Wolfspeed Secures $1.5 Billion in Funding to Lead Silicon Carbide Revolution

Wolfspeed Secures Funding to Propel Silicon Carbide Innovations

DURHAM, N.C.--Today, the U.S. Department of Commerce and Wolfspeed (NYSE: WOLF) disclosed signing a preliminary memorandum to potentially acquire up to $750 million in direct funding through the CHIPS and Science Act. Alongside this, a prominent consortium of investment funds, spearheaded by Apollo, has pledged an additional $750 million to support Wolfspeed’s endeavors in silicon carbide technology. These substantial investments are aligned with Wolfspeed’s vision for long-term growth, particularly in advancing domestic production of this key material.

Driving Clean Energy Solutions

Wolfspeed is recognized as the leading producer of silicon carbide technology, a pioneering endeavor it began over 35 years ago at North Carolina State University. Today, silicon carbide stands out as a superior alternative to traditional silicon for various high-power applications. This includes electric vehicle (EV) powertrains, renewable energy systems, and data centers handling artificial intelligence (AI) workloads.

The Need for Improved Production

The significance of enhancing domestic silicon carbide production is undeniable. Federal agencies acknowledge it as a critical material vital for clean energy technologies and national security. The Department of Energy has categorized silicon carbide as one of 17 critical materials susceptible to supply disruptions. As we face increasing energy demands, it is essential for the U.S. to strategically invest in such technologies to maintain leadership in this vital market.

Wolfspeed's CEO on the Future

Wolfspeed's CEO, Gregg Lowe, expressed that this achievement under the CHIPS and Science Act underscores the company’s commitment to innovation and market-leading quality. He emphasized, "This funding enhances our ability to strengthen domestic production, facilitating advancements in semiconductor technology and meeting the rising global demand for silicon carbide." This initiative also emphasizes the strategic importance of establishing a robust U.S. supply chain to support these innovations.

Expanding Manufacturing Footprint

The proposed investments are poised to enable Wolfspeed to develop a first-of-its-kind 200mm silicon carbide manufacturing facility in North Carolina, alongside establishing a major facility in the Mohawk Valley. These initiatives signify a crucial leap in maintaining competitiveness in the semiconductor industry's evolving landscape. Additionally, Wolfspeed anticipates cash tax refunds through the advanced manufacturing tax credits, amounting to $1 billion under the CHIPS Act, raising total expected capital access to $2.5 billion.

Government and Community Support

Support for Wolfspeed's initiatives comes from various governmental leaders. U.S. Secretary of Commerce Gina Raimondo noted significant advancements in revitalizing U.S. semiconductor manufacturing through investments in companies like Wolfspeed. Senator Chuck Schumer highlighted the importance of this funding, focusing on its potential to create numerous jobs while fortifying America’s tech industry.

North Carolina Governor Roy Cooper praised the funding as a significant boost for local employment and economic prospects, emphasizing the role Wolfspeed’s innovations play in the state. Senator Thom Tillis and Senator Ted Budd also reaffirmed their support, recognizing the critical nature of silicon carbide technologies for national security and economic stability.

The Path Ahead for Wolfspeed

The planned funding will enable Wolfspeed to accelerate its expansion plans significantly. These efforts are aimed at completing a multi-billion-dollar capacity expansion, which will result in the most advanced silicon carbide production facility globally. Notably, this plan remains contingent upon achieving various operational and construction milestones outlined in the memorandum of terms.

A Forward-Looking Strategy

Wolfspeed is committed to restructuring its capital approach, enabling it to raise substantial amounts of additional financing. This strategy includes revising terms concerning its senior notes and ensuring robust liquidity to support expansive growth and innovation strategies. The company aims to maintain its leadership role in semiconductor manufacturing, particularly in silicon carbide technology.

Frequently Asked Questions

What is the main focus of the funding received by Wolfspeed?

The funding primarily targets the expansion of Wolfspeed's silicon carbide manufacturing capabilities and fortifying U.S. semiconductor production.

How does silicon carbide compare to traditional silicon?

Silicon carbide is a superior material for high-power applications, offering improved performance and lower system costs versus conventional silicon.

What are the expected outcomes of this investment for Wolfspeed?

Wolfspeed anticipates enhancing its production capabilities significantly, achieving long-term profitability, and solidifying its market leadership.

Who are the major investors in Wolfspeed's funding initiative?

A consortium led by Apollo, along with other significant investment entities, is providing vital support for this initiative alongside government funding.

What strategic steps is Wolfspeed taking to maximize this funding?

Wolfspeed intends to restructure its capital, enhance operational capabilities, and address specific milestones to ensure optimal utilization of the funds secured.

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