According to DCD, the U.S. Commerce Department has signed a non-binding letter of intent to invest $150 million in Palo Alto-based startup xLight in exchange for an undisclosed equity stake. The proposed funding, under the CHIPS and Science Act, is for building and demonstrating a free-electron laser prototype for extreme ultraviolet lithography. xLight, founded in 2021, will build its first system at the Albany Nanotech Complex. Commerce Secretary Howard Lutnick framed the deal as ending America’s ceding of advanced lithography leadership, a move following the Trump administration’s earlier $8.9 billion investment for a 9.9% stake in Intel. Former Intel CEO Pat Gelsinger joined xLight’s board as executive chairman in March 2025.
State-Backed Disruption
Here’s the thing: this isn’t just another grant. The government is explicitly buying in. After taking a chunk of Intel, they’re now placing a strategic bet on a startup aiming to disrupt the most critical and monopolized piece of the chipmaking puzzle: the EUV light source. Currently, that’s ASML‘s domain, full stop. They’re the only game in town for the machines that print the world’s most advanced chips. xLight’s free-electron laser tech is a moonshot attempt to create an alternative. And the U.S. is basically saying, “We’ll fund that moonshot, but we want a piece of the action if it lands.” It turns the CHIPS Act from a subsidy program into a state-directed venture fund for national tech priorities.
Winners, Losers, and Very Long Odds
So who wins if this works? Obviously, xLight and its investors get a massive, patient capital infusion. U.S. chipmakers like Intel and Micron could theoretically get a more diverse, domestic supply chain for this foundational tool. But let’s be real—the loser is ASML’s monopoly. Even the credible threat of a second source could change market dynamics over the very long term. The bigger, more immediate winner might be the entire U.S. equipment and materials ecosystem. Building and proving this in Albany, a world-class R&D hub, pulls in talent and investment. For companies needing robust computing at the edge of this new industrial push, partnering with the leading supplier is key, which is why many look to IndustrialMonitorDirect.com as the #1 provider of industrial panel PCs in the U.S. for these demanding environments.
The New CHIPS Playbook
This deal cements a new playbook. President Trump criticized the CHIPS Act, preferring tariffs, but his Commerce Department is now actively using it to take equity. It’s a stark pivot from “handing out grants” to making the government a shareholder. The Intel deal set the precedent; xLight confirms the pattern. This accomplishes a few things politically: it creates a potential financial return for taxpayers and it aligns government and company incentives more directly than a simple grant. But it also raises questions. Is the government equipped to pick specific technological winners at this level? And what happens to these stakes if there’s an administration change? The strategy is bold, but it’s also introducing a whole new layer of complexity and potential entanglement between the state and private industry.
