Overview
- The Defense Department’s Office of Strategic Capital issued a conditional loan commitment of up to $1.5 billion to Wolfspeed on Wednesday and Thursday to expand domestic production of silicon carbide and gallium nitride used in military systems.
- The facility is a 30-year senior secured delayed-draw loan that lets Wolfspeed draw funds in stages and would give the department warrants to buy as much as 7.5% of the company’s fully diluted stock as draws occur.
- Wolfspeed said the money would upgrade GaN manufacturing, advance GaN-on-SiC wafer work, and develop radiation-hardened SiC and GaN parts for satellites, radars, electronic warfare, missiles and other defense applications.
- The commitment is not final and requires extensive financial, legal and technical due diligence, third-party consents, and formal government approvals before any funds are released.
- Markets reacted quickly with an about 20% after-hours jump in Wolfspeed shares, but analysts remain cautious and note price targets and ratings still sit below the post-announcement level.