Wolfspeed Lands $750 Million Grant to Power the Future of U.S. Chip Manufacturing
AInvestTuesday, Oct 15, 2024 10:39 am ET
1min read
TSM --
WOLF --

Wolfspeed is set to receive $750 million in government funding to support its new silicon carbide factory in North Carolina, which produces the wafers used in advanced computer chips. This announcement from the U.S. Commerce Department on Tuesday sent the company’s shares soaring nearly 30%. With this proposed funding, Wolfspeed will establish the John Palmour Manufacturing Center, a state-of-the-art, 2-million-square-foot facility in North Carolina. This marks a significant advancement in U.S. semiconductor manufacturing.

"Artificial intelligence, electric vehicles, and clean energy are technologies that will shape the 21st century," said U.S. Commerce Secretary Gina Raimondo in a statement. "Thanks to investments in companies like Wolfspeed, the Biden-Harris administration is taking a major step toward revitalizing U.S. manufacturing of the chips that are essential to these industries."

In addition to the government grant, Wolfspeed will receive another $750 million from a group of investors, including Apollo, The Baupost Group, Fidelity Management & Research Company, and Capital Group. The company also expects to gain an additional $1 billion through an advanced manufacturing tax credit, bringing its total available funds to $2.5 billion.

Wolfspeed CEO Gregg Lowe noted that the U.S. currently produces 70% of the world’s silicon carbide and that these investments will help maintain the country’s leadership as China ramps up its efforts in the sector. The funds will support Wolfspeed's long-term growth plans, and the company anticipates $1 billion in cash tax refunds from the "48D" advanced manufacturing tax credit under the Chips and Science Act.

Earlier this year, Wolfspeed expressed confidence that it would begin delivering wafers from the new facility by summer 2025 to meet its own chip manufacturing needs.

Founded in 1987 in North Carolina, Wolfspeed is a global leader in the production of silicon carbide wafers and devices. Its advanced silicon carbide technology is also used in U.S. military applications, further underscoring its importance in national defense and emerging technologies.

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.