🤯 Chips Revolution: Gelsinger's $150M Gamble 🚀

Tech & Science

A year after his departure from Intel, Pat Gelsinger is still deeply involved in the semiconductor wars, though now operating from a different perspective as a general partner at venture firm Playground Global, where he’s collaborating with ten startups. Notably, one portfolio company, xLight, has recently garnered significant attention: last Monday, the startup announced a preliminary agreement with the U.S. Commerce Department for up to $150 million, securing the government’s role as a major shareholder. This represents a significant achievement for Gelsinger, who spent 35 years at Intel across two periods before the board dismissed his turnaround strategies at the end of last year. The xLight deal is also highlighting a growing trend – the Trump administration’s investment of equity stakes in strategically vital companies – which is generating considerable unease within Silicon Valley, a region long defined by its commitment to free-market principles. As California Governor Gavin Newsom expressed this week, questioning “What the hell happened to free enterprise?” The sentiment reflects a broader discomfort. Speaking at TechCrunch’s StrictlyVC event at Playground Global, where he serves as xLight’s executive chairman, Gelsinger appeared unfazed by the philosophical debate, instead concentrating on his belief that xLight can address the semiconductor industry’s foremost challenge: lithography, the process of etching microscopic features.

The startup is developing massive “free electron lasers,” powered by particle accelerators, which could revolutionize chip manufacturing. If the technology proves successful at scale, of course. “I have a long-term mission to continue to see Moore’s Law in the semiconductor industry,” stated Gelsinger, referencing the decades-old principle that computing power should double every two years. “We believe this technology represents the key to reigniting Moore’s Law.” The xLight deal represents the first Chips and Science Act award under President Trump’s second term, utilizing funding specifically designated for early-stage companies with innovative technologies. Currently, the agreement is at the letter of intent stage, indicating that details remain subject to change. When questioned about the potential for the funding to exceed the announced amount, or potentially not materialize at all, Gelsinger offered a candid response. “We have agreed in principle on the terms; however, like all contracts, there is still work to be completed,” he explained. The xLight technology is characterized by both its significant scale and ambitious goals. The company plans to construct machines approximately 100 meters by 50 meters – roughly the size of a football field – situated adjacent to semiconductor fabrication plants. These free electron lasers would generate extreme ultraviolet light at wavelengths as precise as 2 nanometers, significantly more powerful than the 13.5 nanometer wavelengths currently utilized by ASML, the Dutch giant.

“About half of the capital investment in the semiconductor industry goes into lithography,” Gelsinger explained. “At the heart of a lithography machine is light – and the continuous ability to innovate with shorter wavelengths and higher power light is fundamentally what drives advancement in semiconductors.” Kelez, speaking alongside Gelsinger at the event, added, “Back then, only a handful of extreme ultraviolet lithography (EUV) machines existed, and the industry had already invested tens of billions into established technology. It simply wasn’t the right time to embrace a completely new, orthogonal approach.” Now, with EUV technology now prevalent in leading-edge manufacturing and existing light source technology reaching its limitations, the timing appears more favorable. According to Kelez, the key innovation lies in treating light as a utility, rather than integrating it directly into each machine – a model currently employed by ASML. “We’re moving away from building an integrated light source with the tool, which inherently limits us to smaller, less powerful solutions,” he stated. “Instead, we treat light like electrical power or HVAC systems: we build it at utility scale and then distribute it.” The company is targeting the production of its first silicon wafers by 2028 and the launch of its first commercial system by 2029; however, they acknowledge the challenges involved in competing with established leaders like ASML.

“We’re working very closely with them to essentially design how we integrate with an ASML scanner,” Kelez stated. This collaboration extends to their providers, such as Zeiss, which handles their optics. Adding another dimension to the narrative is Gelsinger’s prior relationship with the Trump administration. He introduced xLight to Commerce Secretary Howard Lutnick in February, prior to both Playground funding the startup and Lutnick’s confirmation. At that time, Kelez indicated that he had already spent more than a year presenting xLight to the government as a means of revitalizing domestic chip manufacturing. However, this recent arrangement has prompted criticism from some who believe the administration’s approach represents undue intervention. Gelsinger remains unconcerned, characterizing the effort as essential for national competitiveness. “I measure it by the results,” he explained. “Does it drive the results that we want and that we need to reinvigorate our industrial policies? Many of our competitive countries don’t have such debates; they’re moving forward with the policies necessary to achieve their competitive outcomes.” He cited energy policy as another relevant example: “How many nuclear reactors are being built in the U.S. today? Zero. How many are being built in China today? Thirty-nine. Energy policy in a digital AI economy equals the economic capacity of the nation.” The government’s investment in xLight is structured with minimal restrictions; the Commerce Department will not hold veto rights or a seat on the board.

Kelez, pictured above, explained, “There’s no information access, nothing available.” Gelsinger concurred, stating, “This represents a minority investment, operating outside of any governing structure, but it underscores the critical need for this company’s success in the national interest.” xLight has secured $40 million in funding from investors including Playground Global and is slated to conduct another fundraising round in January. Unlike companies pursuing technologies like fusion or quantum computing, which require substantial investments of billions, Kelez emphasized that xLight’s path is considerably more manageable. “This isn’t fusion or quantum,” he asserted. “We don’t require such enormous sums.” Furthermore, the company has signed a letter of intent with New York to construct its initial machine at the New York CREATE site near Albany, though this agreement remains subject to finalization. When questioned about coordinating with a network of ten startups – a significant shift from his previous role at Intel – Gelsinger was resolute. “Absolutely. The opportunity to influence across such a diverse range of technologies – I’m fundamentally a deep tech individual – has expanded my perspective immensely. I’m incredibly grateful to the Playground team for inviting me to join and allow me to contribute as a venture capitalist, and – as a bonus – I’ve regained my weekends.”