In a nutshell: Silicon Valley investors have committed more than $100 million to Substrate, a secretive San Francisco-based startup positioning itself against industry titans TSMC and Netherlands-based ASML in advanced chip fabrication. Founded in 2022 by brothers James and Oliver Proud, Substrate aims to leverage particle-accelerator technology to drive down the cost of semiconductor manufacturing.
Despite having no prior semiconductor manufacturing experience, the Proud brothers have secured backing from leading venture capital firms, including Founders Fund, General Catalyst, and Valor Equity Partners. Last year's fundraising round, previously undisclosed, valued Substrate at over $1 billion, according to company executives. People familiar with the funding told The Financial Times that investors see promise in Substrate's unconventional technology.
James Proud frames the company's mission as an effort to strengthen American manufacturing capabilities at a time when domestic tech firms such as Apple and Nvidia largely depend on overseas suppliers for advanced semiconductors. He describes Substrate as "very ideological," emphasizing the need for the US to achieve high-volume, advanced chip production on home soil.
In his view, global reliance on foreign monopolies represents "a glaringly scary dependence," particularly since these players control what he calls "the two main choke points" in chip fabrication.
By challenging ASML's state-of-the-art lithography equipment and TSMC's massive fabrication plants, Substrate is pursuing ambitious goals that Proud acknowledges could eventually require "many billions – at some point, tens, maybe even hundreds of billions of dollars, as the business scales."
Production is targeted for 2028, and Substrate claims its approach will reduce the cost of producing a leading-edge wafer from roughly $100,000 to around $10,000 within the next several years.
Substrate's key technical innovation is a lithography system that uses particle accelerators as light sources, generating X-rays with shorter wavelengths than even ASML's most advanced "High NA" EUV tools. According to Proud, demonstrations at US National Laboratories have already achieved the pattern resolution necessary for the current 2-nanometer benchmark process node. The company also plans to integrate this system with existing chipmaking tools as it moves toward a more vertically integrated foundry model.
Trae Stephens, a partner at Founders Fund and lead investor, emphasizes the rising pressure on the US government to guarantee a reliable, resilient semiconductor supply chain. He notes that this is "the moment that James is capturing right now." Ongoing global volatility – including US efforts to secure Intel's future and threats from China to restrict rare earth mineral exports – has only intensified interest in building a robust domestic supply chain for high-end chips.
To achieve its goals, Substrate expects to rely on a mix of strategic investment, debt, and government support as it builds integrated manufacturing facilities and scales across multiple locations. Proud's recruitment efforts have assembled an experienced team drawn from TSMC, Applied Materials, AMD, Google, and Qualcomm. Stephens observes that Substrate is taking "a much bigger bite of the apple" than most start-ups, but if successful, the rewards could be transformative for the US semiconductor industry.
Proud's path to Silicon Valley began at age 19 when he received the Thiel Fellowship, an award designed to encourage technological entrepreneurship outside of academic settings. His previous start-up, Hello, raised $40 million in the health technology sector before folding after two years. Now, with Substrate, he is betting that a fundamentally new approach to chipmaking could put the US back at the forefront of semiconductor technology.