What Is XLight — The Chip Startup Getting A £120M Lifeline From Trump Govt?

The US government's decision to inject up to $150 million (roughly £120 million) into xLight has gotten global attention. Backed by the administration of Donald Trump, the funding marks a massive intervention in the semiconductor sector.

The investment, structured as the government taking an equity stake in the company, demonstrates confidence in xLight's promise to reshape chip manufacturing with advanced laser technology. Especially for a startup helmed by seasoned industry veterans, this lifeline could well determine whether xLight becomes a giant force in the next generation of computing.

What xLight Does: Reinventing the Light Source for Chips

xLight is not your typical semiconductor company. Rather than manufacturing chips themselves, the startup aims to revolutionise the core lithography process by rethinking the light source used in the most advanced chip factories.

Currently, many of the world's most powerful semiconductors are made using machines that rely on a technology known as 'laser-produced plasma' (LPP) to generate extreme ultraviolet (EUV) light, which etches microscopic patterns onto silicon wafers during production. However, LPP systems have limitations in power, efficiency and scalability.

xLight's vision is radically different. The company is developing Free Electron Lasers (FELs), powered by particle accelerators, the same technology used in advanced physics research labs. Moreover, their FEL platform promises EUV light that is far brighter and more powerful, potentially up to 4 times stronger than current LPP sources.

So if xLight succeeds, its FEL systems could plug directly into existing lithography scanners from industry-leading firms (like ASML) and deliver enhanced performance without requiring a complete overhaul of the manufacturing equipment. According to xLight, one FEL unit could serve multiple lithography machines, massively improving productivity while cutting down per-wafer cost and resource consumption.

Furthermore, beyond economics, this approach also offers sustainability benefits. xLight reportedly says that its FEL systems could reduce power and water usage per wafer by many times compared to conventional systems and eliminate the need for consumable materials like tin or hydrogen, which are materials used in LPP systems.

XLight was founded in 2021 and is headquartered in Palo Alto, California. A team of seasoned technologists and semiconductor veterans leads it. The company announced in July 2025 that it had completed a $40 million (£30.2 million) Series B funding round to advance prototype development of its FEL technology. Moreover, its goal is to deliver a working prototype capable of commercial chip manufacturing by around 2028.

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Why the Trump Government Is Backing xLight

The decision to invest in xLight is from the office of the U.S. Commerce Department, according to reports. Under the plan, the Trump administration will take an equity stake in the startup, potentially making the government its largest shareholder, it seems.

The investment signals a broader strategic mission: to re-establish American leadership in critical semiconductor technologies. In recent years, global chip manufacturing has grown increasingly geopolitically charged, with major firms concentrated in a few regions and a handful of companies dominating the supply chain. By supporting xLight, the U.S. may reduce reliance on foreign suppliers and build a domestic source for advanced lithography technology.