WOLF Stock Alert: Wolfspeed Will Build Advanced Facility in Germany

Feb 3, 202322:08 UTC

The chipmaking race may be about to see a powerful new player. Wolfspeed (NYSE:WOLF) stock doesn’t receive as much attention as some of the sector’s bigger names. But that may be about to change as the “global leader in Silicon Carbide technology and production” gears up for a massive expansion effort. On Feb. 1, the company announced plans to break ground on a 200mm wafer fabrication facility located in Saarland, Germany.

WOLF stock is down today as market momentum shifts, but since the company’s announcement earlier this week, it has been rising steadily. If plans for the advanced manufacturing site progress, it could rise even more as the company scales production.

Let’s dive into Wolfspeed’s expansion news and what investors should be watching for.

What’s Happening With WOLF Stock

As noted, this has been a difficult day for WOLF stock. While shares are down 6% for the day, they have jumped 4% for the week as momentum for the news has grown. The stock has been fairly volatile since the year began, but it has performed well overall. Now, the news of the new factory could be exactly what Wolfspeed needs to take its place among the tech sector’s leading chipmakers.

The new plant will be a $3 billion investment on Wolfspeed’s part, but it will function as both a manufacturing facility and a research and development center. Reuters reports that the company is planning on beginning construction within the coming months, pending the necessary subsidy approval from the European Union. Wolfspeed has also told the outlet that German car part producer ZF Friedrichshafen AG plans on taking a stake in the project worth $185 million.

The company announced plans for the new facility at a recent event attended by German Chancellor Olaf Scholz, who welcomed it to Germany’s Saarland state. Clearly, the government is happy to have the company establish a German base, as it should be. Wolfspeed Head of Investor Relations Tyler Gronbach spoke to InvestorPlace about the strategic expansion as well as the company’s plans. As he stated:

“Germany is world-renowned for its strong technology base, rich manufacturing heritage, and high-quality talent. Diversifying our device fab locations fosters resilience in our supply chain and strategically positions us in one of the largest EV hubs in the world, where automakers and OEMs are fostering this innovation for the future, many of whom are our trusted partners and customers.”

He also notes that the company feels that “proximity to its customer base will “help foster increased collaboration to develop the next generation of Silicon Carbide products”.

The Next Steps

Saarland Minister-President Anke Rehlinger also spoke about the benefits that Wolfspeed’s facility will provide for the region, helping drive economic growth and job creation. The factory will be built on a former coal plant that has long been decommissioned, helping breathe new life into a highly industrial area.

According to the company’s statement, the expansion of Silicon Carbide device manufacturing in Europe will meet the growing demand for such products, helping support the revenue outlook of $4 billion that Wolfspeed hopes to reach in Fiscal 2027.

Wolfspeed hasn’t reported any catalysts of this magnitude since it announced a $500 million investment from BorgWarner (NYSE:BWA) in November 2022. Now it is poised to scale production and secure a piece of Europe’s growing chipmakers.

On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.