Wolfspeed secures $1.5 billion conditional loan commitment from US defense department
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U.S. power chip maker Wolfspeed’s silicon carbide 200mm wafer is seen on display at Wolfspeed’s Mohawk Valley Fab in Marcy, New York, U.S., April 2022. Courtesy of Wolfspeed/Handout via REUTERS/File Photo
Oct 7 (Reuters) - Chipmaker Wolfspeed said on Wednesday it has received a conditional loan commitment for up to $1.5 billion from the US Department of Defense to expand domestic production of silicon carbide materials and power devices, sending its shares surging 27% in extended trading.
• Wolfspeed makes chips using silicon carbide, which are more energy-efficient and used in applications that require huge amounts of power conversion such as electric vehicles, solar inverters and industrial power systems
• The company said the conditional 30-year commitment, through the defense department's Office of Strategic Capital, reflects its efforts to optimize its capital structure and improve its financial foundation
• It plans to use the financing to upgrade its gallium nitride technology for next-generation communications infrastructure and electronic warfare systems and develop radiation-hardening capabilities
• The funding is subject to due diligence, definitive agreements, government approvals and other conditions
• Under the proposed terms, Wolfspeed would be required to issue to the department warrants to purchase up to 7.5% of Wolfspeed's fully diluted equity
(Reporting by Dharna Bafna in Bengaluru; Editing by Shilpi Majumdar)
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