Wolfspeed CEO: Semiconductor demand continues to rise – here’s why

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DURHAM- The recent passage of the CHIPS Act in the U.S. House of Representatives is a positive step for the U.S. semiconductor industry, the CEO of Durham-headquartered Wolfspeed told WRAL TechWire in a statement. interview. But even if that were not to go into effect, demand for semiconductors continues to drive companies to invest in manufacturing capacity and facilities.

Passing the CHIPS Act would unlock $52 billion and be geared towards expanding the semiconductor industry in the United States, at a time when there is a global shortage of in-demand chips.

“A very positive step for the American industry,” said Gregg Lowe. “Primarily because of the number of wafer builds in the world, the percentage of wafer builds has been declining in the United States for many decades.”

Lowe noted that while other countries around the world have programs in place that encourage the construction of semiconductor manufacturing facilities, the United States has not made such investments. Now, the passage of the CHIPS law could change the landscape.

“A very good sign of government support,” Lowe said of the legislation, which in its current form is over 3,000 pages long. “It will make the United States much more competitive,” Lowe said.

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Demand for Semiconductors Continues to Rise

Legislation can provide additional information and incentives for semiconductor companies looking to grow, but it’s not necessarily the sole or primary driver of how companies can plan, Lowe noted.

“A lot of activity has already been announced,” Lowe said, noting Intel’s recent announcement that the company would build a $20 billion facility in Ohio, and a similar announcement from Samsung last year. which it would invest $17 billion in Texas.

The companies plan to expand due to growing demand for semiconductors and the industry shifting from using silicon to using silicon carbide, Lowe said.

“Demand for semiconductor chips continues to rise,” Lowe said. “I will say that the likelihood of you seeing more ads here in the United States will be higher,” Lowe said of the impact of the enactment of the CHIPS Act.

It could also play a role in North Carolina’s economy, as North Carolina can and will be a competitive state for the semiconductor industry, Lowe noted.

“We’re a shining example of that,” Lowe said. “With the expansion of our Durham campus.”

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Expansion in Durham

“The company had a pretty big transition from an LED lighting company to a silicon carbide solid-state power company,” Lowe said. “It really bodes well for us.”

Wolfspeed’s Durham campus sees its fair share of construction cranes and orange fencing, Lowe said. The company is expanding its materials business and increasing the capacity of its wafer manufacturing processes.

“A significant expansion, and it couldn’t come at a better time, as demand for our product is skyrocketing at this point,” Lowe said, noting that he shared the company generated $1.6 billion. dollars of activity in the previous quarter, and the company has an “opportunity pipeline well north of $20 billion.”

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What drives demand?

Here’s what’s driving demand in the semiconductor industry, according to Lowe.

“It’s three things that come together,” Lowe noted. First, consumers are increasingly adopting electric vehicles, and automotive manufacturers and suppliers are improving the supply chain and automotive experience. Second, the use of silicon carbide rather than silicon is accelerating. And, finally, Lowe said, the volume of business that companies, including Wolfspeed, are earning is bigger than expected.

The expansion of the electric vehicle market, especially as vehicles with a single charge range greater than 500 miles become available, is bringing more consumers into the market, Lowe said. “More and more people really want to switch from internal combustion engines to electric vehicles,” he noted.

And that’s part of what’s driving the second factor: the use of silicon carbide instead of silicon in semiconductors.

“It’s mostly happening because the value proposition is just amazing,” Lowe said. “If you use silicon carbide your car will go 5-15% further than if you use silicon,” he said, adding that “range is paramount if you’re using an electric car.”

All in all, “silicon carbide adoption is happening faster,” Lowe said, and that’s translating into “the volume of business we’re winning is greater than we anticipated.”

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Silicon carbide: the future?

Wolfspeed began construction on its new facility in New York about two years ago, and it could be complete and operational this year, Lowe told WRAL TechWire.

“Pretty remarkable, especially because it was all done during Covid,” Lowe said. “The building itself is complete, the clean room is complete, and we have installed over 60 tools in the facility.”

Wolfspeed, which Lowe described as “a leader in this early transition to this new technology”, was among the first companies to use silicon carbide rather than silicon. The company’s co-founder and chief technology officer, Dr. John Palmour, were among North Carolina State University graduate students who founded the company in 1987, believing in the application of silicon carbide, noted the company in a recent press release. Earlier this month, Palmour was elected a Fellow of the National Academy of Engineering, a prestigious industry honor and distinction.

Lowe told WRAL TechWire that this transition, in the automotive, technology and industrial markets, is partly driven by energy efficiency.

“Anyone interested in energy savings is starting to look at silicon carbide,” Lowe said, referring to a company study that analyzed the energy efficiency of silicon carbide compared to silicon. “An electric car, for example, and you use silicon carbide instead of silicon in that car, your return on investment is 13:1,” Lowe said. “It saves 13 times the amount of energy,” he added. “And it’s just a normal car, if that car is a taxi, it’s 24 to 1.”

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people pay attention

The gains could be greater for use cases such as server farms or data centers, Lowe noted. “The servers are running pretty much 24/7, so the efficiency gain, or the energy saved versus the investment, is 55 times better,” he said. “It’s something that a lot of our customers pay attention to.”

Wolfspeed is also careful. And the company continues to hire locally in the Triangle, which Lowe says is going well because it’s an attractive place to work.

“It’s mainly because people who understand power semiconductor chips see the writing on the wall in the silicon carbide conversion,” Lowe said. “We supply something like 62% of the world’s silicon carbide wafers,” he noted. “It was quite easy to get people to come.

The company recently revealed that it is raising $150 million in additional debt, bringing the total to $650 million, in response to growing demand for semiconductors.

Wolfspeed raises $650m and raises capital by $150m in response to demand

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