Reuters reports Durham, North Carolina-based semiconductor manufacturer and GM supplier Wolfspeed is set to receive $750 million in government grants as a result of the CHIPS and Science Act signed into law by President Biden in 2022. The grant money will be used for the company’s new North Carolina plant, which will manufacture silicon carbide chips. The agreement requires Wolfspeed “to take additional steps to strengthen its balance sheet to better protect taxpayer funds.”
“We believe today’s announcement is a testament to the market-leading quality of Wolfspeed products and the significance of Wolfspeed to broader U.S. economic and national security interests,” said Wolfspeed CEO Gregg Lowe in a statement.
Wolfspeed specializes in semiconductors made from silicon carbide, which is more energy-efficient than regular silicon. Because of their superior ability to dissipate heat, one of the chief uses of silicon carbide chips is transmitting power from an EV’s batteries to its motors. Wolfspeed counts GM and Mercedes-Benz among its clients.
Wolfspeed’s planned facility is a 2 million-square-foot plant in Chatham County, North Carolina that will manufacture silicon carbide wafers, which are used for making semiconductors. It expects to start chipping wafers in the summer of 2025 for its own chip manufacturing at its other factories, like the one in Marcy, New York, which plans to increase production by nearly 30 percent.
Wolfspeed’s stock price has plunged by nearly three quarters so far in 2024, primarily due to the slower-than-expected demand for electric vehicles, including from GM. However, this news of the new investment shot its stock up about 10 percent on Tuesday.
In addition to the cash influx, the grant agreement will defer $120 million in cash interest payments due prior to June 30th, 2025, and raise up to $300 million of additional capital (from non-debt sources) over the next year.
It’s unclear what ramifications this grant money will have on GM EV production, but if Wolfspeed’s optimistic predictions come true, it could help The General make good on its promises of introducing more new EV models in the coming years.
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