TSLA - Wolfspeed stock slips as company set to apply for CHIPs Act funding

2023-03-28 15:01:43 ET

Wolfspeed ( NYSE: WOLF ) shares fell more than 2% on Tuesday as the semiconductor company said it would apply for funding from the U.S. CHIPS and Science Act to build a research facility.

Wolfspeed ( WOLF ), which specializes in silicon carbide, will build the new facility on North Carolina A&T's campus, with the focus supporting the company's next-generation semiconductors.

"The R&D facility will enable the next generation of innovators to explore new processes, applications and breakthrough advancements to support the global transition from silicon to Silicon Carbide technology and achieve new levels of sustainability and energy efficiency across a variety of industries," Wolfspeed ( WOLF ) CEO and President Gregg Lowe said in a statement.

The announcement was made at an event at Wolfspeed's ( WOLF ) North Carolina headquarters on Tuesday, which was attended by President Biden.

Wolfspeed ( WOLF ) and North Carolina A&T said they would submit the project, which is set to boost production for Wolfspeed ( WOLF ) by more than 10 times and create 1,800 new jobs, for approval this fall.

On Monday, the U.S. Commerce Department asked semiconductor companies to provide revenue and profit projections in an effort to receive funds from the U.S. CHIPs Act.

In a document, the U.S. Commerce Department said the financial statements would be a "critical part" of how the program evaluates programs and assesses their viability, along with economic returns, risks and the size and scope of projects.

In addition, the government agency unveiled a guide on how to build models for the operations of the new facilities and an Excel-based tool to begin the process.

The $52B CHIPs Act includes in subsidies for domestic production and an investment tax credit for chip plants that could be worth an estimated $24B over the next decade. The legislation was designed to reduce the reliance of foreign semiconductor production amid increasing geopolitical tensions, particularly with China.

Investment firm Roth MKM defended Wolfspeed ( WOLF ) earlier this month after Tesla ( TSLA ) announced it found a way to use less silicon carbide in its vehicles .

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