North Carolina-based semiconductor giant Wolfspeed is holding off on plans for a significant expansion in Germany as it concentrates on ramping up production at its U.S. facilities. CEO Gregg Lowe recently confirmed that the company is delaying construction of a $3 billion facility in Germany’s Saarland region to prioritize its Mohawk Valley Fab in New York, which will process materials from Wolfspeed’s new Chatham County plant in North Carolina.

The decision comes as Wolfspeed secures $750 million from the U.S. CHIPS Act, part of a broader $2.5 billion in funding and tax incentives supporting its American manufacturing operations. The Chatham County facility, which could employ up to 1,800 people, represents Wolfspeed’s continued commitment to meet demand for next-generation semiconductor materials domestically.

Originally, the German expansion was planned in partnership with ZF Friedrichshafe, which had pledged $185 million for a minority stake in the project. However, recent reports indicate that ZF has withdrawn from the agreement, citing Wolfspeed’s revised production strategies and the forecast for a slower electric vehicle market

Wolfspeed stated Thursday that the pause in Germany is based on its current capacity needs to support customer growth timelines. The company remains engaged in discussions with German and Saarland state officials regarding the delay and reiterated its long-term commitment to European expansion. This facility would mark Wolfspeed’s first wafer fabrication site in Europe and was initially targeted to be one of the company’s most advanced.

While North Carolina and New York had been considered for the project, Lowe highlighted the importance of incentive packages in Wolfspeed’s decision-making. German leaders had expressed concerns that U.S. incentives like the CHIPS Act make competition for high-tech manufacturing projects more challenging.

Wolfspeed’s recent moves come as it faces pressure to improve its stock performance, which has dropped 65% over the past year. Although news of the CHIPS Act incentives provided some lift, the company’s stock remains below its highs, closing at $14.82 last week. The pause on the German facility underscores Wolfspeed’s strategic pivot to bolster its U.S. operations and ensure the full utilization of its existing assets.