(Oct 28): A secretive American startup has emerged with aspirations to challenge two titans of the semiconductor industry: ASML Holding NV and Taiwan Semiconductor Manufacturing Co.
The company, Substrate, has developed a new chipmaking machine that uses particle acceleration to handle lithography — the crucial process of etching microscopic circuitry onto silicon wafers. Claiming to have solved one of technology’s toughest problems, Substrate aims to compete with ASML, whose equipment is currently the only option for making advanced processors.
Substrate faces long odds in trying to upend the way chips are made. ASML’s technology took decades and billions of dollars to perfect and the complexity of semiconductor manufacturing makes it hard for upstarts to muscle into the industry. Substrate is also looking to bring cost-effective chip production back to the US — a difficult challenge in itself.
But the company has some key support. Peter Thiel’s Founders Fund participated in early investments in Substrate alongside General Catalyst and Valor Equity Partners. Commerce Secretary Howard Lutnick has also met with the startup’s founder on multiple occasions and Substrate has held discussions with the Commerce Department, Energy Department and other agencies, the company said.
“The overarching goal is being able to produce the best wafers at the lowest price at high volumes in the United States,” Substrate founder and CEO James Proud said in an interview at the company’s San Francisco offices. A lot of people in the industry feel like it can’t be done, Proud said. “But I think history tells you that that’s incorrect.”
Chips get their function from the nanoscale structures built onto discs of silicon. Patterns are burnt into layers of materials, which are then filled with metals and other substances to form transistors and their connections.
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The problem: Some of the lines that make up those circuits are now so fine that their dimensions are narrower than the wavelength of light. ASML’s machines get around that by using extreme ultraviolet light (EUV) and incredibly flat mirrors and lens arrangements. The machinery generates a type of light that doesn’t naturally occur on Earth and is able to etch the lines into today’s most advanced chips.
Substrate aims to offer a twist on that approach. Though the startup is withholding details for competitive reasons, its machine uses a particle accelerator to create a light source from shorter-wavelength X-rays — something that Proud said allows for the creation of narrower beams.
Substrate claims its machines are printing 12nm features, comparable to those produced by ASML’s so-called High NA EUV machines. That would put the startup’s equipment on par with the most advanced production lines in use today.
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Substrate said it uses no externally produced lithography tools or intellectual property and “has built a differentiated technology with no overlap with any other semiconductor company.”
If Substrate succeeds in bringing this to market, its X-ray lithography equipment will be cheaper and smaller than the massive ASML machines, which can cost hundreds of millions of dollars each. The startup said that its technology is viable and it has images of chip layers that have been printed at a scale that’s equal to or better than what the latest ASML machines can handle.
The ultimate goal is to go beyond what ASML does — selling equipment to other companies — and become a chip manufacturer itself. Substrate wants to build an American foundry, a business that creates made-to-order semiconductors. According to Proud’s current plans, its machinery could be in production in a US-based chip fabrication plant (fab) in the next “couple of years”, he said.
In that area, Substrate would be taking on another company with a commanding lead: TSMC. From its home base in Taiwan, the world’s biggest foundry has opened factories in the US and elsewhere, producing the industry’s most sophisticated chips for the likes of Nvidia Corp and Apple Inc.
To pursue its ambitious goals, Substrate has raised a US$100 million seed round at a valuation of more than US$1 billion — knowing that it will need to raise tens of billions more to build just a few fabs equipped with its own machines.
Proud said he’s confident that the company can eventually produce “the lowest-cost leading-edge fabs and wafers in the world.”
Proud, 34, is a serial startup founder and veteran of the Thiel Fellowship — a programme that encourages entrepreneurs to drop out of college. But he has no prior experience in the chip industry.
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He and Substrate’s investors have assembled a group of about 50 people comprised of top talent from academia and the semiconductor world, Proud said. That includes researchers and advisers who worked on developing EUV technology in the early 1980s at national laboratories like Lawrence Livermore National Laboratory, Lawrence Berkeley National Laboratory and Sandia National Laboratories.
Substrate was founded in 2022, though Proud started working on the idea prior to that. The company’s name refers to the thin silicon base that underpins transistors and integrated circuits — crucial to the performance and efficiency of modern electronics.
EUV lithography, though now controlled by a Dutch company, has roots in US research from more than 30 years ago. It’s a key technology enabling chipmakers to pack billions of transistors tightly together — allowing for better performance and efficiency. That’s vital for producing advanced chips used in artificial intelligence and defence.
The strategic importance of chips has made semiconductor manufacturing a national priority for the US, which is seeking to expand domestic production and limit access to rivals such as China.
Proud said Substrate is driven by an ideology that America must lead the world in technological prowess. Born in the UK, he has become a US citizen and renounced his British citizenship, arguing that the US should lead the world in this field and do what it can to beat out economic adversaries like China.
Proud argues that lithography and advanced chipmaking — once distinctly American technologies — were carelessly ceded to rivals and that falling behind China in these fields would be a catastrophic mistake. Chinese lithography companies, including Shanghai Micro Electronics Equipment Group Co, are making progress in developing their own technologies.
“When I say that our work here is very ideological, that is what I mean,” Proud said. “There are much easier ways to make money in the technology industry than what we are doing.”
