The US is taking a stake in a chip startup led by Intel's ousted CEO

The US government is set to acquire a stake in a semiconductor startup, xLight, which is chaired by Pat Gelsinger, the former CEO of Intel. Announced by the Commerce Department, this initiative marks a significant move as the Trump administration had previously signed a nonbinding letter of intent to invest up to $150 million in the company. The funding will be sourced from the CHIPS and Science Act and will be structured as equity, allowing the federal government to hold direct ownership in xLight. This investment represents a pioneering effort by the Trump administration’s CHIPS Research and Development Office, reflecting Washington's determination to reclaim its dominance in semiconductor manufacturing. Currently, the majority of advanced semiconductors are produced internationally, with TSMC in Taiwan and Samsung in South Korea leading the way amidst growing Chinese influence. In July, Intel issued a warning regarding the potential suspension of its next-generation chip development, known as 14A, due to financial constraints. If Intel were to abandon this project, it could significantly impact US chip manufacturing capabilities, as highlighted in a report by Business Insider. Commerce Secretary Howard Lutnick emphasized the urgency of this initiative, stating, "For far too long, America ceded the frontier of advanced lithography to others. Under President Trump, those days are over." He further noted that this collaboration aims to support technology that could revolutionize chip production, asserting that such advancements will happen domestically. Founded in 2021 and based in Palo Alto, xLight is pioneering free-electron laser technology, which serves as an alternative light source for extreme ultraviolet (EUV) lithography machines essential for modern chip manufacturing. The company claims its innovations will enhance the systems produced by Dutch firm ASML, the global leader in EUV lithography. Pat Gelsinger, who was ousted from Intel following a series of poor earnings reports and setbacks in the AI chip sector, took on the role of executive chairman at xLight in March. Additionally, he is a general partner at Playground Global, which played a crucial role in xLight's $40 million Series B funding round in July. Reflecting on his tenure at Intel, Gelsinger acknowledged that the company faced challenges due to past decisions and recognized the delays in embracing AI technologies. Gelsinger has been instrumental in advocating for the 2022 CHIPS Act, which aims to transform America’s semiconductor strategy. He expressed optimism about xLight’s potential, stating that the startup could usher in the next chapter of Moore's Law, enhancing productivity in semiconductor fabrication while bolstering domestic capabilities.