Wolfspeed inks $2 billion semiconductor deal with eye toward incoming Chatham plant
Wolfspeed CEO Gregg Lowe was in Tokyo this week to finalize a multibillion-dollar deal that will help his company fund its ambitious growth in North Carolina.
As part of a 10-year agreement signed Wednesday, Wolfspeed will supply the Japanese semiconductor firm Renesas with silicon carbide wafers over the next decade in exchange for $2 billion upfront. The news was greeted favorably on Wall Street, with Wolfspeed’s share price up 15% at midday.
Headquartered in Research Triangle Park, Wolfspeed manufactures silicon carbide, a semiconducting material company executives say is more energy efficient than standard silicon. The company then cuts this material into circular wafers.
Semiconductor chips are ubiquitous in modern life, with Wolfspeed chips found in electric cars, renewable energy storage units, and aerospace equipment. Besides converting its own wafers into functioning chips, the company also sells wafers to other chipmakers.
Wolfspeed currently makes roughly 60% of the world’s silicon carbide wafers. In a statement Wednesday, Renesas said it plans to begin mass producing silicon carbide semiconductors in 2025. A public company with 21,000 employees worldwide, Renesas produces its own semiconductor products.
It will now do so with more silicon carbide.
“With the steepening demand for silicon carbide across the automotive, industrial and energy sectors, it’s critically important we have best-in-class power semiconductor customers like Renesas to help lead the global transition from silicon to silicon carbide,” Lowe said.
Wolfspeed needs cash for NC ambitions
The $2 billion deposit will support Wolfspeed’s ongoing construction in Siler City.
The site is expected to occupy 445 acres in western Chatham County and expand Wolfspeed’s capacity to make wafers by a factor of 10. The company has committed to employing more than 1,800 people at the facility before the end of the decade. Wolfspeed currently employs roughly 2,500 in the Triangle area.
Company officials say the factory’s initial phase will be completed by the end of next year.
The Renesas deal comes as the chipmaker seeks money to support expensive growth projects in North Carolina, New York and abroad.
Wolfspeed hopes to benefit from the federal CHIPS Act, which allocates $52 billion in grants to promote the production of domestic semiconductors. Officals also hope Wolfspeed is eligible for a lucrative tax credit created by the federal legislation.
Early last week, Wolfspeed received a $1.25 billion loan from a group led by the investment firm Apollo. The money, which carries a nearly 10% interest rate and matures in 2030, will help fund both the Siler City plant and Wolfspeed’s fabrication site in Upstate New York’s Mohawk Valley.
This story was originally published July 5, 2023 at 3:12 PM.
