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On Tuesday, Nvidia rival Wolfspeed Inc. (NYSE:WOLF) and the U.S. Department of Commerce signed a preliminary memorandum of terms for up to $750 million in funding under the CHIPS and Science Act. This announcement led to a surge in Wolfspeed’s stock, which rose over 16% in pre-market trading.

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What Happened: As per Benzinga Pro, Wolfspeed’s stock was trading at $13.28, marking a 16.70% increase from its previous close of $11.38. The funding aims to support Wolfspeed’s long-term growth and enhance domestic production of silicon carbide, a critical component for electric vehicles, AI data centers, and battery storage systems.

Additionally, a consortium led by Apollo, The Baupost Group, Fidelity Management & Research Company, and Capital Group has agreed to provide Wolfspeed with an extra $750 million in financing, Business Wire noted. This brings Wolfspeed’s potential capital access to $2.5 billion, including expected tax refunds, to expand silicon carbide manufacturing in the U.S.

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Why It Matters: The Biden administration has been actively working to strengthen the U.S. semiconductor industry. The CHIPS and Science Act was formalized in 2022 which earmarked $39 billion in grants for U.S. chipmaking and $11 billion for semiconductor research, including the NSTC.

In October, President Joe Biden signed a law to exempt certain U.S. chipmaking facilities from federal environmental reviews. This legislation, under the CHIPS Act, aims to prevent delays from additional federal reviews, ensuring projects comply with existing regulations. These efforts highlight the government’s commitment to bolstering the semiconductor supply chain and maintaining the U.S.’s competitive edge in the global market.

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This article This Chipmaker Jumps Over 16% After Nvidia Rival Signs $750M Deal Under Biden's CHIPS And Science Act originally appeared on Benzinga.com