Cree doubles value of semiconductor deal to $550M

DURHAM – Cree is doubling the value of a long-term semiconductor supply agreement with international chip firm STMicroelectronics.

The deal announced early Tuesday ups the value of the multi-year agreement to more than $500 million.

The deal is the third in recent months in which Cree is making inroads for its silicon carbide wafers, which are seen as making electric vehicles more energy efficient. Demand is also growing for use of the chips across industrial applications, the companies say.

Cree shares (Nasdaq: CREE) advanced slightly on news of the deal.

“Expanding our long-term wafer supply agreement with Cree will increase the flexibility of our global silicon carbide substrate supply. It will further contribute to securing the required volume of substrate we need to manufacture our silicon carbide-based products as we ramp up production over the next years for the increasing number of programs won at automotive and industrial customers,” said Jean-Marc Chery, President and CEO of STMicroelectronics in a statement.

Added Cree CEO Gregg Lowe:

“Silicon carbide delivers performance enhancements that are critical to electric vehicles and a host of next-generation industrial solutions for solar, energy storage and UPS systems. Cree remains committed to leading the semiconductor industry’s transition from silicon to silicon carbide, and the extension of the agreement with ST ensures we are able to meet the accelerating, global demand for this solution across a diverse range of applications while accelerating the market.”