The Trump administration has agreed to inject up to $150 million XILIGHTa semiconductor startup developing advanced chip-making technology, marked the third time the U.S. government has taken an equity position in a private startup and further expanded a controversial strategy that has put Washington at the cap table of U.S. companies.

The Wall Street Journal Reported on Monday That the Commerce Department will fund X-Light in exchange for an equity stake would potentially make the government the startup’s largest shareholder. The agreement uses funding from the CHIPS and Science Act of 2022 and represents the first CHIPS Act award in President Trump’s second term, though it is preliminary and subject to change.

Previous government equity investments under the Trump administration include publicly traded companies Intel, MP Materials, Lithium America, and The ternary metals. two Rare Earth Startup Last month, the Department of Commerce also secured financing in exchange for equity.

You can imagine how this is all playing out in Silicon Valley, where the libertarian ethos runs deep. At TechCrunch’s signature disruptive event in October, Sequoia Capital’s Rolof Botha sarcastically suggested that the trend might be the buzzword of the year when asked about it: “[Some] The most dangerous words in the world are: ‘I’m from the government, and I’m here to help.’

Other VCs have expressed similar concerns, if quietly, about what it means when their portfolio companies are suddenly competing against startups backed by the U.S. Treasury, or even when they find themselves sitting across the table from government representatives at board meetings.

The four-year-old, Palo Alto, Calif., company at the center of this particular experiment is trying to do something real in semiconductor manufacturing. X-Light wants to build lasers powered by particle accelerators.

If it works, it could challenge the near-dominance of ASML, the Dutch giant that has been publicly traded since 1995 and currently holds an absolute monopoly on ultra-violet lithography machines. (Its shares are up 48.6 percent this year.)

X-Light’s CEO is Nicholas Kellys, a veteran of quantum computing and government labs who probably knows his way around a particle accelerator. Backing the project as executive chairman is Pete Gelsinger, the former CEO of Intel, who was shown the door late last year when his ambitious manufacturing revival plans failed to materialize.

“I hadn’t done it yet,” says Jellinger — also a general partner at Playground Global, which led the startup. 40 million Funding-Journal this summer, he added, adding that the effort is “deeply personal” to him.

In fact, X-Lite doesn’t just want to compete with ASML, it wants to go much further. While ASML’s machines operate at wavelengths around 13.5 nanometers, Seismic is targeting 2 nanometers. Gellinger claims this technology can increase wafer processing efficiency by 30% to 40% while using much less energy.

As it happens, both Cleese and Jellinger will join TechCrunch’s hard-hitting event in Palo Alto on Wednesday night, where the government’s support will no doubt be there. (You can still reserve a seat here.)

Commerce Secretary Howard Lutnick, for his part, insisted it was all in the service of national security and technological leadership, saying the partnership could “fundamentally rewrite the boundaries of chipmaking.” Critics will continue to question whether the taxpayer-funded equity stakes represent visionary industrial policy or state capitalism with a patriotic sheen, though even skeptics acknowledge the geopolitical reality.

At least Botha, who described himself as “liberal by nature, like a free-market thinker” in Disruption, conceded that industrial policy had its place when the national interest demanded it. “The reason the United States is resorting to this is because we have other nation-states that we compete with that are using industrial policy to advance their industries that are strategic and perhaps in long-term interests adverse to the United States.”