A year after his departure from Intel, Pat Gelsinger is still getting up at 4 a.m. and remains heavily involved in the semiconductor industry, albeit in a different setting. Now a general partner at Playground Global, a venture capital firm, he’s engaging with 10 startups. However, one company has become a focal point for him: xLight, a semiconductor startup that recently announced a preliminary deal for up to $150 million from the U.S. Commerce Department, likely making the government a significant shareholder.
This deal is a notable achievement for Gelsinger, who spent 35 years at Intel before the board dismissed him last year due to concerns over his plans for a turnaround. Yet the xLight arrangement also highlights a growing trend that’s stirring unease in Silicon Valley: the Trump administration taking equity stakes in key companies.
“What the hell happened to free enterprise?” California Governor Gavin Newsom asked at a recent speaking event, encapsulating the discomfort spreading through an industry that has long championed free-market values.
At a TechCrunch StrictlyVC event at Playground Global, Gelsinger — who also serves as xLight’s executive chairman — seemed unfazed by the philosophical concerns. He’s more focused on his belief that xLight can address a major challenge in the semiconductor sector: lithography, the process of etching tiny patterns onto silicon wafers. The company is developing large “free electron lasers” powered by particle accelerators that could revolutionize chip production, if the technology scales successfully.
“I have this long-term mission to keep Moore’s Law alive in the semiconductor industry,” Gelsinger explained, referring to the well-known principle that computing power should double approximately every two years. “We believe this technology will reinvigorate Moore’s Law.”
The xLight deal is the first award from the Chips and Science Act during Trump’s second term, aimed at funding promising early-stage companies. It’s important to note that the deal is still at the letter of intent stage, meaning it hasn’t been finalized and details may change. When asked if the funding could double or possibly fall through, Gelsinger was straightforward.
“We’ve agreed in principle on the terms, but like any of these contracts, there’s still work to be done,” he said.
The technology xLight is pursuing is ambitious and involves significant scale. The company plans to build machines approximately 100 meters by 50 meters—about the size of a football field—that will operate outside semiconductor fabrication plants. These free electron lasers aim to generate extreme ultraviolet light at precise wavelengths of 2 nanometers, which is far more powerful than the 13.5 nanometer wavelengths that dominate the market currently through ASML, a Dutch company leading in EUV lithography.
“About half of the capital goes into lithography,” Gelsinger clarified regarding the semiconductor industry as a whole. “In a lithography machine, the core component is light. This ability to innovate for shorter wavelength, higher power light is essential for advancing semiconductor technology.”
Nicholas Kelez, who leads xLight, boasts an unconventional background for the semiconductor sector. Before starting xLight, Kelez led quantum computing efforts at PsiQuantum and spent 20 years developing large-scale X-ray science facilities at national labs like SLAC and Lawrence Berkeley, where he was Chief Engineer for the Linac Coherent Light Source.
So, why is this effort viable now when ASML abandoned a similar approach nearly a decade ago? Kelez noted, “The difference was that the technology wasn’t as advanced back then. At that time, only a few extreme ultraviolet lithography (EUV) machines existed, and the industry had invested billions in existing technology. It simply wasn’t the right time for a completely new approach.”
Now, with EUV established in cutting-edge semiconductor manufacturing and existing light source technologies reaching their limits, the timing appears more favorable. Kelez explained their key innovation: treating light like a utility instead of integrating it into each machine. “We move away from building a light source within the tool, as ASML currently does, which limits power and size. Instead, we treat light the same way we treat electrical power or HVAC, creating utility-scale solutions that are distributed.”
The company aims to produce its first silicon wafers by 2028, with its first commercial system expected to go online by 2029.
Of course, challenges exist, but right now, directly competing with ASML isn’t one of them. “We’re closely collaborating with them to design how we integrate with an ASML scanner,” Kelez said. “We’re engaging with them and their suppliers, including Zeiss, who handles their optics.”
When asked if Intel or other major chipmakers have committed to using xLight’s technology, Gelsinger replied that they have not yet made any commitments. “Nobody has committed yet, but we’re actively talking with everyone you’d expect, and the conversations are serious.”
Meanwhile, competition is heating up. In October, Substrate, a semiconductor manufacturing startup backed by Peter Thiel, announced it raised $100 million to develop U.S. chip fabs, including an EUV tool reminiscent of xLight’s approach. Gelsinger sees them not as direct competitors but potential partners. “If Substrate is successful, they could become our customer,” he said, noting that Substrate is focused on building full-stack lithography scanners that would ultimately need a free electron laser, which xLight is developing.
Gelsinger’s ties to the Trump administration add an interesting dimension to the narrative. He discussed xLight with Commerce Secretary Howard Lutnick back in February, before Playground financed the startup and before Lutnick’s confirmation. Kelez mentions he spent over a year pitching xLight to the government to foster chip manufacturing in the U.S., but this arrangement has attracted criticism from some who view it as governmental overreach.
Gelsinger remains unapologetic, framing it as necessary for national competitiveness. “I measure it by the results,” he stated. “Does it help achieve the outcomes we need to revitalize our industrial policies? Many of our competitive nations aren’t having such discussions; they’re advancing their necessary policies to attain competitive advantages.”
He cited energy policy as another example. “How many nuclear reactors are being constructed in the U.S. right now? Zero. How many are being built in China? 39. In a digital AI economy, energy policy is critical to a nation’s economic capacity.”
For xLight, the government’s investment comes with few strings attached. The Commerce Department won’t have veto rights or board representation, Kelez explained. “No information rights, nothing,” Gelsinger added. “It’s a minority investment with no governing influence, but it highlights that we need this company to succeed for national interest.”
xLight has raised $40 million from investors, including Playground Global, and has plans for another fundraising round next month in January. Unlike fusion or quantum computing ventures that require billions, Kelez believes xLight’s path is more achievable. “This is not fusion or quantum. We don’t need billions.”
The company has also signed a letter of intent with New York to build its first machine at the New York CREATE site near Albany, although this agreement still needs finalization.
For Gelsinger, xLight represents more than just another investment; it’s an opportunity to reaffirm his significance in the semiconductor industry he helped create, even if his approach contrasts with Silicon Valley’s traditional values.
When asked how he balances his principles in the current political landscape, Gelsinger took a more technocratic stance on corporate leadership — asserting that the funding is from the U.S. government, that administrations are temporary, and that CEOs must stay above political debates.
“CEOs and companies should not be tied to either political party,” he remarked. “Your job is to achieve business objectives and serve your investors and shareholders. You need to navigate which policies are advantageous, regardless of their political affiliation.”
He added about that $150 million from the Trump administration, “Taxpayers will ultimately benefit.”
When asked if overseeing 10 startups is a suitable role after leading Intel, Gelsinger was adamant. “Absolutely. The ability to influence a broad spectrum of technologies is invigorating — I’m a deep tech enthusiast at heart. My mind is fully engaged here, and I’m thankful that the Playground team welcomed me onboard as a rookie venture capitalist.”
He paused for a moment, then joked: “And I’ve given my wife back her weekends.”
That’s a nice thought, but anyone familiar with Gelsinger’s workaholic reputation might wonder how long that arrangement will last.
