US Commerce Department to invest up to $150 million in in chip laser startup

The U.S. Department of Commerce plans to invest up to $150 million in xLight, a startup developing free-electron laser systems for semiconductor lithography. The proposed funding marks the first investment under the administration’s semiconductor R&D framework.

The United States Department of Commerce has signed a non-binding preliminary letter of intent to provide up to $150 million in incentives to xLight, a company developing free-electron laser technology for advanced chip manufacturing. The size of the government’s equity stake was not disclosed.

The funding will be administered through the department’s CHIPS Research and Development Office and represents its first investment since assuming oversight of a $7.4 billion semiconductor research initiative established during the prior administration. The move signals continued federal backing for domestic semiconductor innovation amid strategic competition in advanced manufacturing technologies.

In extreme ultraviolet (EUV) lithography, the core process used to etch microscopic circuit patterns onto silicon wafers, the laser source is among the most technically challenging components. Currently, ASML is the sole producer of EUV lithography systems. xLight is pursuing a laser architecture derived from particle accelerator science, aiming to reduce energy consumption while delivering the power levels required for next-generation fabrication.

The company is collaborating with U.S. national laboratories to develop a prototype compatible with existing lithography platforms. For semiconductor equipment suppliers and policymakers, the investment underscores efforts to localize critical subcomponents and diversify supply chains in advanced chip production.