Wolfspeed, Inc. (NYSE:WOLF) has announced a significant funding boost, revealing a non-binding preliminary memorandum of terms (PMT) for up to $750 million under the U.S. CHIPS and Science Act. Additionally, the company will receive another $750 million from a consortium led by Apollo Global Management, which includes notable investors such as The Baupost Group, Fidelity Management & Research Company, and Capital Group. This brings the total expected capital access to approximately $2.5 billion [20258c16].
The funding is aimed at expanding Wolfspeed's production capabilities in silicon carbide technology, which is crucial for clean energy systems, electric vehicles (EVs), artificial intelligence (AI) data centers, and battery storage solutions. As the largest producer of silicon carbide technology, established over 35 years ago, Wolfspeed's CEO, Gregg Lowe, emphasized the importance of this funding for both U.S. economic growth and national security [20258c16].
U.S. Secretary of Commerce Gina Raimondo highlighted the investment's role in enhancing U.S. semiconductor manufacturing, while Senator Chuck Schumer noted the job creation potential in the Mohawk Valley. Local leaders, including North Carolina Governor Roy Cooper and Senators Thom Tillis and Ted Budd, praised the investment's anticipated positive impact on regional economies [20258c16].
Despite this promising funding announcement, Wolfspeed has been facing challenges due to weak demand for EVs, which has affected the need for its specialized silicon carbide chips. The company's stock has seen a decline, with a one-month return of -14.02% and a 52-week loss of 59.28%. As of June 25, 2024, Wolfspeed's stock closed at $22.08 per share, with a market capitalization of $2.779 billion [a9f0de9f].
In its latest financial report, Wolfspeed posted $201 million in revenue for the first quarter of 2024, a 4% decrease from the previous quarter but a 4% increase year over year. The broader semiconductor industry continues to experience fluctuations, with Wolfspeed not being among the 31 most popular stocks among hedge funds, although 33 hedge fund portfolios held its stock at the end of the first quarter [a9f0de9f]. As the company navigates these challenges, the substantial funding from both the U.S. government and private investors could play a crucial role in its future growth and stability in the semiconductor market [20258c16].