Wolfspeed Inc (NYSE:WOLF) shares are trading higher by around 15% after it disclosed a 10-year silicon carbide wafer supply deal with Renesas Electronics Corporation (OTC:RNECY) (OTC:RNECF).

As per the agreement, Wolfspeed will supply high-quality 150mm silicon carbide bare and epitaxial wafers to Renesas, accelerating Renesas' silicon carbide power semiconductors' production that will begin in 2025.

The deal also includes a $2 billion deposit by Renesas and will support the adoption of silicon carbide across automotive, industrial, and energy markets.

Renesas' deposit amount is expected to aid Wolfspeed's ongoing capacity construction projects, such as creating the world's largest silicon carbide materials factory in North Carolina.

The facility is expected to boost Wolfspeed's current silicon carbide production capacity in Durham by over 10-fold and generate mainly 200mm silicon carbide wafers.

"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. For more than 35 years, Wolfspeed has focused on producing silicon carbide wafers and high-quality power devices, and this relationship marks an important step in our mission to save the world energy," said Gregg Lowe, President and CEO.

Last month, Wolfspeed received $1.25 billion in secured note financing from an investment group led by Apollo Global Management Inc (NYSE:APO).

Price Action: WOLF shares are up 14.7% at $65.10 premarket on the last check Wednesday.