Highlights:

  • Wolfspeed is borrowing USD 1.25 billion and has the option to raise an additional USD 750 million in the future, per the terms of the transaction.
  • The company will use its new debt financing to fund the construction of a silicon carbide wafer facility in North Carolina.

Wolfspeed Inc., a prominent producer of silicon carbide processors, is looking to obtain USD 2 billion in debt to fund its manufacturing growth plans.

This transaction was announced recently. The chip manufacturer is obtaining funds from a consortium of investors led by Apollo Global Management.

The private equity business, best known for acquiring publicly traded technology companies, is also involved in the debt financing sector. This year, Apollo introduced a dedicated credit unit.

Wolfspeed is borrowing USD 1.25 billion and has the option to raise an additional USD 750 million in the future, per the terms of the transaction. The financing is structured as a secured note, a loan secured by the borrower’s assets. Wolfspeed can repay the loan earlier than its maturity in 2030.

The loan will be used to increase the production of silicon carbide (SiC) semiconductors. Carbon and silicon unite to form the compound of silicon carbide. The material enables chips to operate at higher temperatures and voltages than conventional semiconductors.

Wolfspeed is a significant manufacturer of silicon carbide chips. Its products are utilized in constructing data center power supply modules, which regulate the passage of electricity to a server’s components. Wolfspeed hardware is also used in electric vehicles, energy storage systems, and various other products.

The company will use its new debt financing to fund the construction of a silicon carbide wafer facility in North Carolina. The facility, once operational, will increase Wolfspeed’s wafer production capacity by a factor of ten. The company intends to begin production the following year and will continue to expand the plant’s facilities until the end of the decade.

The wafers produced at the company’s North Carolina facility will be processed into chips at a facility it opened in Marcy, New York, last year. Wolfspeed characterizes the fab as the first silicon carbide chip manufacturing facility to be completely automated. The fabrication facility employs 200-millimeter wafers, which are more cost-effective than the 150-millimeter wafers used in earlier-generation manufacturing processes.

Gregg Lowe, Chief Executive Officer, said, “This important step in our financing provides significant capital to scale up near-term operations at our Mohawk Valley Fab and construction of our Siler City materials facility to help us capture the growing silicon carbide market opportunity.”

In addition to silicon carbide products, Wolfspeed also manufactures gallium nitride-based processors. This is another specialized material used in systems with stringent requirements as an alternative to silicon. The company’s gallium nitride semiconductors are used to construct, among other things, radar sensors and certain 5G cell tower components.