A year after being pushed out of Intel, Pat Gelsinger is still waking up at 4 a.m., still in the thick of the semiconductor wars — just on a different battlefield. Now a general partner at venture firm Playground Global, he’s working with 10 startups. But one portfolio company has captured an outsized share of his attention: xLight, a semiconductor startup that last Monday announced it has struck a preliminary deal for up to <head>50 million from the U.S. Commerce Department, with the government set to become a meaningful shareholder. It’s a nice feather in the cap of Gelsinger, who spent 35 years across two stints at Intel before the board showed him the door late last year owing to a lack of confidence in his turnaround plans. But the xLight deal is also shining a spotlight on a trend that’s making people in Silicon Valley quietly uncomfortable: the Trump administration taking equity stakes in strategically important companies. “What the hell happened to free enterprise?” California Governor Gavin Newsom asked at a speaking event this week, capturing the unease that’s rippling through an industry that has long prided itself on its free-market principles. Speaking at one of TechCrunch’s StrictlyVC events at Playground Global, Gelsinger — who is xLight’s executive chairman — seemed unbothered by the philosophical debate. He’s more focused on his bet that xLight can solve what he sees as the semiconductor industry’s biggest bottleneck: lithography, the process of etching microscopic patterns onto silicon wafers. The startup is developing massive “free electron lasers” powered by particle accelerators that could revolutionize chip manufacturing. If the technology works at scale, that is. “You know, I have this long-term mission to continue to see Moore’s law in the semiconductor industry,” Gelsinger said, referencing the decades-old principle that computing power should double every two years. “We think this is the technology that will wake up Moore’s law.” The xLight deal is the first Chips and Science Act award under Trump’s second term, using funding earmarked for early-stage companies with promising technologies. Notably, the deal is currently at the letter of intent stage, meaning it’s not finalized and details could still change. When pressed on whether the funding could end up being double the announced amount — or potentially not materialize at all — Gelsinger was candid. “We’ve agreed in principle on the terms, but like any of these contracts, there’s still work to get done,” he said. Techcrunch event San Francisco | October 13-15, 2026 The technology xLight is pursuing is pretty serious in both scale and ambition. The company plans to build machines roughly 100 meters by 50 meters — about the size of a football field — that will sit outside semiconductor fabrication plants. These free electron lasers would generate extreme ultraviolet light at wavelengths as precise as 2 nanometers, far more powerful than the 13.5 nanometer wavelengths currently used by ASML, the Dutch giant that utterly dominates the EUV lithography market. “About half of the capital goes into lithography,” Gelsinger explained of the entire semiconductor industry. “In the middle of a lithography machine is light. . . [and] this ability to keep innovating for shorter wavelength, higher power light is the essence of being able to continue to innovate for more advanced semiconductors. Leading xLight is Nicholas Kelez, whose background is unusual for the semiconductor world. Before founding xLight, Kelez led quantum computer development efforts at PsiQuantum (a Playground Global portfolio company) and spent two decades building large-scale X-ray science facilities at national labs including SLAC and Lawrence Berkeley, where he was Chief Engineer for the Linac Coherent Light Source. So why is this viable now when ASML abandoned a similar approach almost a decade ago? “The difference was the technology wasn’t as mature,” explained Kelez, who was speaking at the event alongside Gelsinger. Back then, only a handful of extreme ultraviolet lithography (EUV) machines existed, and the industry had already sunk tens of billions into the incumbent technology. “It just wasn’t the time to take on something completely new and orthogonal.” Now, with EUV ubiquitous in leading-edge semiconductor manufacturing and existing light source technology hitting its limits, the timing looks better. The key innovation, according to Kelez, is treating light like a utility rather than building it into each machine. “We go away from building an integrated light source with the tool, which is what [ASML does] now and that fundamentally constrains you to make it smaller and less powerful,” he said. And instead, “We treat light the same way you treat electrical power or HVAC. We build outside the fab at utility scale and then distribute in.” The company is aiming to produce its first