Wolfspeed (NYSE:WOLF) stock is soaring today on news that the chipmaker locked in a 10-year deal with Japanese semiconductor manufacturing company Renesas Electronics (OTCMKTS:RNECY).
What do you need to know about Wolfspeed’s latest high-flying deal?
Well, Wolfspeed confirmed Wednesday that it “executed a $2 billion deposit from Renesas” for a 10-year supply of silicon carbide wafers to be used in the production of semiconductors and other electronic components.
Hidetoshi Shibata, CEO of Renesas, said the following about the deal:
“The wafer supply agreement with Wolfspeed will provide Renesas with a stable, long-term supply base of high-quality silicon carbide wafers. This empowers Renesas to scale our power semiconductor offerings to better serve customers’ vast array of applications […] We are now poised to elevate ourselves as a key player in the accelerating silicon carbide market.”
Gregg Lowe, President and CEO of Wolfspeed, echoed a similar sentiment for the agreement
“With the steepening demand for silicon carbide across the automotive, industrial and energy sectors, it’s critically important we have best-in-class power semiconductor customers like Renesas to help lead the global transition from silicon to silicon carbide.”
According to both companies, the demand for semiconductors is “dramatically increasing” due to the rapid growth of electric vehicles (EV) and other clean energy technologies.
WOLF Stock Surges on Renesas Deal
Shares of WOLF stock are up more than 15% as of this writing following confirmation of the deal. Not alone, however, RNECY stock is also in the green today in over-the-counter (OTC) trading.
Despite today’s gains, though, WOLF is still down nearly 3% year-to-date (YTD). That’s even as the S&P 500 and tech-heavy Nasdaq Composite are up 16% and 33%, respectively.
Wolfspeed stock has surprisingly underperformed this year, even relative to other semiconductor stocks. Indeed, the PHLX Semiconductor index is up more than 44% YTD.
WOLF stock is likely still reeling from its underwhelming fiscal third-quarter earnings report released on April 26. The company shared declining gross margin, as well as a widening net loss, compared to Q3 2022.
Regardless, WOLF investors are clearly excited by today’s promising announcement. Whether this marks the start of a change of pace for Wolfspeed remains to be seen.
On the date of publication, Shrey Dua 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.
