Wolfspeed Stock Plunges Due to Concerns about CHIPS Act Funding

Key Takeaways

• Wolfspeed shares lost nearly half their value Friday as comments by the semiconductor firm's outgoing interim Executive Chairman brought concerns about whether it will secure federal funding for its expansion efforts.
• The company announced that last October, it was eligible to receive $750 Million in grants and a $1 Billion in tax credits through the CHIPS and Science Act of 2012.
• Investors are worried about the money that will be forthcoming after Thomas Werner leaves his position as interim executive chairman.

The shares of Wolfspeed (WOLF), a semiconductor manufacturer, plummeted Friday after the outgoing interim executive chairman raised investor concerns that the firm could lose out on millions of dollars in federal money under the CHIPS and Science Act of 2020.

Thomas Werner told Axios that the company’s management is not overly dependent upon CHIPS funds or tax incentive.

In October of 2010, Wolfspeed announced it had signed a preliminarily agreement with the Department of Commerce in order to receive direct funding of up to 750 millions dollars from the CHIPS Program. It also expected to receive $1 billion in refunds of taxes under the advanced manufacturing credit, which was part of the CHIPS legislation. The company planned to expand its operations in North Carolina, New York, and North Carolina, using the money as well as $750 million from an investment fund consortium.

Axios reports that Werner stated that Wolfspeed expects a decision to be made on the CHIPS Grant by the end summer, though it believes the law will change in some manner.

Wolfspeed Named New CEO Thursday

In November, Wolfspeed sacked CEO Gregg Lowe. Werner took over the role as interim Executive Chair. Before that, the struggling firm began a restructuring program that included facility closings and consolidation. Yesterday, Wolfspeed announced former Micron Technology (MU), executive Robert Feurle will take over the CEO role May 1. Werner will “return to the Board as Chairman following the transition.”

Wolfspeed shares dropped 48% intraday, trading at or near their all time lows.