Wolfspeed Secures $1.5 Billion in Funding to Expand Silicon Carbide Production

$WOLF

Wolfspeed (NYSE:WOLF) has announced the acquisition of $1.5 billion in funding to bolster its silicon carbide production capabilities. This financing package includes $750 million proposed by the U.S. Department of Commerce under the CHIPS and Science Act, complemented by an additional $750 million from a consortium comprising Apollo, The Baupost Group, Fidelity Management & Research Company, and Capital Group. The funding aims to expand Wolfspeed’s manufacturing operations in North Carolina and New York.

With over 35 years of experience in silicon carbide technology, initially developed at North Carolina State University, Wolfspeed is a leading producer of this advanced material. Silicon carbide is essential for high-power applications, including electric vehicle powertrains, renewable energy systems, and artificial intelligence data centers, due to its superior performance and cost efficiency compared to conventional silicon. The U.S. Department of Energy has classified silicon carbide as one of the 17 “critical materials,” underscoring its significance in advancing clean energy technologies and the necessity of enhancing domestic production capabilities to mitigate supply chain disruptions.

CEO Gregg Lowe emphasized the strategic importance of this funding for the company’s long-term growth, asserting that it would facilitate domestic manufacturing and innovation in semiconductor technology, addressing the escalating global demand for energy-efficient solutions.

The investment plans include establishing a pioneering 200mm silicon carbide manufacturing facility in upstate New York and central North Carolina. U.S. Secretary of Commerce Gina Raimondo and Senator Chuck Schumer have highlighted the potential of this investment to strengthen U.S. economic and national security by revitalizing semiconductor manufacturing.

This initiative is part of broader efforts to maintain technological leadership in critical sectors, such as electric vehicles and artificial intelligence. Wolfspeed is also poised to benefit from substantial tax credits under the U.S. Treasury Department’s Investment Tax Credit program, potentially covering up to 25% of qualified capital expenditures. These resources are expected to enhance Wolfspeed’s financial stability and support its growth and profitability objectives.

The funding agreement is structured as a non-binding preliminary memorandum of terms (PMT), outlining the conditions for disbursement, contingent upon Wolfspeed meeting specific operational and construction milestones. The agreement also permits adjustments to Wolfspeed’s capital structure, including the potential restructuring of outstanding convertible notes and deferring cash interest payments. As the firm expands its production capacity in silicon carbide technology, it is positioned to play a crucial role in meeting the demands of various high-stakes industries.

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