The Trump administration has approved an investment of up to $150 million in xLight, a semiconductor startup focused on cutting-edge chip-making technology. This move marks the government’s third equity investment in a private startup, expanding a controversial strategy that involves Washington in American companies’ cap tables.
The Wall Street Journal reported on Monday that the Commerce Department will fund xLight in exchange for an equity stake, potentially making the government the startup’s largest shareholder. This funding comes from the 2022 Chips and Science Act and represents the first Chips Act award in President Trump’s second term, subject to further developments.
Previous government equity investments under the Trump administration include Intel, MP Materials, Lithium Americas, and Trilogy Metals. Two rare earths startups also received funding from the Commerce Department last month in exchange for equity.
This approach has stirred mixed reactions in Silicon Valley due to its departure from the libertarian ethos prevalent in the tech industry. Venture capitalists have raised concerns about competing against startups backed by the government and navigating board meetings with government representatives.
XLight, a company based in Palo Alto, California, is pioneering semiconductor manufacturing by developing particle accelerator-powered lasers for chip production. The company’s ambitious goal is to challenge ASML, the Dutch giant dominating extreme ultraviolet lithography machines in the industry.
