Wolfspeed, Inc. (NYSE: WOLF) has received a conditional loan commitment letter from the U.S. Department of War, through its Office of Strategic Capital, for up to $1.5 billion in long-term financing to support domestic development and production of silicon carbide materials and wide bandgap power devices.

The commitment contemplates a senior secured delayed-draw term loan facility with a 30-year term. The financing is intended to support national security applications, including upgrades to gallium nitride epitaxy capabilities for next-generation communications infrastructure and electronic warfare systems, as well as radiation-hardening capabilities for silicon carbide and future GaN products.

Wolfspeed plans to use the funds to strengthen domestic silicon carbide materials and power-device production, establish or expand GaN power device capabilities, advance GaN-on-SiC radio-frequency epitaxial wafer technology, and develop domestic radiation-hardening capabilities. The company operates manufacturing facilities in North Carolina, New York, and Arkansas.

As part of the potential financing, Wolfspeed would be required to issue VWAP-based warrants to the Department of War to purchase up to 7.5% of the company's fully diluted equity, issued proportionally as financing tranches are funded.

"The scale and 30-year tenor of this conditional commitment reflects the long-term importance of the technology and manufacturing capabilities Wolfspeed has built in the United States," said Robert Feurle, Chief Executive Officer of Wolfspeed.

Gregor van Issum, Chief Financial Officer, noted the commitment is "subject to the satisfaction of diligence, negotiation of definitive agreements, and other financial, legal, and investment conditions."

The financing remains conditional and is subject to due diligence, negotiation of definitive agreements, governmental authorizations, and other closing conditions. Wolfspeed filed a Current Report on Form 8-K with the U.S. Securities and Exchange Commission in connection with the announcement.