Leopold Aschenbrenner's hedge fund Situational Awareness narrowly dodged collapse over the past few weeks, after margin calls from its creditors triggered an unwinding that left it down 67% for the month. This culminated in the discounted sale of its public equities portfolio to Citadel. Shortly afterwards, it was reported that the firm had invested $400 million of its capital into an unnamed private equity deal.
These private equity positions represent the vast majority of the fund’s remaining AUM, although their relative opacity means the exact companies and composition are unknown. The target of this latest $400 million deployment is now known, however, after Friday's reports in Bloomberg and the Wall Street Journal named San Francisco startup Source Foundry.
Founded in 2025 by two Stanford researchers, Source Foundry aims to develop and operate the lithography equipment required for advanced chip manufacturing. This is broadly in line with Situational Awareness’ existing investment thesis, which has centered primarily around AI infrastructure plays.
However, previous investments in companies like Anthropic and MatX focused more on service providers and chip manufacturers; the investment in Source Foundry represents a move up the supply chain to a company developing the foundational tools the AI industry relies on. Sequoia partner Stephanie Zhan said that Source Foundry goes after "the tightest bottleneck: tooling for semiconductor manufacturing."
This latest $400 million cash injection reportedly brings the fund’s total investment in Source Foundry to $500 million, against a total valuation of $5 billion based on its latest fundraising round.
How Source Foundry aims to challenge ASML
Dutch firm ASML is the market leader in advanced extreme ultraviolet lithography, the process by which machines use light to print circuitry onto blank silicon wafers. Just one of its most advanced High-NA EUV machines can cost upwards of $400 million. ASML’s 2025 financial results revealed €32.7 billion in net sales and €9.6 billion in net income, with a prediction that its sales could rise to €39 billion in 2026.
Source Foundry explicitly aims to challenge the dominance of ASML.
The firm is not alone in this mission: fellow Silicon Valley startup Substrate raised $100 million for lithography equipment last year, aiming to operate its own mass-production facility by 2028. Meanwhile, hardware firm xLight has raised $150 million from the U.S. government under the CHIPS Act to research new lithographic tools using light sources based on shrunken particle accelerators.
Source Foundry is still likely several years away from mass production capability
Setting up a viable lithography production line typically takes several years, given the exceptionally high technical and capital barriers. Startups in the field are often absorbed by established competitors before reaching commercial production capability. Source Foundry is only one year old, having been incorporated in California in July 2025. The firm has operated in stealth since then, with little known about its production capabilities or timeline for establishing full-scale production.
For Situational Awareness, this represents a sizable bet on a firm that, at present, has no working product. The timing of the investment suggests that the near-collapse of Situational Awareness has done little to shake Aschenbrenner’s belief in its core thesis: that big bets on the major bottlenecks in AI infrastructure will yield outsized returns as the industry grows.
The difference now is that the fund is moving away from its heavily leveraged public-market investments. Aschenbrenner himself promised investors that the firm will not make use of the prime-broker borrowing model that led to July’s near miss.