Investors, led by Apollo Global Management, have committed to investing between $1 billion and $2 billion in debt to support the U.S. expansion of chipmaker Wolfspeed. This significant financing package will provide Wolfspeed with $1.25 billion in immediate liquidity, with an additional $750 million to be disbursed in the future. The investment comes at a crucial time for Wolfspeed, as it seeks to strengthen its position in the rapidly growing electric vehicle (EV) chip manufacturing industry.
The investment, structured as seven-year secured notes, carries a coupon rate of 9.875% and a three-year repayment period. This arrangement provides the investors with a substantial return on their investment while giving Wolfspeed the necessary financial resources to pursue its expansion plans. The financing deal is expected to be officially disclosed in the coming days, according to reliable sources cited by The Information.
Wolfspeed, a leading provider of silicon carbide (SiC) and gallium nitride (GaN) semiconductors, has been making strategic moves to capitalize on the surging demand for EV chips. Last September, the company unveiled its ambitious plan to construct a state-of-the-art factory in North Carolina, dedicated to the production of raw materials essential for EV chip manufacturing. The proposed multibillion-dollar facility aims to bolster the domestic supply chain and reduce reliance on foreign chip manufacturers.
With the backing of Apollo Global Management and its consortium of investors, Wolfspeed can expedite the development of its North Carolina factory and ramp up production capacity. This infusion of capital will enable the company to acquire advanced manufacturing equipment, hire skilled workers, and establish a robust research and development division. By doing so, Wolfspeed aims to position itself as a key player in the EV chip market, capitalizing on the increasing adoption of electric vehicles worldwide.
The investment from Apollo Global Management is a testament to the potential and growth prospects of Wolfspeed. The chipmaker has been gaining traction in recent years, driven by the rising demand for energy-efficient and high-performance semiconductors. The partnership with Apollo Global Management, a renowned investment firm with a strong track record in the technology sector, signals confidence in Wolfspeed’s capabilities and long-term viability.