Despite his departure from Intel a year ago, Pat Gelsinger continues his early morning routine and remains deeply involved in the semiconductor industry, albeit from a new vantage point. As a general partner at Playground Global, a venture capital firm, he supports ten startups. However, one specific portfolio company, xLight, a semiconductor startup, has garnered significant focus. It recently revealed a tentative agreement to receive up to $150 million from the U.S. Commerce Department, which would make the government a substantial equity holder.
This achievement is a notable success for Gelsinger, whose 35-year tenure at Intel ended last year when the board removed him due to concerns about his proposed revitalization strategies. Nonetheless, the xLight agreement also highlights an emerging practice that is subtly unsettling Silicon Valley: the Trump administration’s acquisition of equity in businesses deemed strategically vital.
“What became of free enterprise?” California Governor Gavin Newsom questioned at a recent speaking engagement, encapsulating the growing discomfort within an industry historically committed to free-market ideals.
During a TechCrunch StrictlyVC event held at Playground Global, Gelsinger, serving as xLight’s executive chairman, appeared unconcerned by the philosophical discourse. His primary focus lies in his conviction that xLight can address the semiconductor industry’s most significant challenge: lithography, which involves inscribing minuscule designs onto silicon wafers. The startup is advancing colossal “free electron lasers,” energized by particle accelerators, with the potential to transform chip production—assuming the technology proves scalable.
“My enduring objective is to sustain Moore’s Law within the semiconductor sector,” Gelsinger stated, alluding to the decades-old tenet predicting a doubling of computing power every two years. “We believe this particular technology will reinvigorate Moore’s Law.”
This xLight agreement represents the inaugural Chips and Science Act allocation during Trump’s second presidential term, utilizing funds designated for nascent companies demonstrating innovative technologies. It is important to note that this deal is presently a letter of intent, indicating it remains unconfirmed and subject to modifications. When questioned about the possibility of the funding either increasing significantly or failing to materialize, Gelsinger responded frankly.
“While we have reached an agreement on the core terms, considerable effort is still required to finalize the contract, as is typical with such agreements,” he clarified.
xLight’s technological pursuit is highly ambitious in both scope and scale. The company intends to construct machinery approximately 100 meters by 50 meters—comparable to the size of a football field—designed to operate externally to semiconductor fabrication facilities. These free electron lasers aim to produce extreme ultraviolet light with wavelengths as minute as 2 nanometers, significantly more potent than the 13.5 nanometer wavelengths currently employed by ASML, the Dutch powerhouse dominating the EUV lithography sector.
“Roughly half of all investment within the semiconductor industry is directed towards lithography,” Gelsinger elaborated. “At the core of a lithography machine lies light. . . [and] the continuous innovation towards shorter wavelength, higher power light is fundamental to advancing semiconductor technology further.”
xLight is spearheaded by Nicholas Kelez, whose professional background is atypical for the semiconductor field. Prior to establishing xLight, Kelez headed quantum computer development initiatives at PsiQuantum (another Playground Global portfolio firm) and dedicated twenty years to constructing expansive X-ray science facilities at national laboratories such as SLAC and Lawrence Berkeley, where he served as Chief Engineer for the Linac Coherent Light Source.
What makes this approach feasible now, considering ASML discontinued a similar method nearly a decade ago? “The technology at that time lacked sufficient maturity,” Kelez clarified, speaking alongside Gelsinger at the event. Previously, only a limited number of extreme ultraviolet lithography (EUV) systems were in operation, and the industry had already invested tens of billions into existing technologies. “It was simply not the opportune moment to pursue an entirely novel and distinct path.”
However, with EUV now widely adopted in advanced semiconductor production and current light source technologies reaching their boundaries, the timing appears more favorable. Kelez asserts that the pivotal innovation lies in considering light as a utility, rather than integrating it directly into every machine.
“We are moving beyond embedding the light source directly within the tool, as [ASML] currently does, which inherently limits its size and power,” he explained. “Instead, we manage light much like electrical power or HVAC. We construct it at a utility scale outside the fabrication plant and then distribute it inward.”
The company targets producing its initial silicon wafers by 2028, with its first commercial system operational by 2029.
While challenges certainly exist, direct competition with ASML currently seems unlikely. On the contrary, the opposite holds true. “We are collaborating extensively with them to engineer our integration with an ASML scanner,” Kelez stated. “This involves working with ASML and their suppliers, such as Zeiss, which manufactures their optical components.”
When questioned about whether Intel or other prominent chip manufacturers had pledged to acquire xLight’s technology, Gelsinger responded negatively: “No commitments have been made yet, but we are actively engaging with all the expected industry players and conducting rigorous discussions with each of them.”
Concurrently, the competitive environment is intensifying. Last October, Substrate, a semiconductor manufacturing startup supported by Peter Thiel, declared it had secured $100 million to establish U.S. chip fabrication plants, including an EUV tool remarkably akin to xLight’s methodology. Gelsinger, however, does not perceive them as direct competitors.
“Should Substrate achieve success, they might become a client for us,” he remarked, implying that Substrate is concentrating on developing a comprehensive lithography scanner that would eventually require a free electron laser, precisely the technology xLight is pioneering.
Gelsinger’s association with the Trump administration introduces an additional dimension to this narrative. He introduced xLight to Commerce Secretary Howard Lutnick in February, prior to Playground’s investment in the startup and Lutnick’s confirmation. Kelez notes that by then, he had already dedicated over a year to advocating xLight to the government as a means to re-shore chip manufacturing in the U.S., yet this novel arrangement has garnered criticism from those who perceive the administration’s strategy as excessive intervention.
Gelsinger remains resolute, portraying the initiative as crucial for national competitiveness. “I evaluate its effectiveness based on outcomes,” he declared. “Does it achieve the desired results and the revitalization required for our industrial policies? Numerous competitor nations do not engage in such discussions; they proceed with policies essential to reaching their competitive objectives.”
He cited energy policy as another illustrative case. “What is the current number of nuclear reactors under construction in the U.S.? None. How many are being built in China today? Thirty-nine. In a digital AI economy, energy policy directly correlates with a nation’s economic strength.”
For xLight, the government’s investment carries very few conditions. Kelez (shown above) confirmed that the Commerce Department will not possess veto power or a board position. Gelsinger further stated, “No information rights, nothing.” He concluded, “It constitutes a minority, non-governing investment, yet it also signifies the company’s crucial importance for national interests.”
xLight has secured $40 million from investors, including Playground Global, and intends to initiate another fundraising round next month, in January. Kelez noted that, unlike fusion or quantum computing startups demanding billions, xLight’s financial trajectory is more attainable. “This isn’t fusion or quantum,” he asserted. “We don’t require billions.”
Furthermore, the company has entered into a letter of intent with New York to establish its inaugural machine at the New York CREATE facility close to Albany, although this agreement also awaits formalization.
Evidently, xLight represents more than merely another portfolio company for Gelsinger. It offers him an opportunity to solidify his influence within the semiconductor industry he contributed to shaping, even if his chosen approaches diverge from Silicon Valley’s established principles.
When questioned about how he reconciles his principles with the contemporary political landscape, Gelsinger adopted a more technocratic perspective on corporate governance. He emphasized that funding originates from the U.S. government, administrations are transient, and chief executives should remain detached from political conflicts.
“Corporate leaders and organizations should not align with either the Republican or Democratic party,” he asserted. “Your fundamental role is to achieve business goals, benefit your investors, and serve your shareholders. That is your core mission. Consequently, you must discern which policies, whether from the Republican or Democratic perspective, are advantageous, and skillfully maneuver through them.”
Regarding the $150 million provided by the Trump administration, he additionally commented, “Taxpayers stand to benefit significantly.”
Upon being questioned if managing ten startups provided sufficient engagement for someone who once led Intel, Gelsinger responded with conviction: “Without a doubt. The prospect of influencing such a broad spectrum of technologies is exhilarating—I am fundamentally a deep tech enthusiast. My intellect is profoundly challenged here, and I am genuinely appreciative that the Playground team welcomed me to contribute, enhance their knowledge, and embark on this journey as a novice venture capitalist.”
He then paused before adding with a smile: “Moreover, I’ve returned her weekends to my wife.”
This is a pleasant notion, although those familiar with Gelsinger’s reputation for intense work might question the longevity of such an arrangement.