The U.S. Department of Commerce and the National Institute of Standards and Technology (NIST) have signed a nonbinding letter of intent to provide up to $150 million in CHIPS incentives to xLight, a startup developing lasers for extreme ultraviolet (EUV) lithography.

The funding is intended to help xLight build and demonstrate a prototype free-electron laser (FEL), which could serve as an alternative light source for EUV tools used to print advanced chips. The program marks the first major award from NIST after assuming leadership of the National Semiconductor Technology Center.

NIST called EUV “a critical technology” for manufacturing transistors beyond the 7nm node and said xLight aims to create a light source that will “reposition the U.S. as the global leader in next generation semiconductor lithography.” However, the company has yet to demonstrate a working FEL suitable for production-scale semiconductor fabrication, and the investment remains continent on future agreements.

Executive Chairman Pat Gelsinger said xLight aims to build a more energy-efficient EUV laser, potentially improving performance over current technology “tenfold.”

While the letter of intent reflects a significant U.S. government interest in fostering next-generation semiconductor research, the path from prototype to production remains complex.