A year after being fired from Intel, Pat Gelsinger is still waking up at 4 a.m., still in the middle of the semiconductor wars — just on a different battlefield. He is now a general partner at venture firm Playground Global and is working with 10 startups. But one portfolio company has captured a large portion of their attention: xLight, a semiconductor startup that announced last Monday it had struck an initial deal worth up to $150 million from the U.S. Commerce Department, with the government set to become a meaningful shareholder.
It’s a nice accomplishment for Gelsinger, who spent 35 years at Intel over two tenures before the board ousted him late last year due to a lack of confidence in his turnaround plans. But the
“Whatever happened to free enterprise?” California Governor Gavin Newsom asked at a speaking event this week, expressing unease in an industry that has long prided itself on its free-market principles.
Speaking at one of TechCrunch’s StrictlyVC events at Playground Global, Gelsinger – who is executive chairman of Xlite – seemed unimpressed by the philosophical debate. He’s focusing more on his claim that xLight can solve what he sees as the semiconductor industry’s biggest hurdle: lithography, the process of engraving microscopic patterns on silicon wafers. The startup is developing a large-scale “free electron laser” powered by particle accelerators that could revolutionize chip manufacturing. If the technology works at scale, that is.
“You know, it’s my long-term mission to continue to see Moore’s Law in the semiconductor industry,” Gelsinger said, referencing the decades-old theory that computing power should double every two years. “We think this is the technology that will awaken Moore’s Law.”
The XLight deal is the first Chips and Science Act award under Trump’s second term, using funding earmarked for early-stage companies with promising technologies. Notably, the deal is currently in the letter of intent stage, meaning it has not been finalized and the details may still change. When pressed on whether the funding might be double the amount announced – or possibly not materialize at all – Gelsinger was candid.
“We have agreed to the terms in principle, but like any of these contracts, there is still work to be done,” he said.
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The technology that XLight is pursuing is quite serious in both scale and ambition. The company plans to build machines approximately 100 meters by 50 meters – about the size of a football field – that will sit outside semiconductor manufacturing plants. These free electron lasers will generate extreme ultraviolet light at wavelengths as precise as 2 nanometers, which is much more powerful than the 13.5 nanometer wavelength currently used by ASML, the Dutch giant that completely dominates the EUV lithography market.
“About half the capital goes into lithography,” Gelsinger said of the entire semiconductor industry. “There is light in the middle of the lithography machine… [and] This ability to continue to innovate for shorter wavelength, higher power light is the essence of being able to continue to innovate for more advanced semiconductors.
Leading the charge is Nicolas Kelez, whose background is unusual for the semiconductor world. Before founding XLight, Kelez led quantum computer development efforts at PsiQuantum (a Playground Global Portfolio Company) and spent two decades building large-scale
So why is it viable now when ASML abandoned a similar approach nearly a decade ago? “The difference was that the technology was not as mature,” explained Kelez, who was speaking at the event along with Gelsinger. At the time, only a few extreme ultraviolet lithography (EUV) machines existed, and the industry had already invested tens of billions in existing technology. “This was not the time to adopt something completely new and conservative.”
Now, with EUV becoming ubiquitous in leading semiconductor manufacturing and existing light source technology reaching its limits, times look better. According to Kelez, the key innovation is to treat lighting like a utility rather than building it into every machine. “We move away from creating an integrated light source with the device, which is what [ASML does] Anymore and it basically forces you to make it smaller and less powerful,” he said. And instead, “we treat light the same way you treat electrical power or HVAC. We manufacture at utility scale out of the fab and then distribute.
The company aims to produce its first silicon wafers by 2028 and bring its first commercial systems online by 2029.
Naturally, there are hurdles, although right now, competing directly with ASML doesn’t seem to be one of them. “We’re working closely with them to basically design a way to integrate with the ASML scanner,” Kelez said. “So we’re working with both of them as well as their providers, [like] Zeiss, who does their optics.
Asked whether Intel or other major chip makers have committed to purchasing XLight’s technology, Gelsinger said they have not. “No one has committed yet, but work is underway with everyone on the list that you would expect, and we are in intensive conversations with all of them.”
Meanwhile, the competitive landscape is heating up. In October, Substrate – a semiconductor manufacturing startup backed by Peter Thiel – announced it had raised $100 million to develop a US chip fab, including an EUV tool that sounds similar to Xlight’s approach. However Gelsinger does not see them as direct competition. “If Substrate is successful, they could be a customer for us,” he said, adding that Substrate is focused on building a full-stack lithography scanner that will eventually require a free electron laser, which is exactly what xLight is developing.
Gelsinger’s relationship with the Trump administration adds another layer to the story. Before Playground funded the startup and before Lutnick was confirmed, he pitched xLight to Commerce Secretary Howard Lutnick in February. At the time, Kelez says, he had already spent more than a year pitching xLight to the government as a way to bring chip manufacturing back to the US, but the new arrangement has drawn criticism from some who see the administration’s approach as overreaching.
Gelsinger has made no apologies for this, calling it essential for national competitiveness. “I measure it by results,” he said. “Does this drive the outcomes we want and do we need to reinvent our industrial policies? Many of our competitor countries are not having such debates. They are moving forward with the policies that are necessary to meet their competitive outcomes.”
He pointed to energy policy as another example. “How many nuclear reactors are being built in the US today? Zero. How many nuclear reactors are being built in China today? 39. Energy policy in a digital AI economy is equal to the economic potential of the nation.”
For Xlight, the government stake comes with minimum conditions. The Commerce Department would not have veto power or a board seat, says Kelleys (pictured above). “No Freedom of Information, nothing,” says Gelsinger. “It’s a minority investment in a non-governmental way, but it also says we need this company to be successful for the national interest.”
xLight has raised $40 million from investors including Playground Global and is planning another fundraising round next month, January. Unlike fusion or quantum computing startups, which require billions, Kelez said xLight’s path is more manageable. “This is not fusion or quantum,” he said. “We don’t need billions.”
The company also signed a letter of intent with New York to build its first machine at the New York Create site near Albany, though that agreement also needs to be finalized.
For Gelsinger, xLight is clearly more than just another portfolio company. It’s a chance to cement his relevance in the semiconductor industry he helped create, even if his methods put him at odds with the traditional ethos of Silicon Valley.
When asked about navigating his principles in the current political climate, Gelsinger fell back on a more technocratic view of corporate leadership – where the money is from the US government, governance is temporary, and the CEO must stay above the fray.
“CEOs and companies should neither be Republicans nor Democrats,” he said. “Your job is to serve the business objective, serve your investors, serve your shareholders. That’s your objective. And as a result, you have to be able to figure out what policies are beneficial on the R side or what policies are beneficial on the D side, and be able to navigate through them.”
“Taxpayers would do well to get that $150 million from the Trump administration,” he said separately.
When asked if working at 10 startups was enough for someone who runs Intel, Gelsinger responded emphatically. “Absolutely. The idea that I can now have an impact on such a wide range of technologies – I’m a deeply technical person at the core of who I am. My mind has been stretched a lot here, and I’m just grateful that the Playground team took me on board and allowed me to make them smarter and be a newbie venture capitalist.”
He paused, then said with a smile: “And I gave my wife her weekends back.”
It’s a nice idea, although anyone who knows Gelsinger’s reputation as a workaholic might wonder how long this arrangement will last.
