technological Breakthrough Targeting Core Lithography Aspects

xLight aims to utilize technology derived from particle accelerators to create a "Free Electron Laser," generating a more stable and precise extreme ultraviolet light source with lower energy consumption, and plans to integrate it into ASML or other manufacturers' lithography systems.

The company even aims for a more advanced 2-nanometer wavelength, which means that if the technology succeeds, the precision of chip manufacturing is expected to significantly improve, helping to sustain the vitality of "Moore's Law."

Even more notably, the company has welcomed former Intel CEO Pat Gelsinger to join. He has taken on the role of executive chairman of xLight's board in March this year. After leaving Intel, Gelsinger views this project as his "second chance" and describes it as a "very personal mission."

"We are here to awaken Moore's Law; it has been dozing off," Gelsinger stated in a media interview. He anticipates that xLight's new technology could improve wafer processing efficiency by 30% to 40%, while significantly reducing energy consumption, thereby reshaping the economic model of advanced manufacturing.

This investment comes from the relevant appropriations of the 2022 CHIPS & Science Act, aimed at supporting early-stage frontier technologies. This is also the first investment decision made by the current government after taking over a semiconductor research institution valued at $7.4 billion. Although it is still in the "preliminary non-binding agreement" stage, the political signal is very clear.

Lutnick explicitly stated in a statement that the U.S. has "yielded to others for too long" in the field of advanced lithography technology, and now "this situation must end."

xLight's plans are quite ambitious. Its free electron laser equipment could measure 100 meters by 50 meters and will be deployed as a "utility-level" device around the wafer fabrication facility in the future The company's goal is to achieve the production of the first silicon wafers by 2028.

Currently, the company is led by CEO Nicholas Kelez, who has previously worked in government laboratories and quantum computing companies. This summer, it secured $40 million in funding, including from Playground Global, of which Kissinger is one of the partners.

Government Direct Investment Strategy Sparks Controversy

However, the practice of the government directly investing in companies has drawn criticism from some market participants, who argue that it represents a form of "state capitalism" with the potential to "pick winners and losers."

Lutnick defended this approach, stating that stimulating the development of key industries and bringing in private sector partners is reasonable.

Beyond xLight, the U.S. is also encouraging more domestic semiconductor technology challengers to emerge. The startup Substrate, backed by Peter Thiel, recently announced $100 million in funding, planning to create its own EUV alternative in the U.S.; meanwhile, the government is also pressuring companies like TSMC to expand their investment scale in the U.S.

It is foreseeable that a new round of "technological arms race" surrounding EUV lithography and its core components has quietly begun. Whether xLight can transition from the laboratory to mass production, from technological imagination to industrial reality, will become an important variable in the evolution of the semiconductor landscape in the coming years