Apollo Global leads a $2 billion private funding for chipmaker Wolfspeed

Chipmaker Wolfspeed announced on Monday it has raised a total of $2 billion in private funding from a group of lenders led by private-equity firm Apollo Global. The debt financing, which includes a $1.25 billion secured note with an accordion feature for up to an additional $750 million, will be used to support its U.S. expansion.

The latest funding supports Wolfspeed’s previously announced U.S. expansion efforts and is a significant step toward achieving its $6.5 billion global capacity expansion plan. By executing its growth strategy in the United States, Wolfspeed aims to expedite the adoption of silicon carbide technology across various industries. This expansion not only drives technological advancement but also contributes to the creation of substantial job opportunities within the semiconductor manufacturing sector in the United States.

According to a news release, the recently issued 9.875% notes have a maturity date set for 2030 and provide the company with the option to prepay them as outlined in the indenture governing the notes. Notably, the investment was led by funds managed by Apollo’s Credit business, which manages approximately $450 billion in assets.

“The group’s commitment to Wolfspeed further validates the importance of silicon carbide to the global energy transition,” said Gregg Lowe, president and CEO of Wolfspeed. “This important step in our financing provides significant capital to scale up near-term operations at our Mohawk Valley Fab and construction of our Siler City materials facility to help us capture the growing silicon carbide market opportunity. The financing positions Wolfspeed to continue to lead the growth of the industry and focus on the execution of our vertically integrated strategy to meet growing demand.”

“Our agreement with Apollo and its capital partners achieves our near-term funding targets while prioritizing our shareholders with a new, non-dilutive source of financing,” said Neill Reynolds, the chief financial officer of Wolfspeed. “Apollo and its capital partners’ investment follows an extensive review of our business and demonstrates their conviction in our team, operating plan and trajectory.”

“Apollo is pleased to provide a dynamic and flexible credit solution to Wolfspeed as it significantly expands its silicon carbide manufacturing capacity. The company’s growth plan is designed to deliver critical silicon carbide products for a range of automotive and industrial uses, and support sustainability goals with market-leading technology,” said Joseph Jackson, Partner, Apollo Credit. “With the help of our capital partners, we have crafted a facility that can provide up to $2 billion to ramp the company’s expansion plans.”

Wolfspeed CEO Gregg Lowe said the financing would also help “scale up near-term operations at our Mohawk Valley Fab and construction of our Siler City materials facility to help us capture the growing silicon carbide market opportunity.”

We covered Apollo Global two years ago after the private equity firm bought arts and crafts retailer Michaels in a transaction that values Michaels at an equity value of approximately $3.3 billion (for a transaction valued at $5.0 billion).

Wolfspeed traces its roots back to its founding in 1987 by Edmond and a group of five individuals, including four fellow graduate students from North Carolina State University. Originally named Cree Inc., the company initially centered its efforts on manufacturing LEDs and subsequently expanded into offering LED lighting solutions. The early focus on LED technology laid the foundation for Wolfspeed’s growth and evolution into the advanced semiconductor solutions provider it is today.