Startups to Watch: Substrate - Rethinking How the World Makes Advanced Semiconductor Chips

From smartphones and laptops to AI systems, electric vehicles, and robots, almost every modern technology depends on one tiny component: the semiconductor chip.

But as chips become more powerful, making them is becoming increasingly complex and expensive. This is where Substrate is taking a different approach.

Substrate is developing a next-generation semiconductor foundry built around a new form of X-ray lithography—a technology designed to print extremely small patterns onto silicon wafers while potentially reducing the cost and complexity of advanced chip manufacturing.

But what exactly does that mean? Let's break it down.

Photo by Manuel on Unsplash

From San Francisco to the Future of Chipmaking

Founded in 2022 by brothers James Proud and Oliver Proud, Substrate is a San Francisco-based semiconductor technology company with an ambitious goal: to build a new generation of semiconductor fabs in the United States.

The company has attracted significant attention from the technology and investment community. By October 2025, Substrate had raised more than $100 million, with its funding round valuing the company at more than $1 billion. Its prominent backers include Peter Thiel's Founders Fund, General Catalyst, Valor Equity Partners, In-Q-Tel, Allen & Co., and Long Journey Ventures.

The backing is significant because Substrate is attempting to tackle one of the semiconductor industry's hardest problems: how to manufacture increasingly advanced chips without allowing manufacturing costs to spiral out of control.

Unlike a conventional chip-design startup, Substrate wants to go deeper into the manufacturing process itself. Its long-term vision is to build a vertically integrated semiconductor foundry powered by its own X-ray lithography technology.

In simple terms, Substrate isn't just trying to design a better "brain" for computers. It is trying to reinvent part of the factory that makes those brains.

First, What Is a Semiconductor?

Think of a semiconductor chip as a tiny city.

Inside it are billions of microscopic components called transistors. These transistors act like

incredibly small switches that control electrical signals and allow computers to process

information.

The smaller these components can be made, the more transistors can fit onto a chip. More

transistors generally mean greater computing capability, better efficiency, and more advanced applications.

The challenge is that making these tiny structures requires extraordinary precision.

This is where lithography comes in.

Lithography: The "Printing Press" of Chip Manufacturing

Lithography is one of the most important steps in semiconductor manufacturing.

Imagine having a printer that needs to draw patterns far smaller than the width of a human

hair—over and over again, with almost perfect accuracy.

That is essentially what lithography does.

A silicon wafer is coated with a light-sensitive material called photoresist. A lithography

system then projects a carefully controlled pattern onto it. The exposed areas are processed,

allowing manufacturers to create the intricate structures that eventually become transistors and electrical connections.

Today's most advanced chip manufacturing relies heavily on EUV (Extreme Ultraviolet)

lithography. Substrate is attempting a different approach: advanced X-ray lithography.

Photo by Umberto on Unsplash

So, What Is Substrate Actually Building?

Substrate isn't simply designing another computer chip.

It is working on the technology and manufacturing infrastructure used to make advanced

chips.

At the heart of its approach is a powerful X-ray source based on a particle accelerator.

Here's the simplified version:

Electrons → Particle Accelerator → Powerful X-rays → Lithography System → Silicon

Wafer → Advanced Chip Patterns

The accelerator pushes electrons to near the speed of light. Carefully engineered magnetic

fields then cause those electrons to release extremely bright X-ray light. That light is directed

through specialized optics and ultimately onto the silicon wafer to print microscopic patterns.

Substrate describes the resulting light as billions of times brighter than the Sun.

And yes, that sounds like science fiction. It is, however, a very real engineering problem

involving particle physics, optics, materials science, mechanical engineering, and

computational modeling.

Why Use X-rays?

The goal is simple: make smaller and more complex features possible while reducing

manufacturing complexity and cost.

Substrate reports that its X-ray lithography technology has printed patterns with 12-nanometer critical dimensions. It says these results are comparable in resolution to High-NA EUV lithography and equivalent to the requirements of the 2 nm semiconductor node.

To understand the scale, one nanometer is one-billionth of a meter.

So a 12-nanometer feature is unbelievably small.

And these aren't simply theoretical computer simulations. Substrate has published

scanning-electron-microscope images of complex metal patterns printed onto silicon using its X-ray lithography system.

One Exposure Instead of Multiple Steps

Here's another interesting part of Substrate's technology.

Advanced semiconductor manufacturing can use multi-patterning, where a pattern is divided

across multiple exposure and processing steps to create extremely fine structures.

More steps can mean more processing time, additional equipment, greater opportunities for

defects, and higher manufacturing costs.

Substrate says its X-ray system has demonstrated complex, bidirectional metal-one (M1)

patterns at a 24 nm pitch, corresponding to a 12 nm half-pitch, using a single mask and

exposure.

In simple terms:

Instead of taking several steps to draw an incredibly complicated pattern, Substrate is working toward drawing it in one exposure.

If this approach can be successfully developed for high-volume manufacturing, it could have

significant implications for semiconductor production.

Where Does Artificial Intelligence Come In?

Surprisingly, AI isn't only something that needs advanced chips. Substrate is also using AI to

improve the process of making those chips.

One of the major challenges in X-ray lithography is computational lithography—the enormous amount of calculation required to predict how patterns will behave during printing.

Substrate worked with Google DeepMind's AlphaEvolve to optimize parts of its

computational lithography system.

According to Substrate, after a month of optimization, the same computational task required

97% less compute, used 74% less equivalent memory, and ran 680% faster.

That creates an interesting feedback loop:

AI improves chip manufacturing → better manufacturing enables better chips → better

chips provide more computing power → more powerful computing helps advance AI.

Substrate calls this vision a form of AI–silicon co-evolution.

From Machine to Foundry

Substrate's ambition goes beyond developing a lithography tool.

The company says it is building a vertically integrated semiconductor foundry, bringing

together technologies such as particle accelerators, optics, lithography, computational

systems, materials, and manufacturing.

It has also announced that it completed its first in-house production-quality 300 mm wafer

lithography tool, designed around the demanding requirements of leading-edge

semiconductor manufacturing.

The bigger objective is to make advanced semiconductor manufacturing more economical.

Substrate argues that the cost of leading-edge fabs and wafers is rising rapidly and aims to

eventually bring wafer costs closer to $10,000 rather than $100,000. This is a company target,

not an established industry result, and its ability to achieve it at commercial scale remains to be demonstrated.

Why Does This Matter?

The semiconductor industry is facing a simple problem:

The world wants more powerful chips than ever, but producing those chips is becoming

increasingly difficult and expensive.

AI data centers, robotics, autonomous systems, advanced vehicles, and countless other

technologies are increasing demand for computing power.

Substrate's answer is not simply to make a better chip.

It is to rethink the factory and manufacturing technology behind the chip.

If successful, its approach could help make advanced silicon more accessible while

strengthening domestic semiconductor manufacturing in the United States.

Of course, there is a long road between demonstrating promising lithography results and

operating a commercially successful, high-volume semiconductor foundry. Yield, throughput,

reliability, cost, and manufacturing scale will ultimately determine whether the technology can compete in the real world.

Photo by Tima Miroshnichenko

The Bigger Picture

Semiconductor manufacturing is often described as a race to make chips smaller.

But the real race is broader: Who can manufacture the most advanced chips, at the highest

volume, with the best economics?

Substrate is betting that the answer may require a fundamentally different approach to

lithography and semiconductor fabrication.

By combining particle physics, X-ray technology, advanced optics, computational

lithography, AI, and high-volume manufacturing, the company is attempting something

ambitious: to rethink how the world's most advanced silicon is made.

The technology inside tomorrow's AI systems may be incredibly small.

But building the machines that create it?

That's a very big challenge.

And Substrate is betting that the future of computing starts there.

Read More about them: https://substrate.com/

Blog by Rimashree