October 17, 2024 /SemiMedia/ — The U.S. Department of Commerce announced that Wolfspeed will receive a $750 million subsidy under the CHIPS Act to support the construction of a new silicon carbide (SiC) wafer manufacturing facility in North Carolina. The financing agreement requires Wolfspeed to "take additional steps to strengthen its balance sheet to better safeguard taxpayer funds."

Wolfspeed said investment funds led by Apollo Global Management, Baupost Group, Fidelity Management & Research Company, and Capital Group have agreed to provide an additional $750 million in financing. The company expects to receive $1 billion in cash refunds from advanced manufacturing tax credits under Section 48D of the CHIPS Act, bringing the total funds raised to $2.5 billion to support silicon carbide production.

The company plans to use these funds to advance its $6 billion expansion plan, which includes the construction and installation of equipment at the John Palmour Silicon Carbide Manufacturing Center in Siler City, North Carolina, as well as the expansion of the M-Line West at the fully automated 200mm Mohawk Valley Fab in Utica, New York. This will increase production of 200mm silicon carbide wafers tenfold and enhance equipment manufacturing capacity fivefold.

Wolfspeed supplies major clients including General Motors and Mercedes-Benz with silicon carbide chips, which are more energy-efficient than standard silicon and used for tasks such as transferring power from electric vehicle batteries to motors. The material is also used in renewable energy systems, industrial applications, and artificial intelligence (AI). While the electric vehicle market has shown signs of slowing, silicon carbide is gaining attention for power supply applications in AI data centers, despite facing competition from gallium nitride (GaN).

“This announcement underscores the market-leading quality of Wolfspeed products and their importance to broader U.S. economic and national security interests,” said Wolfspeed CEO Gregg Lowe. “This support enhances our ability to expand domestic production, accelerate next-generation semiconductor technology innovation, and meet the growing global demand for silicon carbide.” He emphasized that the investment will strengthen Wolfspeed’s position as the leader in 200mm silicon carbide production in New York and North Carolina, while enhancing the resilience and competitiveness of the U.S. supply chain.

Under agreements with the Commerce Department and lenders, Wolfspeed will restructure or refinance its outstanding 2026, 2028, and 2029 convertible notes within specific intervals. The company also plans to defer $120 million in cash interest payments due before June 2025 and raise up to $300 million from non-debt sources within the next 12 months.