By Lynn Doan | Updated on Oct 07, 2026 at 09:59 PM
The US Defense Department pledged to issue a conditional loan to Wolfspeed Inc., the chipmaker that filed for bankruptcy last year, for as much as $1.5 billion to support the development of materials that the firm described as key to national security.
The government sent Wolfspeed a conditional, 30-year commitment letter for a senior secured facility of as much as $1.5 billion, according to a company statement. Under the terms of the transaction, which are subject to negotiation, Wolfspeed would issue the Defense Department warrants in exchange to buy as much as 7.5% of Wolfspeed shares in tranches.
The North Carolina-based company filed for bankruptcy in July 2025 after struggling with production snarls at a key factory that makes silicon carbide wafers. Wolfspeed had won a $750 million award as part of a Biden administration-era chips program that US President Donald Trump has fiercely criticized since taking office. The Trump administration has been reworking many of the awards, and Wolfspeed had only collected part of the money in the lead-up to its bankruptcy.
Shares of Wolfspeed were up 25% at $39.22 in after-hours trading on Wednesday.
Read More: Wolfspeed Wins $1.5 Billion Financing From Chips Act, Apollo
Wolfspeed said Wednesday that it would use the government financing to produce silicon carbide materials and wide bandgap power devices that are used in power electronics for the telecom, aerospace and defense industries. The company also plans to use the funding to upgrade its capabilities to supply a material used in warfare communications systems.
The Trump administration has demonstrated a willingness to invest in and loan directly to companies it views as critical to US national security. It took a stake in chipmaker Intel Corp. last year. In May, the Commerce Department announced it would offer more than $2 billion in funding in exchange for non-controlling equity stakes in a group of quantum computing firms.