Wolfspeed is set to receive $750 million in government grants to support the development of its silicon carbide wafer manufacturing plant in North Carolina, the U.S. Commerce Department announced on Tuesday. This funding is part of the broader U.S. semiconductor subsidy program, aimed at bolstering domestic chip production, and helped boost the company's stock by over 30%.
The government funding is contingent upon Wolfspeed taking “additional steps to strengthen its balance sheet to better protect taxpayer funds,” according to the Commerce Department.
In addition to the government grant, Wolfspeed also secured $750 million in private financing from investment firms led by Apollo Global Management, the Baupost Group, Fidelity Management & Research Company, and Capital Group.
Wolfspeed, which supplies General Motors and Mercedes-Benz, produces chips from silicon carbide, a more energy-efficient material than conventional silicon, often used in electric vehicles and renewable energy systems. The company is also expanding its production capacity by 30% at its Marcy, New York facility, as part of its broader $6 billion expansion plan.
The company expects to benefit from $1 billion in tax refunds under the “48D” advanced manufacturing tax credit through the Chips and Science Act. “We believe today's announcement is a testament to the market-leading quality of Wolfspeed products and significance of Wolfspeed to broader U.S. economic and national security interests,” said CEO Gregg Lowe.
The award, which is subject to final due diligence, will contribute to Wolfspeed's 2 million-square-foot facility in Chatham County, North Carolina, slated to begin wafer production by mid-2025. This facility is critical to Wolfspeed's long-term growth strategy, especially as demand in the electric vehicle market slows.
As part of its financial strategy, Wolfspeed plans to restructure or refinance its 2026, 2028, and 2029 convertible notes and defer $120 million in cash interest payments. The company is also expected to raise up to $300 million in additional non-debt capital over the next year.
The government funding is part of the $52.7 billion U.S. semiconductor subsidy program designed to enhance domestic manufacturing of semiconductors.
