The US Department of Commerce and Wolfspeed signed a non-binding preliminary memorandum of terms (PMT) for up to $750 million in proposed direct funding under the CHIPS and Science Act. In addition, a consortium of investment funds led by Apollo, The Baupost Group, Fidelity Management & Research Company and Capital Group have agreed to provide Wolfspeed an additional $750 million of new financing.

Together, these investments support Wolfspeed’s long-term growth plans and bolster domestic production of silicon carbide to power clean energy systems underpinning electric vehicles (EVs), artificial intelligence (AI) data centers, battery storage and more.

In addition, Wolfspeed expects to receive $1 billion of cash tax refunds from the advanced manufacturing tax credit under the CHIPS and Science Act (section 48D), giving the company, in total, access to up to $2.5 billion of expected capital to support the expansion of silicon carbide manufacturing in the United States.

Wolfspeed is the world’s largest producer of silicon carbide technology, pioneering the technology more than 35 years ago on the campus of North Carolina State University. Since that time, Wolfspeed has become the global leader in silicon carbide technology, one of the fastest growing components of the broader semiconductor industry.

Silicon carbide is a superior alternative to silicon for high power applications—such as EV powertrains, e-mobility, renewable energy systems, battery energy storage systems, and AI and cryptocurrency data centers—that unlocks improved performance and lower system costs.

Bolstering the domestic production of silicon carbide has been recognized across multiple federal agencies; the Department of Energy denoted it as one of 17 “critical materials” with a high risk of supply disruption that are integral to clean energy technologies, while the Department of Commerce recognizes silicon carbide semiconductors as important to national security.

These proposed funds, which are expected to be received upon milestone achievements in the coming years, would enable Wolfspeed to complete its multi-billion-dollar greenfield US capacity expansion plan, which consists of the largest and most advanced 200mm silicon carbide footprint in the world. In addition to the proposed direct funding, Wolfspeed intends to benefit from the US Treasury Department Investment Tax Credit of up to 25% of the qualified capital expenditures primarily related to its construction and installation of equipment at The John Palmour Manufacturing Center for Silicon Carbide in Siler City, NC and completion of the Mohawk Valley Fab M-Line West Expansion in Utica, NY.

Summary of the PMT. The PMT outlines key terms for a CHIPS incentive award, including the proposed amount and form of the award, and provides that the disbursement of funds will be conditioned upon the achievement of certain operational and construction milestones and other requirements.

The PMT includes an obligation for Wolfspeed to raise an aggregate of $750 million in debt financing over three tranches through the issuance of senior notes under an amended and restated indenture. Wolfspeed and its lenders, led by Apollo funds, have reached an agreement for this additional financing, including $250 million to be available within 10 business days, and have agreed to certain intercreditor terms with the CHIPS Program Office as described in the PMT.

Together, the PMT and the agreement with lenders also requires:

• Wolfspeed to undertake further actions with respect to its capital structure, including (a) restructuring or refinancing its outstanding 2026, 2028 and 2029 convertible notes at specified intervals prior to their respective maturity dates, (b) deferring a total of $120 million in cash interest payments due prior to June 30, 2025 under an unsecured customer refundable deposit agreement, and (c) raising up to $300 million of additional capital from non-debt sources over the next 12 months.

• In addition, Wolfspeed has agreed with its lenders to certain revisions in the terms of the senior notes, including revisions to the interest rate applicable to the senior notes, as described in the Form 8-K filed today with Securities and Exchange Commission (SEC).

The award is subject to due diligence and the negotiation and signing of a definitive direct funding agreement with the Department of Commerce and the negotiation and signing of an intercreditor agreement between the Department of Commerce and the Company’s lenders, which may contain different or additional conditions not contained in the PMT. Additional terms of the PMT were not disclosed.