Shares of Durham-based Wolfspeed soared more than 20% Tuesday after the maker of high-speed semiconductors reported it could receive up to $2.5 billion in Chips and Science Act funding, IRS refunds and financing from investment groups.
The $2.5 billion in expected capital will “help ensure a clear path to profitability while maintaining critical investments in next-generation technology to support production of silicon carbide,” according to a release contained in a Form 8-K filing with the SEC on Tuesday.
Wolfspeed’s stock was trading around $13.81 at 3 p.m. today, up $2.43 or 21%. Even with Tuesday’s bump, Wolfspeed stock is down about 57% in the past year. Shares of Wolfspeed have traded between $7.28 and $47.43 in that period. Wolfspeed has a market capitalization of $1.75 billion.
Here are the highlights:
- U.S. Department of Commerce proposes $750 million in CHIPS and Science Act funding to support Wolfspeed’s North Carolina expansion and catalyze New York expansion
- Investment group led by Apollo, The Baupost Group, Fidelity Management & Research Company and the Capital Group pledge $750 million in financing.
- Wolfspeed expects to receive approximately $1 billion in Section 48D cash tax refunds from IRS over the next several years.
Together these investments support Wolfspeed’s long-term growth plans and bolster domestic production of silicon carbide to power clean energy systems underpinning electric vehicles, artificial intelligence data centers, battery storage and more, according to a release.
The $1 billion of tax refunds come from the advanced manufacturing tax credit under the CHIPS and Science Act.
Wolfspeed is the world’s largest producer of silicon carbide technology, pioneering the technology more than 35 years ago on the campus of NC State University. Since that time, Wolfspeed has become the global leader in silicon carbide technology, one of the fastest growing components of the broader semiconductor industry.
It is building a $5 billion plant in western Chatham County that is expected to eventually employ 1,802 workers.
“To reach this milestone under the U.S. 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 U.S. economic and national security interests,” says Wolfspeed CEO Gregg Lowe in a release. “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 U.S. supply chain.”
U.S. Secretary of Commerce Gina Raimondo says the investment and Wolfspeed’s work serve the nation’s economic and national security interests, and creates jobs.
“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 U.S. manufacturing of the chips that underpin these important technologies,” says Raimondo in a release.
As part of the deal, Wolfspeed was required to raise an aggregate of $750 million in debt financing. Wolfspeed and its lenders, led by Apollo funds, reached that level, including $250 million to be available within 10 business days.