Shares of silicon carbide semiconductor maker Wolfspeed soared almost 20% at $37.4 late Wednesday after announcing a financing deal with the Pentagon.

The company has received a conditional loan commitment from the Defense Department for $1.5 billion in long-term 30-year financing, contingent on producing silicon carbide materials and other power devices in America.

The Defense Department will get warrants equivalent to 7.5% of Wolfspeed stock if and when the deal is executed.

Most chips are made on silicon. Silicon carbide substrates are good for high-voltage applications such as data centers and electric vehicles. They also find their way into satellite technologies.

The Defense Department has been investing heavily to boost domestic production of key materials. In July 2025, it provided MP Materials with capital, a price floor, and a guaranteed customer for MP's rare earth materials in a landmark deal.

"Silicon carbide and gallium nitride have critical national security applications," said Wolfspeed CEO Robert Feurle in a news release. "With this financing, the company would be well positioned to not only continue to serve the [Department of War] but also expand its capabilities for the benefit of U.S. national security as a whole."

The Trump administration has revived the use of Department of War as a secondary name for the DOD.

Gallium nitride is another Wolfspeed product used in high-end electronics, including radars.

The financing commitment is helpful. Wolfspeed isn't profitable yet, and it is spending heavily on facilities in North Carolina and New York. Capital spending is ramping down in 2026 as construction wraps up.

Wolfspeed remains a relatively small company, with a market value of about $2 billion. Only three analysts cover the stock. All three rate shares Hold.