The U.S. government is poised to become the largest shareholder in xLight, a semiconductor startup aiming to disrupt the chip manufacturing industry, through a $150 million investment. This move – the third of its kind under the Trump administration – marks a growing trend of Washington directly funding and taking equity in private American companies, raising questions about the future of tech investment and U.S. industrial policy.
Government as Venture Capitalist: A New Reality
The Commerce Department’s investment in xLight, sourced from the 2022 Chips and Science Act, is structured as an equity stake. This means the government won’t just be providing capital; it will hold a significant ownership position in the company, influencing its direction. Previous investments under the Trump administration include public companies like Intel and MP Materials, as well as other rare earth startups, suggesting a deliberate strategy to secure U.S. dominance in critical industries.
This approach is notable because it departs from traditional grant-based funding models. By taking equity, the government directly benefits from the company’s success – or shares in its failure. This has sparked debate in Silicon Valley, where libertarian ideals are deeply ingrained. As Sequoia Capital’s Roelof Botha quipped, “Some of the most dangerous words in the world are: ‘I’m from the government, and I’m here to help.’”
xLight’s Audacious Ambition: Challenging ASML’s Monopoly
xLight aims to revolutionize chip manufacturing with a radical approach: using particle accelerator-powered lasers to create more precise light sources for chip creation. If successful, this technology could challenge ASML, the Dutch giant that currently holds a near-monopoly on extreme ultraviolet lithography. ASML’s stock has surged almost 50% this year, but xLight is targeting even smaller wavelengths (2 nanometers versus ASML’s 13.5 nanometers) with the potential to increase wafer processing efficiency by 30-40% while using less energy.
The venture is led by CEO Nicholas Kelez, a veteran of quantum computing and government labs, and executive chairman Pat Gelsinger, the former Intel CEO recently ousted after his ambitious turnaround plans faltered. Gelsinger sees this as a second act, calling the effort “deeply personal.”
The Geopolitical Chess Game
The U.S. government’s foray into venture capitalism isn’t purely about innovation; it’s about geopolitical competition. Commerce Secretary Howard Lutnick frames the investment as vital for national security and technological leadership. The reality is that other nations, like China, are already employing aggressive industrial policies to bolster strategic industries. As Botha acknowledged, the U.S. is resorting to this tactic because it needs to counter those efforts.
The debate over whether this represents visionary policy or state capitalism will continue, but one thing is clear: the line between government funding and direct intervention in the tech industry is blurring. This trend raises fundamental questions about the role of the state in innovation and the long-term implications for private enterprise.
