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 an interview. But even if it weren’t to come into law, demand for semiconductors continues to drive companies to invest in manufacturing capacity and facilities.
The passage of the CHIPS Act would open up $52 billion, and would be geared toward expanding the semiconductor industry in the United States, at a time when there’s a global shortage of the in-demand chips.
“A very positive step for the U.S. industry,” said Gregg Lowe. “Primarily because the number of wafer fabs in the world, the percentage of wafer fabs has been declining in the U.S. for many decades.”
Lowe noted that while other countries across the globe have existing programs in place that incentivize the construction of semiconductor manufacturing facilities, the United States has not made such investments. Now, the passage of the CHIPS Act could change the landscape.
“A very good sign of support from the government,” Lowe called the legislation, which in its current form is more than 3,000 pages long. “It will make the U.S. much more competitive,” said Lowe.
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Demand for semiconductors continues to increase
The legislation may provide additional information and incentives to semiconductor firms seeking to expand, but it’s not necessarily the only or the primary driver for how firms may be planning, Lowe noted.
“There’s been a lot of activity already announced,” Lowe said, noting the recent announcement from Intel that the company would construct a $20 billion facility in Ohio, and a similar announcement from Samsung last year that it would invest $17 billion in Texas.
Companies are planning to expand due to increasing demand for semiconductors, and due to a shift in the sector from the use of silicon to the use of silicon carbide, said Lowe.
“The demand for semiconductor chips continues to increase,” said Lowe. “I will say that the probability that you will see more announcements here in the United States will be higher,” Lowe said about the impact of the CHIPS Act being signed into law.
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,” said Lowe. “With the expansion of our Durham campus.”
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“The company has had a pretty significant transition from an LED lighting company to a silicon carbide semiconductor power company,” said Lowe. “Bodes really well for us.”
The Wolfspeed campus in Durham is seeing its fair share of construction cranes and orange fencing, Lowe said. The company is expanding its materials business and is adding capacity in its wafer fabrication processes.
“A significant expansion, and it couldn’t come at a better time, because demand for our product is skyrocketing at this point,” said Lowe, noting that he shared that the company generated $1.6 billion in business in the prior quarter, and the company has an “opportunity pipeline well north of $20 billion.”
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What’s driving demand?
Here’s what’s driving demand in the semiconductor industry, according to Lowe.
“It’s three things coming together,” Lowe noted. First, consumers are increasingly adopting electric vehicles, and automobile manufacturers and suppliers are improving the automotive supply chain and experience. Second, the use of silicon carbide rather than silicon is accelerating. And, finally, said Lowe, the amount of business that firms, including Wolfspeed, is winning is greater than anticipated.
The expansion of the electric vehicle market, especially as vehicles with a single-charge range of greater than 500 miles are available, is pulling in more consumers to the market, Lowe said. “More and more people are really wanting 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.
“Primarily happening because the value proposition is just amazing,” said Lowe. “If you use silicon carbide, your car will go 5-15% further than if you use silicon,” he said, adding that “range is everything if you use an electric car.”
All told, “the adoption of silicon carbide is happening faster,” Lowe said, and that’s resulting in “the amount of business that we are winning is more than we anticipated.”
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Silicon carbide: the future?
Wolfspeed began construction on its new facility in New York some two years ago, and it could be completed and operational this year, Lowe told WRAL TechWire.
“Quite remarkable, especially because all of this was done during Covid,” Lowe said. “The building itself is finished the clean room is finished, and we have installed greater than 60 tools in the facility.”
Wolfspeed, which Lowe described as “a leader in this early transition to this new technology,” was among the first firms to use silicon carbide rather than silicon. The company’s co-founder and its chief technology officer, Dr. John Palmour, was among the North Carolina State University graduate students who founded the company in 1987, believing in the application of silicon carbide, the company noted in a recent statement. Earlier this month, Palmour was elected as a member in the National Academy of Engineering, a prestigious honor and distinction in the industry.
Lowe told WRAL TechWire that this transition, across automotive, technology, and industrial markets, is driven in part by power efficiency.
“Anybody that is interested in saving power is starting to look at silicon carbide,” Lowe said, referencing a company study that analyzed the power payback of silicon carbide compared to silicon. “An electric car, as an example, and you use silicon carbide instead of silicon in that car, your payback is 13:1,” said Lowe. “It saves 13 times the amount of energy,” he added. “And that’s just a normal car, if that car is a taxi, it is 24-to-1.”
People are paying attention
Gains could be greater for use cases like server farms or data centers, Lowe noted. “Servers are running pretty much 24/7, so the efficiency gain, or the energy saved versus invested, is 55 times better,” he said. “That’s a thing that a lot of our customers are paying attention to.”
Wolfspeed is paying attention, as well. And the company continues to hire locally in the Triangle, which Lowe said is going well, due to being an attractive place to work.
“That’s primarily because people who understand power semiconductor chips see the writing on the wall in the conversion to silicon carbide,” said Lowe. “We provide something like 62% of the world’s silicon carbide wafers,” he noted. “It’s been quite easy bringing people in.”
The company recently disclosed it is raising an additional $150 million in debt, upping the total to $650 million, in response to the increasing demand for semiconductors.
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