Wolfspeed shares jumped after the company disclosed a massive $698.6 million cash tax refund from the IRS, a windfall tied to the Advanced Manufacturing Investment Credit (AMIC) under Section 48D of the U.S. tax code. The refund immediately strengthened the silicon carbide specialist’s balance sheet, lifting its cash to about $1.5 billion and easing investor concerns around funding its capital‑intensive expansion plans.
Where the $698.6 Million Came From
The payment is part of nearly $1 billion in refundable Section 48D credits Wolfspeed has accrued for qualifying investments in advanced manufacturing. Before this latest check, the company had already received about $186.5 million in cash refunds related to its 2023 and 2024 federal tax filings. Section 48D—created under the CHIPS and Science Act framework—lets eligible chip and materials makers convert tax credits into actual cash rather than just offsetting tax bills, a key benefit for loss‑making growth companies.
How Wolfspeed Plans to Use the Money
Management says roughly $192.2 million of the refund will retire about $175 million of outstanding debt under an agreement with senior secured lenders, with the remainder going to “general corporate purposes.” That means the cash will help fund:
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Expansion of Wolfspeed’s 200 mm silicon carbide wafer manufacturing capacity
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Ongoing investment in U.S.-based, vertically integrated SiC supply for EVs, industrial, AI data centers, and defense markets
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Working capital and operating needs during a heavy capex phase
The combination of debt reduction and a larger cash buffer materially improves near‑term liquidity and lowers refinancing risk, which equity investors typically reward with a higher share price.
Why the Stock Jumped
News of the refund sent Wolfspeed stock up roughly 7–10% in early trading, as the market reacted to a clearer funding path for its long‑term growth strategy despite recent revenue pressure. Key positives investors focused on:
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Cash balance now around $1.5 billion, versus a backdrop of negative revenue growth and elevated leverage.
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Ability to keep building out high‑value SiC capacity without as much reliance on dilutive equity or expensive new debt.
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Reinforcement that Wolfspeed is successfully monetizing CHIPS‑related incentives it had previously only booked as credits.
Analysts note that while structural challenges remain—weak recent sales growth and substantial debt—the IRS money buys Wolfspeed time and flexibility to execute on its SiC roadmap.
Key Numbers at a Glance
| Item | Detail |
|---|---|
| New IRS refund received | $698.6 million cash |
| Total Section 48D refunds expected | ≈ $1 billion |
| Prior cash refunds (FY23–FY24) | $186.5 million |
| Pro forma cash balance after refund | ≈ $1.5 billion |
| Debt paydown from refund | $192.2M applied to ≈$175M debt |
| Use of remaining funds | General corporate purposes, capex, liquidity |
What It Means Going Forward
The refund is not recurring earnings, but it meaningfully de‑risks Wolfspeed’s near‑term financing needs while it ramps SiC production for EVs, industrial power, and high‑performance computing customers. Future stock performance will still hinge on how quickly the company can convert that capacity and R&D spend into sustainable revenue and margin growth, but for now, the IRS check has given Wolfspeed a much‑needed financial and sentiment boost.
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FAQs
Q1: Why did Wolfspeed get $698.6M from the IRS?
It’s a refundable tax credit payment under the Advanced Manufacturing Investment Credit (Section 48D) for qualifying U.S. manufacturing investments.
Q2: How will the refund be used?
About $192.2M will pay down roughly $175M of debt; the rest supports capex and general corporate needs.
Q3: Why did the stock spike on the news?
The big cash inflow strengthens liquidity, reduces debt risk, and reassures investors about Wolfspeed’s ability to fund its silicon carbide expansion
