Wolfspeed said it needed $1 billion more to build Siler City plant. It just got it.
In late April, Wolfspeed executives told investors during an earnings call that their Durham-based company needed an additional $1 billion in private financing by the end of the year to help fund its massive new semiconductor chip facility near Siler City.
On Monday, the company announced it had secured the money, $1.25 billion in cash, provided immediately from a group led by the investment firm Apollo. The loan has a nearly 10% interest rate and will mature in 2030. Under the agreement, Wolfspeed could increase its line of credit by an additional $750 million if it meets certain conditions.
In a statement Monday, Wolfspeed CEO Gregg Lowe said the financing will help the company “scale up near-term operations at our (New York campus) and construction of our Siler City materials facility.”
Wolfspeed’s stock was up more than 3% as of midday Monday.
Semiconductors are a class of materials used to make chips that power essential appliances like cars, medical equipment and phones. While standard chips are made from silicon, Wolfspeed develops silicon carbide, a combination of silicon and carbon which the company says delivers greater efficiency. Wolfspeed grows silicon carbide at its Research Triangle Park headquarters.
In September, the company announced it would build a $5 billion campus in western Chatham County, about an hour’s drive west of Raleigh. This plant will focus on converting raw silicon carbide material into blank circular wafers. These wafers then get sent to a fabrication plant in New York’s Mohawk Valley.
Wolfspeed chips are used to power electric cars, fast-charging stations, renewable energy storage and defense equipment globally. The company says its Chatham factory will expand its capacity to produce wafers by 10 times.
Under its incentive agreement with the state, Wolfspeed pledges to employ more than 1,800 people at the Siler City site by the end of the decade.
Wolfspeed says construction is already underway.
Earlier this month, the North Carolina Department of Environmental Quality issued the site a key air quality permit. Then on June 9, Chatham County issued a permit for Wolfspeed to begin building the steel frame and roof of the factory. Chatham spokesperson Kara Dudley said the county will grant additional permits later this year.
“The steel is going up, and we’re starting to go vertical,” Wolfspeed spokesperson Melinda Walker told The News & Observer on Monday.
According to Walker, the company aims to complete the site’s initial phase by the end of 2024.
Wolfspeed still waiting on CHIPS Act ruling
Wolfspeed is also in line to benefit from the federal CHIPS Act, which Congress passed in August to promote domestic semiconductor manufacturing. But to what degree remains unclear.
The CHIPS Act set aside $52 billion in grants which have yet to be awarded. The legislation also established an investment tax credit which eligible companies could use to subsidize 25% of their project costs.
But Wolfspeed might not be eligible for this lucrative tax credit.
On May 9, Wolfspeed General Counsel Bradley Kohn submitted a 12-page comment to the IRS and the Treasury Department, requesting the latter change its proposed definition of tax credit eligibility. Kohn wrote that the current language excludes Wolfspeed “despite Congressional intent within the statute to ensure such facilities benefit from all CHIPS Act incentives.”
In spelling out its eligibility rules, the Treasury Department did not include manufacturers of “compound semiconductor wafers,” which is Wolfspeed’s specialty.
The Treasury Department and IRS have scheduled a hearing to discuss the proposed rule on July 26.
This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work.
This story was originally published June 26, 2023 at 4:08 PM with the headline "Wolfspeed said it needed $1 billion more to build Siler City plant. It just got it.."
