Wolfspeed Stock Is Ripping Higher Tuesday: Here's Why

Wolfspeed Inc (NYSE:WOLF) shares are trading higher Tuesday after the company announced new proposed funding under the CHIPS and Science Act.

What Happened: Wolfspeed and the U.S. Department of Commerce signed a non-binding preliminary memorandum of terms for up to $750 million in proposed direct funding under the CHIPS and Science Act.

A consortium of investment funds led by Apollo, The Baupost Group, Fidelity Management & Research Company and Capital Group have also agreed to provide Wolfspeed an additional $750 million of new financing.

In addition, Wolfspeed expects to receive $1 billion of cash tax refunds from the advanced manufacturing tax credit under the CHIPS and Science Act, giving the company access to up to $2.5 billion of expected capital in total.

The investments are aimed at supporting Wolfspeed’s long-term growth plans and bolstering U.S. production of silicon carbide to power clean energy systems.

“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,” said Gregg Lowe, CEO of Wolfspeed.

“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.”

See Also: Nvidia, AMD Face Chip Export Curbs, As Biden Administration Considers Restrictions On Middle-East Countries, Others: Report

The proposed funds are expected to be received upon milestone achievements over the coming years and would enable Wolfspeed to complete its multi-billion-dollar greenfield U.S. capacity expansion plan. The investment will also help bolster Wolfspeed’s balance sheet and accelerate its long-term profitability goals.

U.S. Secretary of Commerce Gina Raimondo said, “Artificial intelligence, electric vehicles, and clean energy are all technologies that will define the 21^st 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.”

WOLF Price Action: Wolfspeed shares were up 24.$% at $14.16 at the time of publication Tuesday, according to Benzinga Pro.

Photo: courtesy of Wolfspeed.