WOLF - Wolfspeed just announced a decade-long deal with Renesas

2023-07-05 11:08:06 ET

Wolfspeed Inc ( NYSE: WOLF ) opened about 20% up on Wednesday after announcing a decade-long deal with the Japanese semiconductor giant Renesas Electronics Corp ( TYO: 6723 ).

Renesas paid $2.0 billion for the deal

The Durham-headquartered firm has agreed to supply Renesas with its silicon carbide bare and epitaxial wafers for ten years.

Renesas Electronics made a $2.0 billion deposit today to secure the supply agreement. Hidetoshi Shibata – its Chief Executive said in a press release today:

The agreement will provide Renesas with a stable, long-term supply base. This empowers Renesas to scale power semiconductor offerings to better serve customers’ vast array of applications.

Executives from both companies agreed that the switch to electric vehicles and focus on clean energy at large was resulting in a material increase in the demand for semiconductors.

Wolfspeed is focused on increasing capacity

Wolfspeed plans on using the $2.0 billion payment from Renesas on its capacity construction projects.

JP – the multi-billion-dollar facility in Chatham County due for completion by the end of this decade is expected to boost its production capacity by more than 10 times. According to Gregg Loew – the Chief Executive of Wolfspeed Inc:

With steepening demand for silicon carbide, it’s critically important we have best-in-class power semi customers like Renesas to help lead global transition from silicon to silicon carbide.

The stock market news arrives about a couple months after Wolfspeed reported its financial results for the third quarter that topped Street estimates. Its shares are now back to the price at which they started the year.

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