The U.S. Department of War is offering advanced chip materials firm Wolfspeed up to $1.5 billion in long-term financing to strengthen domestic production of advanced power semiconductors and develop chips for defense and national security applications.
The company says it plans to use the financing to upgrade its GaN epitaxy capabilities for next-generation communications infrastructure and electronic warfare systems, among other initiatives. It also plans to develop radiation-hardening capabilities for its current SiC and future GaN products.
Wolfspeed specializes in silicon carbide (SiC) and gallium nitride (GaN) materials and devices. SiC can handle higher voltages, higher temperatures and greater power density than conventional silicon.
Wolfspeed also plans to expand or establish domestic manufacturing capabilities for low- and high-voltage GaN power devices and advance GaN-on-SiC technology for radio frequency applications.
The financing is intended to strengthen the U.S. semiconductor supply chain for military electronics, aerospace, communications infrastructure and other strategic applications.
In exchange, Wolfspeed would issue warrants allowing the Department of War to purchase shares representing up to 7.5% of the company’s fully diluted equity. The warrants would be issued proportional to the amounts funded under the agreement.
“This conditional 30-year commitment represents another significant milestone in our ongoing efforts to optimize Wolfspeed’s capital structure and improve our financial foundation,” said Gregor van Issum, chief financial officer of Wolfspeed, in a statement.
Silicon carbide and gallium nitride are known as wide bandgap semiconductor materials. Compared with conventional silicon, they can support higher operating voltages, faster switching and improved performance under demanding thermal conditions. These characteristics make them useful in power conversion, high-frequency electronics and military systems.
The commitment is not yet a finalized loan. Funding depends on due diligence, definitive agreements, government approvals and appropriations, as well as required consent from existing lenders and satisfaction of other closing conditions. Wolfspeed said there is no guarantee the transaction will be completed.
For the U.S. government, the commitment represents another effort to secure domestic sources of strategically important semiconductor technologies. By supporting SiC and GaN production, the initiative aims to strengthen the industrial base supplying power electronics and radio-frequency components for defense and other critical infrastructure.
