The US government has agreed to invest $150 million in chip-making technology startup xLight in exchange for an undisclosed equity stake.

In a statement, the Commerce Department said it had signed a non-binding preliminary letter of intent (LOI) with the company, and would provide xLight with “proposed federal incentives under the CHIPS and Science Act.”

These potential incentives would be for the construction, build-out, and demonstration of a free-electron laser (FEL) prototype as an alternative light source for extreme ultraviolet (EUV) lithography, the statement said.

Palo Alto-based xLight was founded in 2021 with the mission to “commercialize particle accelerator-driven free electron lasers (FEL) for critical US economic and national security applications.”

Nicholas Kelez, CEO and CTO of xLight, said: “With the support from Commerce, our investors, and development partners, xLight is building its first free-electron laser system at the Albany Nanotech Complex, where the world's best lithography capabilities will enable the research and development that will define the future of chip manufacturing.”

“For far too long, America ceded the frontier of advanced lithography to others. Under President Trump, those days are over. This partnership would back a technology that can fundamentally rewrite the limits of chipmaking. Best of all, we would be doing it here at home. xLight’s FEL platform represents the kind of breakthrough innovation that restores American leadership, secures our supply chains, and guarantees that the next generation of semiconductors is born in the United States. This is the CHIPS program at its best,” said Secretary of Commerce Howard Lutnick.

President Trump has long been critical of the CHIPS Act, arguing that the government should levy tariffs on the semiconductor industry instead of handing out grants and loans to chip companies. However, despite saying multiple times that tariffs on foreign-made chips would be imposed imminently, Trump has yet to announce any specific levies on semiconductors.

In August 2025, Lutnick said during an interview with CNBC that the government would be looking to take equity stakes in companies set to be in receipt of grants under the Act.

A week later, it was announced that the US government had taken a 9.9 percent stake in Intel, with the state investing $8.9 billion in the chipmaker – $5.7bn of which came from funds that would have been awarded to the company through the CHIPS Act, and $3.2bn from funds under the Secure Enclave program.

Former Intel CEO Pat Gelsinger joined xLight’s board as executive chairman in March 2025.