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Biden admin to provide $750 million to Wolfspeed
WASHINGTON | The Biden-Harris administration announced plans Tuesday to provide up to $750 million in direct funding to Wolfspeed, with the money supporting its new silicon carbide factory in North Carolina that makes the wafers used in advanced computer chips and its factory in Marcy, New York.
Wolfspeed’s use of silicon carbide enables the computer chips used in electric vehicles and other advanced technologies to be more efficient. The North Carolina-based company’s two projects are estimated to create 2,000 manufacturing jobs as part of a more than $6 billion expansion plan.
“Artificial intelligence, electric vehicles, and clean energy are all technologies that will define the 21st century, and thanks to proposed investments in companies like Wolfspeed, the Biden-Harris administration is taking a meaningful step towards reigniting U.S. manufacturing of the chips that underpin these important technologies,” Commerce Secretary Gina Raimondo said in a statement.
The new Wolfspeed facility in Siler City could be a critical symbol in this year’s election, as it opened earlier this year in a swing state county that is undergoing rapid economic expansion in large part due to incentives provided by the Biden-Harris administration.
Vice President Kamala Harris, the Democratic nominee, is making the case to voters that the administration’s mix of incentives are increasing factory work, while former President Donald Trump, the Republican nominee, says the threat of broad tariffs will cause overseas factories to relocate in the United States.
In 2023, President Joe Biden spoke at Wolfspeed to promote his economic agenda, saying it would help the United States outcompete China. Trump narrowly won North Carolina during the 2020 presidential election and has talked about bringing back the state’s furniture manufacturing sector.
The Biden-Harris administration’s argument is that the government support encourages additional private investments, a case that appears to apply to Wolfspeed.
In addition to the government grant, a group of investment funds led by Apollo, The Baupost Group, Fidelity Management & Research Company and Capital Group plan to provide an additional $750 million to Wolfspeed, the company said. Wolfspeed also expects to receive $1 billion from an advanced manufacturing tax credit, meaning the company in total will have access of up to $2.5 billion.
Wolfspeed CEO Gregg Lowe told The Associated Press that the United States currently produces 70% of the world’s silicon carbide — and that the investments will help the country preserve its lead as China ramps up efforts in the sector.
Lowe said “we’re very happy with this grant” and that the Commerce Department staff awarding funds from the 2022 CHIPS and Science Act was “terrific.”
Boeing signals it may raise up to $25 billion to shore up finances
Boeing signaled Tuesday that it could raise up to $25 billion in new stock or debt to shore up its balance sheet after years of heavy losses.
The company said in back-to-back regulatory filings that it could raise the cash over the next three years and enter into a new borrowing agreement with lenders.
Boeing hasn’t earned an annual profit since 2018, losing more than $25 billion since, after two 737 Max jets crashed, killing 346 people. Its finances are under new pressure as a strike by workers who build most of its airline jets factory goes into its second month. The strike is cutting into cash, which Boeing receives when it delivers new planes to buyers.
The strike is also getting the attention of the Biden administration. Julie Su, the acting labor secretary, visited Seattle and met with the union and Boeing on Monday, according to the International Association of Machinists and Aerospace Workers.
Boeing has burned through more than $1 billion in cash and ended September with $10.3 billion in cash and securities.
On Friday, new CEO Kelly Ortberg said Boeing will cut about 10% of its workforce – around 17,000 jobs – and pushed back the launch of a new model of its large 777 airliner.
Production of current models of the 777 and Boeing’s best-selling plane, the 737 Max, have been halted by the strike.
Boeing’s securities filings Tuesday are called shelf registrations, which indicate that a company has the ability to raise funds without committing to doing anything.
The company also said that it entered into a $10 billion supplemental credit agreement with several leading U.S. banks to provide near-term liquidity.
Fitch Ratings said the announcements increase Boeing’s financial flexibility and ease near-term liquidity concerns. Management’s ability to tap capital sources other than debt “will help alleviate downgrade risks” by improving the prospects for paying off debt that matures in 2025 and 2026, Fitch said.
Standard & Poor’s said last week it was considering cutting Boeing’s credit rating.
Shares of The Boeing Co, based in Arlington, Virginia, rose 2% in afternoon trading Tuesday.
United Airlines says its third-quarter profit dipped 15%
CHICAGO | United Airlines on Tuesday reported that its third-quarter profit fell 15% from a year ago but revenue trends improved thanks to low-fare carriers scaling back their growth plans for the rest of the year.
The Chicago-based airline’s directors, meanwhile, approved up to $1.5 billion to buy back shares. It’s United’s first share-repurchase program since 2020, when airlines were barred from buying back their own stock as a condition of getting pandemic-relief aid from the federal government.
United said that by September, it was seeing more strength in corporate, premium and no-frills basic economy travel.
Airline executives have complained about budget airlines cutting prices on economy-class seats because of a glut of flights. Their pricing power is improving, however, as Spirit, Southwest and others trim their schedules and reduce the supply of seats for sale.
United said a closely watched figure, revenue per seat, turned positive compared with last year on flights within the United States in August and September after lagging 2023 levels in earlier months.
United posted a third-quarter profit of $965 million, down from $1.14 billion a year earlier. Excluding special items, the airline said its adjusted earnings were $3.33 per share, beating the average forecast by analysts of $3.17 per share, according to FactSet.
Revenue rose 2.5% to $14.84 billion, topping the analysts’ average forecast of $14.77 billion.
United forecast fourth-quarter earnings of $2.50 to $3 per share, in line with analysts’ average prediction of $2.76 per share.
—From AP reports
