A year after his departure from Intel, Pat Gelsinger, now a general partner at venture firm Playground Global, has re-emerged as a key figure in the semiconductor industry's ongoing technological evolution. Gelsinger is currently engaged with ten startups, but a significant portion of his focus is directed towards xLight, a semiconductor startup that recently announced a preliminary agreement for up to $150 million from the U.S. Commerce Department. This landmark deal positions the U.S. government as a meaningful shareholder in xLight, marking the first "Chips and Science Act" award under Trump's second term specifically for early-stage companies with promising technologies. While a notable achievement for Gelsinger, who also serves as xLight's executive chairman, the government's equity stake in strategically important companies is generating quiet discomfort and philosophical debate within Silicon Valley, challenging its traditional free-market ethos.

Gelsinger, however, remains undeterred by the philosophical discussions, prioritizing xLight's mission to tackle what he identifies as the semiconductor industry's most critical bottleneck: lithography. This intricate process involves etching microscopic patterns onto silicon wafers, a foundational step in chip manufacturing. xLight is developing groundbreaking technology centered on massive "free electron lasers," powered by particle accelerators, designed to revolutionize chip production. These colossal machines, approximately 100 meters by 50 meters—comparable in size to a football field—are intended to operate externally to semiconductor fabrication plants. Their purpose is to generate extreme ultraviolet light at an incredibly precise wavelength of 2 nanometers, significantly more powerful than the 13.5 nanometer wavelengths currently utilized by ASML, the Dutch powerhouse dominating the EUV lithography market. Gelsinger emphasizes that lithography accounts for roughly half of the capital expenditure in the semiconductor industry, and continuous innovation in shorter, more powerful light sources is essential to advancing semiconductor capabilities and fulfilling the long-term vision of Moore's Law.

The leadership of xLight falls to Nicholas Kelez, whose extensive background is particularly suited for this ambitious endeavor. Prior to co-founding xLight, Kelez spearheaded quantum computer development efforts at PsiQuantum (another Playground Global portfolio company) and dedicated two decades to constructing large-scale X-ray science facilities at prestigious national labs such as SLAC and Lawrence Berkeley, where he served as Chief Engineer for the Linac Coherent Light Source. Kelez explained that while ASML explored a similar approach nearly a decade ago, the timing wasn't right due to less mature technology and significant industry investment in incumbent solutions. Today, with EUV technology pervasive in leading-edge manufacturing and existing light sources reaching their practical limits, the environment is far more conducive to xLight's innovation. The company's core differentiator lies in treating light as a utility, akin to electrical power or HVAC, by building utility-scale light sources outside the fab and then distributing the light inward, thus bypassing the size and power constraints of integrated light sources.

xLight aims to produce its initial silicon wafers by 2028, with the first commercial system anticipated to be operational by 2029. Despite the scale of its ambition, the company doesn't foresee direct competition with ASML as an immediate hurdle; in fact, Kelez noted active collaboration with ASML and its providers, such as Zeiss (optics), to ensure seamless integration with ASML scanners. While major chipmakers, including Intel, have not yet formally committed to purchasing xLight's technology, Gelsinger confirms intense ongoing discussions with all key industry players. The competitive landscape is evolving, with companies like Substrate, backed by Peter Thiel, raising significant capital for U.S. chip fabs and developing EUV tools. Gelsinger views Substrate not as a competitor but as a potential customer, as their focus on building a full-stack lithography scanner would ultimately necessitate a free electron laser like xLight's.

The $150 million deal from the Commerce Department is currently at the letter of intent stage and subject to finalization, yet its terms indicate minimal government interference. Kelez stated that the Commerce Department would not hold veto rights, a board seat, or any information rights. Gelsinger further clarified it as a minority, non-governing investment, emphasizing its importance for national interest and competitiveness. He candidly engaged with Commerce Secretary Howard Lutnick about xLight even before Playground Global's investment and Lutnick's confirmation. For Gelsinger, this government involvement is a pragmatic necessity for national competitiveness, pointing to differing industrial policies globally where other nations readily adopt policies for competitive outcomes without extensive debate. xLight has already secured $40 million from investors including Playground Global and plans another fundraising round soon. The company has also signed a letter of intent with New York to establish its first machine at the CREATE site near Albany.

For Pat Gelsinger, xLight represents more than just another portfolio company; it's an opportunity to solidify his influence and legacy within the semiconductor industry. He views the ability to impact a diverse range of deep technologies as immensely satisfying. When addressing the political implications of government investment, Gelsinger adopted a technocratic stance, asserting that CEOs and companies should remain apolitical, focusing solely on business objectives and shareholder value by navigating policies beneficial to either political side. He expressed confidence that taxpayers would ultimately benefit from the government's investment in xLight. Despite his reputation as a workaholic, Gelsinger affirmed his contentment with his current role, finding his mind stretched across various technologies, and jokingly added that he has "given his wife back her weekends," though the longevity of that arrangement remains to be seen.