WASHINGTON (Reuters) - U.S. chipmaker Wolfspeed ( WOLF ) is set to receive $750 million in government grants for its new North Carolina silicon carbide wafer manufacturing plant facility, the U.S. Commerce Department said Tuesday.

Commerce added that the preliminary funding agreement requires Wolfspeed ( WOLF ) "to take additional steps to strengthen its balance sheet to better protect taxpayer funds."

Wolfspeed ( WOLF ) said a consortium of investment funds led by Apollo Global Management ( APO ), the Baupost Group, Fidelity Management & Research Company and Capital Group have agreed to provide the company an additional $750 million of new financing.

The company, which counts General Motors ( GM ) and Mercedes-Benz among its customers, makes chips using silicon carbide, a more energy-efficient material than standard silicon, that are used in tasks such as transmitting power from an electric vehicle's batteries to its motors.

Commerce noted Wolfspeed's ( WOLF ) devices are utilized for renewable energy systems, industrial uses, and artificial intelligence applications.

Wolfspeed ( WOLF ) also said it plans to expand its existing silicon carbide device manufacturing facility in Marcy, New York, and increase its production capacity by approximately 30%. Both projects are part of the company's previously announced $6 billion capacity expansion plan.

The company said the investments support Wolfspeed's ( WOLF ) long-term growth plans and added it expects to receive $1 billion of cash tax refunds from the "48D" advanced manufacturing tax credit under the Chips and Science Act.

"We believe today's announcement is a testament to the market-leading quality of Wolfspeed ( WOLF ) products and significance of Wolfspeed ( WOLF ) to broader U.S. economic and national security interests," said Wolfspeed ( WOLF ) CEO Gregg Lowe in a statement.

Under the preliminary memorandum of terms with the Commerce Department and agreement with lenders, Wolfspeed ( WOLF ) will restructure or refinance its outstanding 2026, 2028 and 2029 convertible notes at specified intervals prior to their maturity dates. It will also defer a total of $120 million in cash interest payments due prior to June 30 and raise up to $300 million of additional capital from non-debt sources over the next 12 months.

Its stock has slumped nearly three quarters this year, hurt by a sharp slowdown in EV demand.

Wolfspeed's ( WOLF ) new 2 million-square foot multi-billion dollar silicon carbide wafer factory in Chatham County, North Carolina, was announced in 2022. Wafers are used for making chips.

Earlier this year, the company said it was confident it would deliver wafers from the facility by summer 2025 for its own chip manufacturing needs.

The award from the $52.7 billion semiconductor research and production subsidy program is subject to due diligence and not yet final.