The Biden-Harris administration announced plans Tuesday to provide up to $750 million in direct funding to Wolfspeed. This money will support Wolfspeed’s new silicon carbide factory in North Carolina that makes wafers for advanced computer chips and its factory in Marcy, New York. The CHIPS Act has earmarked billions of taxpayer dollars for companies such as Samsung, Intel (Nasdaq: INTC), Micron (Nasdaq: MU) and Global Foundries (Nasdaq: GFS).
Wolfspeed is set to receive $750 million in grants from the U.S. Department of Commerce matched by $750 million in private investment led by existing backer Apollo Global Management. Certain milestones determine the funding. The firm also plans to take advantage of another aspect of the CHIPS Act, the Department of the Treasury’s Investment Tax Credit, expected to cover up to 25 percent of certain construction costs for the factory outside Siler City, to round out the full $2.5 billion.
Wolfspeed’s journey to $2.5 billion
Getting here took a lengthy process, which Wolfspeed CEO Gregg Lowe said “definitely took a lot longer than we anticipated.” Wolfspeed’s journey to $2.5 billion started when the government signed the CHIPS Act two years ago. The company filled out multiple applications. Several site visits followed, as did repeated assurances from executives on earnings calls that the funding would come.
“We felt like we had a great position from the get-go. Every time we engaged, we took further steps forward,” Lowe said. Now that the dollars are official, Lowe said they’ll “enable companies like Wolfspeed to stay in the lead in silicon carbide.”
Chinese companies work to own the electric automobile space, and they receive subsidies from their government to fuel the effort, he said. “This kind of levels the playing field,” Lowe said. “We will have a significant lead. … This will cement that position.”
U.S. Leads in Next-Gen Semiconductor Materials
The United States is, at the forefront of developing cutting edge semiconductor materials for the future generation technology sector; however global competition is on the rise in this field. These materials play a role in energy related products such as electric vehicles and server farm infrastructure leading to significant energy efficiency compared to conventional silicon. A study conducted by the Biophysical Economics Institute revealed that using these materials in electric vehicle powertrains can result in energy savings of 13 times more than chips resulting in enhanced range capacity and faster charging capabilities while reducing weight.
“This represents the biggest disruptive impact on the history of the automobile, so we’ll see choppiness,” Lowe said. “This won’t follow a straight line. We’ll see winners and losers in this transition.” Wolfspeed earmarks most of its CHIPS Act dollars for the Chatham factory under construction. The company says the plant will serve as its main base for silicon carbide production.
“It’s a giant facility,” Lowe said. “It has huge capabilities, so having that funding proved pretty critical for us.” The company has largely completed the facility, with some final touches underway, including office space.
Just a few months ago, Lowe pushed the button to start the crystal growth process at the facility. Lowe said they plan to qualify the new growers by the end of the year in time to start shipping material to its factory in New York in the middle of 2025. Right now the factory remains on track and on budget, he said.
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Wolfspeed Silicon Carbide Factory Project Factsheet
Project Overview
Company: Wolfspeed
Project: $5 billion, 1,800-job silicon carbide factory
Location: Chatham County
CHIPS Act Funding Support
Total funding support: $750 million
Breakdown:
$750 million in grants from U.S. Department of Commerce
$750 million in private investment led by Apollo Global Management
Investment Tax Credit: Up to 25% of certain construction costs
Project Status
Factory construction ongoing
Crystal growth process started
Timeline
Plan to qualify new growers by end of the year
Start shipping material to New York factory in mid-2025
Technology
Focus: Silicon carbide semiconductor production
Applications: Electric vehicles, server farm infrastructure
Read also: New York teams up with IBM, Micron for $10B semiconductor facility at Albany University
