Wolfspeed’s accelerating growth set to propel North Carolina forward.

January 21st 2021

Happy Saturday morning. We hope you’re getting through the doldrums of winter.

Today we’re talking about Wolfspeed, the semiconductor company formerly known as Cree.

The company responsible for the largest economic development announcement in North Carolina history, betting big that the electric vehicle market will follow a hockey-stick trajectory, and with it the silicon carbide semiconductors that Wolfspeed manufactures.

Six years ago, the company boldly transformed itself to prepare for just this moment.

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Wolfspeed’s $5 billion project in Chatham County traces back to 1891, when American lamp-manufacturer Edward Acheson mixed some materials together and heated them up in an effort to produce synthetic diamonds.

He didn’t produce the diamonds. But he did find bright green crystals attached to his electrode: the first discovery of silicon carbide (SiC).

The material is strikingly stable. It’s corrosion-resistant and largely immune to attacks by acids, salts, and alkalis even at extreme temperatures. It barely contracts or expands even at the hottest and coldest temperatures. For decades after Acheson’s discovery, SiC was the hardest synthetic material known to man. (SiC is naturally occurring in trace amounts, likely introduced by meteorites.)

After Acheson’s discovery, SiC’s primary application was in grinding wheels and abrasive paper.

Though an English experimenter discovered electroluminescence using SiC in 1907, it would be decades before manufacturers applied the material for that use at scale.

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At an N.C. State laboratory in 1983, an assistant professor and a few student researchers were fiddling around with silicon carbide (SiC) in lighting applications. They soon created a company, Cree, and in 1989 commercialized the world’s first silicon carbide blue LED, opening the door to “full color LED display technology.”

Over the next 25 years, Cree was a market leader in innovating LED technologies. In 2007 one business magazine wrote, “At a time when 22 percent of the nation’s energy is spent keeping the lights on, an LED bulb can burn for almost six years before it needs to be replaced, and some consume even less energy than compact fluorescent bulbs.”

WRAL’s TechWire wrote at the time that LEDs “are threatening to disrupt the lighting industry,” and they were right.

But Cree’s core competency wasn’t LED lighting. It was silicon carbide.

Beginning in 2017, when current CEO Gregg Lowe joined Cree, the company set out on a massive four-year transformation. Cree unloaded its LED lighting portfolio (which reportedly comprised two-thirds of the company’s business at the time) and reoriented itself toward power semiconductors, which the company viewed as the future of silicon carbide.

In 2021, Cree completed its reimagining and formally adopted a new name: Wolfspeed.

“Today officially marks a transformative milestone for Wolfspeed as we are now a pure-play global semiconductor powerhouse,” Lowe said then. “The next generation in power semiconductors will be driven by silicon carbide technology.”

Semiconductors are essential components in nearly all electronic devices, so the general growth potential of silicon carbide semiconductors seems clear. But SiC semiconductors have disrupted one industry in particular – electric vehicles.

The New York Timesreported in May 2022, “When Tesla released its Model 3, it had a secret technical edge over the competition: a material called silicon carbide.” Other EV developers soon followed Tesla’s lead.

One of the business cases for Wolfspeed’s transformation seems obvious, then:

• The company says it produces more than 60% of the world’s silicon carbide.
• Engineers increasingly rely on silicon carbide to make electric vehicles faster, better, and more efficient.
• Analysts expect electric vehicle demand to skyrocket in the coming years.

Indeed, Wolfspeed expects SiC power chips to make up 20% of the semiconductor market by 2027, a four-fold increase from today’s 5%.

With so much demand for silicon carbide chips expected in the coming years, Wolfspeed can either build enough capacity to meet that demand or miss out on lucrative supply contracts.

Thus the need for a massive new facility in Chatham County, North Carolina. Wolfspeed expects the investment to “generate a more than ten-fold increase from Wolfspeed’s current silicon carbide production capacity on its Durham campus.” The plant will primarily produce silicon carbide wafers, a raw material of sorts that other facilities, including one in New York, will use to create chips.

Wolfspeed is relying on its decades-long experience with silicon carbide to offer the market higher-quality SiC materials more efficiently. And producing SiC materials isn’t easy. Here’s how Forbes described it: “Unlike in silicon-based semiconductor manufacturing, ‘there’s no tool industry for silicon carbide,’ says Lowe. ‘You have to do it yourself, which makes it more challenging. The company builds its own proprietary SiC crystal growth machines, and while Lowe doesn’t go into specifics, it does require ultra-pure raw materials and operating temperatures roughly half those at the surface of the sun, all operating in a very harsh environment and inert atmosphere.”

The North Carolina-based company, then, has made North Carolina central to its aggressive growth aspirations.

Though the move is good for both North Carolina and for Wolfspeed, it also comes with an added benefit: At time of writing, the Wolfspeed site takes up approximately 450 acres and leaves another 1400 acres ready for large scale job providers – but wait, there’s more – The infrastructure upgrades to the Chatham Advanced Manufacturing megasite make the currently unoccupied part of the site all the more attractive to future development.

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Wolfspeed’s historic investment in North Carolina began with an accidental 19^th-century discovery. From tinkering in an N.C. State lab to an aggressive business reorientation decades later, Wolfspeed has seen around corners time and again to position itself for the future.

That North Carolina is at the center of that future should make us all proud.