Update with more detail on the initiative from Substrate to use electron accelerators rather than EUV for making new generations of semiconductors.
Benzinga
06:18 AM EDT, 10/29/2025
Meet The New Chip Maker Aiming To Outrun TSMC And ASML
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Silicon Valley heavyweights, including Peter Thiel’s Founders Fund, General Catalyst, and Valor Equity Partners, have poured over $100 million into San Francisco chip startup Substrate.
Their investment in the secretive U.S. startup founded in 2022 marks their ambitions to disrupt Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) and ASML Holding NV (NASDAQ:ASML) in advanced chipmaking.
Founded by brothers James and Oliver Proud, the San Francisco-based company aims to use particle accelerators as light sources for X-ray-based lithography.
Also Read: Not Just Taiwan Semiconductor: Elon Musk To Also Rely On Samsung For Tesla’s AI Chips
Substrate claims its method could reduce the cost of producing a cutting-edge wafer from $100,000 to around $10,000 by the end of the decade, with commercial production targeted for 2028, the Financial Times reported on Tuesday.
CEO James Proud plans to build alternatives to ASML’s extreme ultraviolet lithography systems and Taiwan Semiconductor’s fabrication plants, potentially requiring tens or even hundreds of billions of dollars in funding as Substrate scales operations.
Analyst: AI is the New Growth Driver for ASMLChip equipment maker ASML stock has gained 52% year-to-date. According to Goldman Sachs analyst Alexander Duval, ASML is demonstrating strong momentum, driven by surging demand for its advanced chipmaking equipment from the artificial intelligence industry.
The analyst argues that massive investments in AI infrastructure are accelerating the chip industry’s migration to more advanced manufacturing nodes, making AI, not smartphones, the new main driver for ASML’s most advanced technology.
Taiwan Semiconductor Maintains Dominance with Aggressive AI InvestmentTaiwan Semiconductor stock has gained 53% year-to-date. Dan Nystedt of TriOrient Investments highlighted the chipmaker’s unmatched manufacturing dominance, pointing out that even rival chipmaker Intel Corp. (NASDAQ:INTC) outsources the production of its critical AI-related processors to the Taiwanese foundry.
Nystedt notes that Taiwan Semiconductor is aggressively investing to meet this surge in AI demand, boosting its capital expenditure to between $40 and $42 billion for the year and works closely with its major customers, like Alphabet Inc. (NASDAQ:GOOGL) Google, Amazon.com Inc. (NASDAQ:AMZN), and Microsoft Corp. (NASDAQ:MSFT) to gauge real demand and avoid overbuilding.
The analyst also highlighted the immense cost of producing these cutting-edge chips, with the price for the latest 2-nanometer wafers expected to reach $30,000.
Prototype Success and Key Hires Fuel Substrate MomentumSubstrate has already demonstrated its prototype technology at U.S. National Laboratories, producing wafer patterns at resolutions comparable to ASML’s most advanced high-NA EUV machines, which are used for 2-nanometer chip production.
Substrate has recruited top talent from Taiwan Semiconductor, Applied Materials, Inc. (NASDAQ:AMAT), Advanced Micro Devices, Inc. (NASDAQ:AMD), Google, Qualcomm Inc. (NASDAQ:QCOM), and U.S. National Labs.
Price Actions: ASML shares were trading higher by 1.89% to $1,072.37 at last check Wednesday. TSM was up 0.87%. |
