The U.S. Department of Defense awarded semiconductor company Wolfspeed a conditional $1.5 billion, 30-year loan commitment to expand gallium nitride (GaN) epitaxy and radiation-hardened silicon carbide (SiC) manufacturing capacity.

Wolfspeed Inc. has received a conditional 30-year, $1.5 billion loan commitment letter from the U.S. Department of War through its Office of Strategic Capital, according to an announcement on October 7. The funding will support the company's efforts to upgrade gallium nitride (GaN) epitaxy capabilities and develop radiation hardening capabilities for both current silicon carbide (SiC) and future GaN products.

Wolfspeed, which manufactures SiC and GaN materials and devices, plans to deploy the capital toward applications it describes as critical to national security: defense, aerospace, communications infrastructure, and electronic warfare systems. "SiC and GaN have critical national security applications," said CEO Robert Feurle. "With this financing, the company would be well positioned to not only continue to serve the DoW but also expand its capabilities for the benefit of U.S. national security as a whole."

Under the loan's terms—subject to final agreement—Wolfspeed will issue the DoW warrants to purchase up to 7.5% of its fully diluted equity. The warrants will be priced at the stock's volume-weighted average price and distributed in proportion to each loan tranche as it is funded. The commitment remains conditional, pending the OSC's completion of due diligence, as well as government approvals, appropriations, and consent from Wolfspeed's existing lenders. The company cautioned there is no guarantee the financing will close.

CFO Gregor van Issum characterized the commitment as "another significant milestone in our ongoing efforts to optimize Wolfspeed's capital structure and improve our financial foundation," noting it is expected to provide long-dated capital to support strategic priorities and improve financial flexibility.

The announcement represents the latest in a series of U.S. efforts to strengthen domestic semiconductor manufacturing. Through the $54.2 billion CHIPS and Science Act, the government has directed billions into major fabrication facilities for industry leaders including TSMC, Intel, GlobalFoundries, and Micron. The government has also deployed the Section 48D Advanced Manufacturing Investment Credit, which offers a 25% tax credit and has prompted over $827 billion in private sector investment announcements.