On Tuesday, Nvidia rival Wolfspeed Inc. (NYSE:WOLF) and the U.S. Department of Commerce signed a preliminary memorandum of terms for up to $750 million in funding under the CHIPS and Science Act. This announcement led to a surge in Wolfspeed’s stock, which rose over 16% in pre-market trading.

What Happened: As per Benzinga Pro, Wolfspeed’s stock was trading at $13.28, marking a 16.70% increase from its previous close of $11.38. The funding aims to support Wolfspeed’s long-term growth and enhance domestic production of silicon carbide, a critical component for electric vehicles, AI data centers, and battery storage systems.

Additionally, a consortium led by Apollo, The Baupost Group, Fidelity Management & Research Company, and Capital Group has agreed to provide Wolfspeed with an extra $750 million in financing, Business Wire noted. This brings Wolfspeed’s potential capital access to $2.5 billion, including expected tax refunds, to expand silicon carbide manufacturing in the U.S.

See Also: Apple’s Low-Cost Vision Pro Could Hit The Shelves Next Year — Everything You Need To Know About iPhone Maker’s Plan To Challenge Meta

Why It Matters: The Biden administration has been actively working to strengthen the U.S. semiconductor industry. The CHIPS and Science Act was formalized in 2022 which earmarked $39 billion in grants for U.S. chipmaking and $11 billion for semiconductor research, including the NSTC.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

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