Wolfspeed shares leap after $2 billion silicon carbide wafer deal

Key takeaways

Wolfspeed Shares jumped more than 17% in early trading on Wednesday after signing a 10-year, $2 billion deal to supply Japanese wafers to Renesas Electronics Corporation.
The company said demand for silicon carbide chips is increasing due to cost advantages over traditional silicon chips.
Wolfspeed intends to use the ;money to increase its production capacity.

Shares of Wolfspeed (WOLF) soared 17% in early trading Wednesday after the wide-bandgap semiconductor maker struck a deal to supply Japan's Renesas Electronics Corporation with wafers of silicon carbide.

Renesas makes $2 billion down payment for guarantee a 10-year supply of inserts. He said the transaction would “pave the way” for Renesas to increase production of silicon carbide power semiconductors from 2025.

Wolfspeed noted that demand for silicon carbide chips is growing because they offer higher power efficiency, greater power density and lower system cost compared to conventional silicon power chips.

Renesas CEO Hidetoshi Shibata said the deal will help his company better serve its customers' wide range of applications. He added that “we are now poised to elevate ourselves as a key player in the accelerating silicon carbide market.”

Wolfspeed stated that the The money will help support the company's ongoing capacity building projects, including the world's largest silicon carbide materials plant in North Carolina.

Despite advance As of Wednesday, shares of Wolfspeed were still down more than 4% year-to-date.