Today, the Biden-Harris Administration announced that the U.S. Department of Commerce and Wolfspeed, Inc. have signed a non-binding preliminary memorandum of terms (PMT) to provide up to $750 million in proposed direct funding under the CHIPS and Science Act.
The proposed funding would support the construction of a new silicon carbide wafer manufacturing facility in Siler City, North Carolina, helping to secure a reliable domestic supply of the semiconductors that will underpin the future energy economy and AI boom. President Biden and Vice President Harris championed the CHIPS and Science Act, a key component of the Administration’s Investing in America agenda, to usher in a new era of semiconductor manufacturing in the United States, bringing with it a revitalized domestic supply chain, good-paying jobs, and investments in the industries of the future. In addition to Wolfspeed’s North Carolina project, the proposed CHIPS investment is expected to catalyze its planned expansion of its device manufacturing facility in Marcy, New York. The projects together are estimated to create over 2,000 manufacturing jobs and 3,000 construction jobs and are part of the company’s previously announced more than $6 billion capacity expansion plan.
“Artificial intelligence, electric vehicles, and clean energy are all technologies that will define the 21st century, and thanks to proposed investments in companies like Wolfspeed, the Biden-Harris Administration is taking a meaningful step towards reigniting U.S. manufacturing of the chips that underpin these important technologies,” said U.S. Secretary of Commerce Gina Raimondo. “Because of the Biden-Harris Administration’s CHIPS and Science Act, the United States is building and fortifying our semiconductor manufacturing capabilities to serve our economic and national security interests while creating jobs and economic opportunities for communities across the country.”
Founded in North Carolina in 1987, Wolfspeed is the world’s leading manufacturer of wafers and devices made from silicon carbide, a compound which has favorable chemical and material properties compared to traditional silicon, enabling Wolfspeed’s semiconductors to be highly energy-efficient and durable. The silicon carbide devices manufactured by Wolfspeed power electric vehicles (EVs) and plug-in hybrids, enabling extended driving range-per-charge, faster charging times, and lower overall systems costs. Wolfspeed’s products sold in 2023 will save approximately 72 million metric tons of CO2 over their lifetimes. Beyond EVs, Wolfspeed’s devices are utilized for renewable energy systems, industrial capacities, and artificial intelligence applications. Furthermore, Wolfspeed supplies next-generation silicon carbide technologies used in national security applications to the United States military.
“We intend to build a booming semiconductor R&D industry in the United States that will attract and keep semiconductor manufacturers in this country,” said Under Secretary of Commerce for Standards and Technology and National Institute of Standards and Technology Director Laurie Locascio. “These efforts depend on a reliable domestic supply of specialized semiconductor wafers and devices, such as those produced by firms like Wolfspeed. With proposed investments such as this, we are realizing the goals of the CHIPS and Science Act by building out the domestic supply chains that will keep America’s R&D capacity healthy and competitive.”
“We’re grateful for the continued support of Secretary Raimondo and the CHIPS Office throughout this process, as this announcement marks a pivotal milestone in Wolfspeed’s long-term growth strategy and important technology. As a key player in the semiconductor industry, this proposed funding will enable us to solidify our leadership position with a first-of-a-kind 200mm silicon carbide manufacturing footprint in New York and North Carolina, while contributing to the resilience and competitiveness of the U.S. supply chain,” said Wolfspeed CEO Gregg Lowe.
The proposed CHIPS investment would support the construction of the John Palmour Manufacturing Center for silicon carbide in Siler City, North Carolina. This new, 2-million-square-foot facility would become the United States’ largest silicon carbide wafer manufacturing facility and the world’s first high-volume 200mm silicon carbide wafer manufacturing facility. In conjunction with the Siler City development, Wolfspeed plans to expand its existing silicon carbide device manufacturing facility in Marcy, New York, which would contribute to the growth of the facility as the world’s first fully automated 200mm silicon carbide power device fab and increase its production capacity by approximately 30%. This fab is qualified to serve both automotive and industrial and energy customers. Due in part to these proposed projects, Wolfspeed anticipates achieving a five-fold increase in their silicon carbide device output and a ten-fold increase in 200mm materials production capacity.
The proposed CHIPS funding will also help catalyze private capital investment of at least $750 million to support the company’s expansion plans. This injection of private capital would not have occurred were it not for the CHIPS and Science Act. Consistent with the Department’s practice across all announced PMTs, the PMT with Wolfspeed contains conditions for funding disbursements related to construction and operating milestones. The PMT requires the company to take additional steps to strengthen its balance sheet to better protect taxpayer funds.
In North Carolina, Wolfspeed has partnered with North Carolina Agricultural and Technical State University (N.C. A&T) and committed $4 million over five years to establish the Wolfspeed Endowed Scholars Program. N.C. A&T and Wolfspeed aim to establish curriculum and training programs to create undergraduate and graduate silicon carbide manufacturing credentials and career advancement programs for manufacturing workers. In New York, Wolfspeed has established partnerships with programs, such as Real Life Rosies and VET ST.E.P., to develop and recruit more women and military veterans into the semiconductor workforce. Furthermore, Wolfspeed has partnered with local career organizations, including Mohawk Valley Community College and the Manufacturers Association of Central New York, to develop a Registered Apprenticeship program.
To address local child care challenges in North Carolina and New York, Wolfspeed plans to offer financial support in both locations to increase the capacity or operating hours of existing providers while providing a stipend and a Dependent Care Flexible Spending Account to employees to defray costs. Wolfspeed also plans to join a vendor partners program in each location, building four new licensed in-home care programs creating 24 more child care slots in New York and five to ten licensed in-home care programs to create 40-80 more child care slots in North Carolina.
Wolfspeed has achieved Silver Leadership in Energy and Environmental Design (LEED) certification in New York and is pursuing LEED certification in Siler City. Wolfspeed plans to conserve substantial amounts of energy and water in both their office buildings and the semiconductor manufacturing processes to cut operational emissions by 50% by 2030.
The company has indicated that it plans to claim the Department of the Treasury’s Investment Tax Credit, which is expected to be up to 25% of qualified capital expenditures.
As explained in its first Notice of Funding Opportunity, the Department of Commerce may offer applicants a PMT on a non-binding basis after satisfactory completion of the merit review of a full application. The PMT outlines key terms for a potential CHIPS incentives award, including the amount and form of the award. The award amounts are subject to due diligence and negotiation of award documents and are conditional on the achievement of certain milestones. After a PMT is signed, the Department of Commerce begins a comprehensive due diligence process on the proposed projects and continues negotiating or refining certain terms with the applicant. The terms contained in any final award documents may differ from the terms of the PMT being announced today.
