Staff Reports
Wolfspeed, a power solutions company specializing in silicon carbide, has secured a tentative agreement with the Biden administration for a staggering $750 million in funding. This announcement comes as the company’s stock has tumbled 71%, proving that even with government handouts, market performance doesn’t always cooperate. However, amidst the chaos, Wolfspeed still holds the title of an American industry leader, continually fending off competition from Chinese firms that seem hell-bent on taking over every sector.
The half-a-billion infusion is said to support the construction of a new semiconductor manufacturing facility in Siler City, aimed at securing a domestic supply of silicon carbide wafers critical for the future energy economy and the booming artificial intelligence industry. It’s worth noting that government largesse has become a staple of economic strategy under the current administration, which seems to view taxpayer money as a magical ATM for businesses in distress.
$WOLF is up 23% pre-market on news that it will receive $1.5B for its North Carolina silicon carbide wafer plant, split between U.S. CHIPS Act & private equity financing — to boost production capacity by 30% 👀 pic.twitter.com/Z3QI7gqcrv
— Shay Boloor (@StockSavvyShay) October 15, 2024
Additionally, a facility in Marcy, New York, also stands to benefit from this funding through the CHIPS and Science Act. According to the overly optimistic folks at the Commerce Department, these projects are set to create over 2,000 manufacturing jobs and 3,000 construction jobs, which sounds great on paper, but one has to wonder if these lofty promises will materialize or fade into the ether like so many government initiatives before them.
The CHIPS and Science Act, a legislative feat passed in July 2022 with bipartisan support, has been trumpeted as the lifeline for American semiconductor production. However, one can’t help but chuckle at the irony. America was the pioneer of semiconductors but now produces a mere 10% of the global supply, relying on East Asia for three-quarters of it. So much for “Made in America.” This plan seems less about revitalizing an industry and more about feeling good while throwing billions around like confetti.
Wolfspeed boasts about its “next-generation semiconductor technology,” framing itself as the savior of sustainable energy with promises of electrification for all. Meanwhile, the underlying reality remains: even with this substantial chunk of federal cash, the company is still recovering from its plummet in stock value. The location of Siler City, positioned between burgeoning manufacturing hubs, is likely to become yet another government-funded project hoping to attract private enterprise while balancing on the shaky legs of public funds. It’s a classic ‘if you build it, they will come’ scenario that consistently fails to deliver in the long run.
While officials are throwing around terms like “booming semiconductor R&D industry” as if it were candy, the past suggests skepticism. The relentless push for a reliable domestic supply chain appears to be more of a buzzword than a workable strategy. Plans may sound grand, but if history is any indicator, reality often bites hard—and it does so with an insatiable appetite for taxpayer resources.
