A year after leaving Intel, Pat Gelsinger is still waking up at 4 a.m., still in the thick of the semiconductor wars — just on a different battlefield. Now a general partner at venture capital firm Playground Global, he works with 10 startups. But one holding company has grabbed a huge share of his attention: xLighta semiconductor startup that last Monday announced it had secured a preliminary deal of up to $150 million from the U.S. Department of Commerce, with the government poised to become a substantial shareholder.
It’s a nice feather in the cap of Gelsinger, who spent 35 years in two stints at Intel before the board showed him the door late last year because of a lack of trust in his overthrow plans. But the xLight deal also shines a spotlight on a trend that makes people in Silicon Valley quietly uncomfortable: the Trump administration taking stakes in strategically important companies.
“What the hell happened to free enterprise?” California Governor Gavin Newsom asked at a speaking event this week, documenting the unease roiling an industry that has long prided itself on free-market principles.
Speaking at one of TechCrunch’s StrictlyVC events at Playground Global, Gelsinger — who is xLight’s executive chairman — seemed unfazed by the philosophical debate. He’s more focused on his bet that xLight can solve what he sees as the semiconductor industry’s biggest hurdle: lithography, the process of etching tiny patterns on silicon wafers. The startup is developing massive “free electron lasers” powered by particle accelerators that could revolutionize chip manufacturing. If the technology works at scale, that is.
“You know, I have this long-term mission to continue to see Moore’s Law in the semiconductor industry,” Gelsinger said, referring to the decades-old principle that computing power should double every two years. “We believe this is the technology that will awaken Moore’s Law.”
The xLight deal is the first Chips and Science Act award in Trump’s second term, using funding reserved for early-stage companies with promising technologies. Notably, the deal is currently in the letter of intent stage, meaning it has not been finalized and the details are subject to change. When pressed about whether the funding could end up being double the amount announced — or possibly not materialize at all — Gelsinger was candid.
“We have agreed in principle on the terms, but like any of these contracts, there is still work to be done,” he said.
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The technology xLight is pursuing is quite serious in both scale and ambition. The company plans to build machines about 100 meters by 50 meters – about the size of a football field – that will be located outside semiconductor factories. These free electron lasers will produce extreme UV light at wavelengths as precise as 2 nanometers, far more powerful than the 13.5 nanometer wavelengths currently used by ASML, the Dutch giant that absolutely dominates the EUV lithography market.
“About half the capital goes into lithography,” Gelsinger explained of the entire semiconductor industry. “In the middle of a lithography machine is light… [and] this ability to continue to innovate for shorter wavelength, higher power light is the essence of being able to continue to innovate for more advanced semiconductors.
Leading xLight is Nicholas Kelez, whose background is unusual for the semiconductor world. Before founding xLight, Kelez led quantum computing development efforts at PsiQuantum (a Playground Global holding company) and spent two decades building large-scale X-ray science facilities at national laboratories, including SLAC and Lawrence Berkeley, where he was Chief Engineer for the Linac Coherent Light Source.
So why is this viable now when ASML abandoned a similar approach nearly a decade ago? “The difference was that the technology wasn’t as mature,” explained Kelez, who was speaking at the event along with Gelsinger. Back then, there were only a few extreme ultraviolet (EUV) lithography machines and the industry had already sunk tens of billions into the existing technology. “It just wasn’t the time to take on something completely new and orthogonal.”
Now, with EUV ubiquitous in cutting-edge semiconductor manufacturing and existing light source technology reaching its limits, the timing seems better. The key innovation, according to Kelez, is treating light as a utility rather than building it into every machine. “We’re getting away from building an integrated light source with the tool, which is this [ASML does] now and that fundamentally limits you to making it smaller and less powerful,” he said. We build out of the factory at utility scale and then distribute in.”
The company aims to produce its first silicon wafers by 2028 and have its first commercial system online by 2029.
There are, of course, obstacles, although at the moment, direct competition with ASML does not appear to be one of them. “We’re working very closely with them to basically design how we integrate with an ASML scanner,” Kelez said. “So we work with them as well as their providers, [like] Zeiss, which makes their optics.”
When asked if Intel or other major chipmakers have committed to buying the xLight technology, Gelsinger said they have not. “No one has committed yet, but work continues with everyone on the expected list, and we’re in active discussions with everyone.”
Meanwhile, the competitive landscape is heating up. In October, Substrate — a semiconductor manufacturing startup backed by Peter Thiel — announced the increase 100 million dollars for US chip development, including an EUV tool that sounds eerily similar to xLight’s approach. However, Gelsinger does not see them as direct competition. “If Substrate is successful, it could be a customer for us,” he said, offering that Substrate is focused on building a full-stack lithography scanner that would eventually require a free-electron laser, which is exactly what xLight is developing.
Gelsinger’s relationship with the Trump administration adds another layer to the story. He brought xLight to Commerce Secretary Howard Lutnick in February, before Playground funded the startup and before Lutnick was confirmed. At that point, Kelez says, he had already spent more than a year pitching xLight to the government as a way to bring chip manufacturing back to the US, but the new deal has drawn criticism from some who see the administration’s approach as overreaching.
Gelsinger is unforgiving and characterizes it as necessary for national competitiveness. “I measure it by results,” he said. “Is it driving the results we want and that we need to reinvigorate our industrial policies? Many of our competitor countries are not having such discussions. They are moving forward with the policies necessary to achieve their competitive results.”
He cited energy policy as another example. “How many nuclear reactors are being built in the US today? Zero. How many are being built in China today? 39. Energy policy in a digital AI economy equals the nation’s economic capacity.”
For xLight, the government’s share comes with minimal strings attached. The Commerce Department won’t have veto rights or a seat on the board, says Kelez (pictured above). “There are no rights to information, nothing,” Gelsinger adds. “It’s a minority investment, in a non-government way, but it also says we need this company to succeed in the national interest.”
xLight has raised $40 million from investors including Playground Global and is planning another round of fundraising next month, in January. Unlike fusion or quantum computing startups that need billions, Kelez said xLight’s path is more manageable. “This is not fusion or quantum,” he said. “We don’t need billions.”
The company also signed a letter of intent with New York to build its first machine at the New York CREATE site near Albany, though that deal also needs to be finalized.
For Gelsinger, xLight is clearly more than just another holding company. It’s a chance to cement his relevance in the semiconductor industry he helped build, even if his methods have put him at odds with traditional Silicon Valley ethos.
Asked about navigating his principles in the current political environment, Gelsinger retreated to a more technocratic view of corporate leadership — one where the money comes from the U.S. government, administrations are temporary and CEOs must stay above the fray.
“CEOs and companies should be neither Republicans nor Democrats,” he said. “Your job is to achieve the business objective, to serve your investors, to serve your shareholders. That’s your goal. As a result, you have to be able to understand which policies are beneficial on the R side or which policies are beneficial on the D side and be able to navigate them.”
He added that apart from that $150 million from the Trump administration, “taxpayers are going to be fine.”
When asked if working on 10 startups is enough for someone who used to run Intel, Gelsinger was unequivocal. “Absolutely. The idea that I can now make an impact 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 was asking me to join them and make them smarter and be a startup entrepreneur.
He paused, then added with a smile, “And I gave my wife back her weekends.”
It’s a nice thought, although anyone who knows Gelsinger’s reputation as a workaholic might wonder how long this arrangement will last.
