Market Commentary

Wolfspeed Rallies 16% on $2 Billion Deal with Renesas

Ahmed Asaad
6 Feb 2024 · 1 minute read

Wolfspeed (WOLF:US) shares opened nearly 16% higher on Wednesday after the semiconductor company said it struck a 10-year silicon carbide wafer deal with Japanese chip company Renesas. 

The deal includes a $2 billion deposit from Renesas and is focused on expanding the production of silicon carbide power semiconductors, starting in 2025.

The deposit will support Wolfspeed’s aggressive expansion plans, including the construction of the state-of-the-art, multi-billion-dollar factory in North Carolina.

“With the steepening demand for silicon carbide across the automotive, industrial and energy sectors, it’s critically important we have best-in-class power semiconductor customers like Renesas to help lead the global transition from silicon to silicon carbide,” said Gregg Lowe, President and CEO of Wolfspeed.

The Renesas investment comes just a few days after Wolfspeed said it secured a $1.25 billion secured note financing from private equity firms, led by Apollo. An additional $750 million is available if needed, the statement said. Wolfspeed is looking to secure funding to support its $6.5 billion global capacity expansion plan.

The loan is based on 9.875% notes, which will mature in 2030.

“The financing positions Wolfspeed to continue to lead the growth of the industry and focus on the execution of our vertically integrated strategy to meet growing demand,” Lowe said last week.

Congress members Josh Gottheimer and Sara Jacobs were trading WOLF shares earlier. The stock could attract more attention from Congress members in 2023 following the most recent developments. 

Despite Wednesday’s surge in WOLF shares, they are still down about 6.29% year-to-date.