Wolfspeed is set to receive a total of $1.5 billion in funding, including $750 million from the U.S. Department of Commerce under the CHIPS and Science Act and an additional $750 million from a consortium of investment funds.

This funding aims to support Wolfspeed's expansion operations in North Carolina and address liquidity concerns as the company shifts focus to manufacturing silicon carbide semiconductors.

Wolfspeed's silicon carbide technology enhances the efficiency of computer chips used in electric vehicles and advanced technologies, providing significant advantages over traditional silicon.

The company's expansion projects, costing over $6 billion, are expected to create approximately 2,000 manufacturing jobs in North Carolina and New York.

The new facility in Siler City, North Carolina, symbolizes economic growth in a key swing state, particularly in the context of the upcoming elections.

Vice President Kamala Harris is promoting the administration's incentives for increasing factory jobs, while former President Donald Trump argues for tariffs to bring back manufacturing.

CEO Gregg Lowe emphasized that the U.S. currently produces 70% of the world's silicon carbide, and these investments are crucial for maintaining this leadership amid competition from China.

Wolfspeed is working to produce larger 200-millimeter substrates, which yield more chips and allow for cost savings, with CHIPS funding specifically allocated for this effort.

The CHIPS Act grant is contingent upon Wolfspeed achieving specific milestones, including raising additional capital and restructuring existing debt.

Despite the positive funding news, Wolfspeed's stock has significantly declined, dropping from over $100 in October 2022 to around $28 by March 2024, with recent prices below $10 per share.

Following the announcement of the significant financial support, Wolfspeed's shares surged nearly 25% in premarket trading.

Analysts believe that the CHIPS Act funding is crucial for Wolfspeed, given its advanced semiconductor technology and U.S.-based manufacturing operations.