wolfspeed faces bankruptcy: ev supply chain in turmoil?

2025-06-23 general

Washington, Monday, 23 June 2025.
wolfspeed, a major silicon carbide semiconductor manufacturer and key supplier to ev companies, has filed for chapter 11 bankruptcy protection. this action sent its stock plummeting 30% to a record low. the company aims to restructure and reduce its debt by approximately 70%, a staggering $4.6 billion. this bankruptcy raises concerns about potential disruptions to the semiconductor supply chain, especially for electric vehicle production, and may shake market confidence in the sector.

stock performance and financial distress

Wolfspeed’s financial difficulties and the possibility of not securing the expected $1.75 billion in subsidies and tax credits under the 2022 federal Chips and Science Act have significantly contributed to its stock decline [1]. The company’s shares have plummeted approximately 90% this year, with recent trading around $0.62 [1]. Prior to this, concerns about its ability to continue operations arose in May, triggered by increasing economic uncertainties due to changes in u.s. trade policies and weakening demand [4]. These factors culminated in the chapter 11 filing to execute a restructuring support agreement (rsa) with its primary creditors [1].

restructuring agreement details

The restructuring support agreement aims to reduce wolfspeed’s total debt by about 70%, which is equivalent to approximately $4.6 billion [1][3]. This agreement is also projected to reduce the company’s annual cash interest expenses by 60% [3][5]. As part of the rsa, wolfspeed expects to receive $275 million in new financing, supported by some of its existing creditors and renasas electronics’ u.s. subsidiary [4][7]. wolfspeed intends to obtain approval for its pre-packaged plan and aims to emerge from bankruptcy by the end of the third quarter of 2025 [4].

expert opinions and strategic moves

ceo robert feurle stated that the restructuring decision was made after assessing potential options to strengthen the balance sheet and optimize the capital structure [1]. the company views this as a proactive step to reinforce its financial foundation in anticipation of scalable and profitable growth [7]. wolfspeed is also streamlining costs by closing its 6-inch wafer business, its texas factory, and plans to shut down its durham, north carolina headquarters factory later this year [6]. these actions are intended to focus on high-growth areas such as electric vehicles, ai data centers and aerospace applications [6].

challenges and contributing factors

several factors contributed to wolfspeed’s financial woes. the softening electric vehicle market led to the loss of significant orders from key customers like tesla and volkswagen, resulting in a 15% revenue decline [6]. additionally, wolfspeed was burning approximately $600 million in cash each quarter, partly due to the construction of a silicon carbide semiconductor factory in new york’s mohawk valley [6]. furthermore, delays in receiving promised government support, including $750 million in grants related to the chips act, added to the company’s financial strain [6].

implications for investors

wolfspeed’s bankruptcy filing serves as a stark reminder of the risks associated with the semiconductor industry, particularly concerning capital-intensive manufacturing and reliance on government subsidies [5][6]. investors should closely monitor the restructuring process and assess the potential impact on the broader ev supply chain [1]. the company’s ability to successfully reduce debt, secure new financing, and streamline operations will be crucial in determining its long-term viability and potential returns for investors [4][7]. the outcome of this situation may also influence investor confidence in other semiconductor companies and the overall market for electric vehicle components [1].

Bronnen

semiconductor bankruptcy