Wolfspeed Soars on $2.5 Billion Funding Boost for US Semiconductor Expansion

Wolfspeed Inc (WOLF) is experiencing a surge in its stock price today, fueled by a significant funding boost aimed at bolstering US semiconductor production.

The company announced a groundbreaking deal that includes a proposed $750 million direct grant from the US Department of Commerce under the CHIPS and Science Act, alongside a $750 million investment from a consortium of leading investment funds, including Apollo, The Baupost Group, Fidelity Management & Research Company, and Capital Group.

Adding to this impressive package, Wolfspeed anticipates receiving $1 billion in cash tax refunds thanks to the advanced manufacturing tax credit provisions of the CHIPS and Science Act. In total, the company stands to gain access to a whopping $2.5 billion in capital, setting the stage for aggressive growth and expansion.

This multi-faceted funding strategy is specifically designed to support Wolfspeed’s ambitious long-term growth plans. The company will leverage these funds to significantly expand its US production of silicon carbide, a crucial component powering clean energy systems, electric vehicles, and other cutting-edge technologies.

Gregg Lowe, CEO of Wolfspeed, emphasized the transformative nature of this investment, stating:

“This support galvanizes our ability to expand domestic manufacturing, accelerate innovation in next-generation semiconductor technology, and meet the increasing global demand for silicon carbide. As a key player in the semiconductor industry, this proposed investment will enable us to solidify our leadership position with a first-of-its-kind 200mm silicon carbide manufacturing footprint in upstate New York and central North Carolina, while contributing to the resilience and competitiveness of the US supply chain.”

The impact of this investment extends beyond Wolfspeed itself.

US Secretary of Commerce Gina Raimondo highlighted the broader implications of this initiative, stating:

“Artificial intelligence, electric vehicles, and clean energy are all technologies that will define the 21st century, and thanks to proposed investments in companies like Wolfspeed, the Biden-Harris Administration is taking a meaningful step towards reigniting US manufacturing of the chips that underpin these important technologies.”

The proposed funds will be disbursed upon the achievement of specific milestones over the coming years.

This strategic approach ensures accountability and allows Wolfspeed to execute its ambitious growth plan with precision. The influx of capital will enable the company to complete its multi-billion-dollar greenfield US capacity expansion plan, bolstering its financial position and propelling it toward its long-term profitability goals.

The positive impact of this news is evident in the market’s reaction.

At the time of publication, Wolfspeed shares were soaring 24.1% at $14.16, signaling investor confidence in the company’s future prospects. This significant funding, coupled with the company’s commitment to innovation and expansion, positions Wolfspeed as a major player in the rapidly evolving semiconductor landscape.