Wolfspeed announces $750M in CHIPS Act funding
The US Department of Commerce and Wolfspeed have signed a non-binding preliminary memorandum of terms (PMT) for up to $750 million in proposed direct funding under the CHIPS and Science Act.
In addition, a consortium of investment funds led by Apollo, The Baupost Group, Fidelity Management & Research Company and Capital Group have agreed to provide Wolfspeed an additional $750 million of new financing.
Together these investments support Wolfspeed’s long-term growth plans and bolster domestic production of SiC to power clean energy systems underpinning electric vehicles (EVs), artificial intelligence (AI) data centres, battery storage and more. In addition, Wolfspeed expects to receive $1 billion of cash tax refunds from the advanced manufacturing tax credit under the CHIPS and Science Act (section 48D), giving the company, in total, access to up to $2.5 billion of expected capital to support the expansion of SiC manufacturing in the United States.
Wolfspeed is believed to be the world’s largest producer of SiC technology, pioneering the technology more than 35 years ago on the campus of North Carolina State University.
The importance of bolstering the domestic production of SiC has been recognised across multiple federal agencies; the Department of Energy denoted it as one of 17 'critical materials' with a high risk of supply disruption that are integral to clean energy technologies, while the Department of Commerce recognises SiC semiconductors as important to national security.
Wolfspeed CEO, Gregg Lowe, said: “To reach this milestone under the US CHIPS and Science Act is an incredible achievement in Wolfspeed’s long-term growth strategy, and we believe today’s announcement is a testament to the market-leading quality of Wolfspeed products and significance of Wolfspeed to broader US economic and national security interests. This support galvanizes our ability to expand domestic manufacturing, accelerate innovation in next-generation semiconductor technology, and meet the increasing global demand for SiC. 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 SiC manufacturing footprint in upstate New York and central North Carolina, while contributing to the resilience and competitiveness of the US supply chain. It’s not just about growth for Wolfspeed—it’s about driving technological advancement that powers the future."
He added: "SiC is already enabling superior energy efficiency across mission-critical industries of the future like electric vehicles, e-mobility, solar and wind energy, industrial power applications, and AI data centres. While EVs have been the driver of SiC adoption thus far, we believe the use cases for our technology are expansive and will only continue to grow as more and more industries find themselves needing to solve for the same power loss, system size, and system cost challenges as automakers.”
“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,” said US Secretary of Commerce Gina Raimondo. “Because of the Biden-Harris Administration’s CHIPS and Science Act, the United States is building and fortifying our semiconductor manufacturing capabilities to serve our economic and national security interests while creating jobs and economic opportunities for communities across the country.”
“We are pleased to expand our investment in Wolfspeed by providing additional capital in support of the company’s build out of its leading SiC capabilities,” said Apollo partner Joseph Jackson. “We believe Wolfspeed is at the forefront of a critical transformation in sustainable transportation and ensuring that the company has durable capital access to complete its expansion plans will help solidify its leadership in this space. Along with our lending consortium, which includes multiple funds that also own substantial equity stakes in the company, we believe this strategic investment will drive significant long-term value while advancing key tenets of the CHIPS and Science Act.”
These proposed funds, which are expected to be received upon milestone achievements in the coming years, would enable Wolfspeed to complete its multi-billion-dollar greenfield US capacity expansion plan, which consists of the largest and most advanced 200mm SiC footprint in the world. In addition to the proposed direct funding, Wolfspeed intends to benefit from the US Treasury Department Investment Tax Credit of up to 25 percent of the qualified capital expenditures primarily related to its construction and installation of equipment at The John Palmour Manufacturing centre for SiC in Siler City, NC and completion of the Mohawk Valley Fab M-Line West Expansion in Utica, NY.
