What does it mean when Uncle Sam is one of your biggest shareholders? Chip startup xLight is about to find out

The Trump administration agreed to pump up to $150 million into the project xLighta semiconductor startup developing advanced chip-making technology, marks the third time the U.S. government has taken an equity position in a private startup and further expands a controversial strategy that has put Washington on the agendas of corporate America.

The Wall Street Journal I mentioned Monday That the Commerce Department would provide financing to xLight in exchange for an equity stake would likely make the government the startup’s largest shareholder. The deal uses funding from the 2022 CHIP & Science Act and represents the first CHIP Act award in President Trump’s second term, although it remains preliminary and subject to change.

Previous government equity investments under the Trump administration include publicly traded companies Intel, MP Materials, Lithium Americas, and Metal Trilogy. two Startups in the field of rare earths It also received equity funding from the Ministry of Commerce last month.

Just imagine how all this is happening in Silicon Valley, where the spirit of liberation is taking hold. At TechCrunch’s featured Disrupt event in October, Sequoia Capital’s Roelof Botha jokingly made what might be an understatement of the year when asked about the trend: “[Some] One of the most dangerous words in the world is: “I am from the government, and I am here to help.”

Likewise, other venture capital firms have expressed concerns, albeit quietly, about what it means when their portfolio companies suddenly compete against start-ups backed by the US Treasury, or even when they find themselves sitting across the table from government representatives in board meetings.

The four-year-old company in Palo Alto, California, which is at the center of this particular experiment, is trying to do something really bold in semiconductor manufacturing. XLight wants to build particle accelerator lasers — machines the size of a football field — that would create more powerful and precise light sources for making chips.

If successful, it could challenge the near-total dominance of ASML, the Dutch giant that has been publicly traded since 1995 and currently enjoys an absolute monopoly on extreme UV lithography machines. (Its shares are up 48.6% this year.)

xLight’s CEO is Nicholas Kelles, an expert in quantum computing and government labs who supposedly knows his way around a particle accelerator. Helping this project as CEO is former Intel CEO Pat Gelsinger, who was ousted late last year after his ambitious plans to revive manufacturing fell through.

“I’m not done yet,” said Gelsinger — also a general partner at Playground Global, which led the startup 40 million dollars funding round this summer — he told the newspaper, adding that the effort is “very personal” for him.

In fact, xLight doesn’t just want to compete with ASML, it wants to go much further. While ASML devices operate at wavelengths of about 13.5 nanometers, xLight targets 2 nanometers. Gelsinger claims that this technology could boost chip processing efficiency by 30% to 40% while using much less energy.

As it happens, both Kelez and Gelsinger will be at TechCrunch’s StrictlyVC event Wednesday night in Palo Alto, where government support will undoubtedly come. (You can still get a seat here.)

For his part, Commerce Secretary Howard Lutnick insists that this is all in the service of national security and technology leadership, saying that the partnership could “fundamentally rewrite the boundaries of the chip industry.” Critics will continue to question whether taxpayer-funded equity stakes represent visionary industrial policy or state capitalism with national lustre, though even skeptics acknowledge the geopolitical reality.

At least Botha, who described himself on Disrupt as “a sort of inherently libertarian free-market thinker,” acknowledged that industrial policy has its place when national interests demand it. “The only reason the United States would do this is because we have other nation-states with which we compete that are using industrial policy to promote their industries that are strategic and potentially contrary to long-term interests of the United States.”