Why Wolfspeed Is Cratering: The Bankruptcy Report

Wolfspeed was once a big name in the chip world. The company made special chips called silicon carbide semiconductors. These chips are used in electric cars and clean energy products. Big companies like GM and Mercedes-Benz trusted Wolfspeed to supply them.

But now, things are not going well. In May 2025, Wolfspeed’s stock dropped over 50% in just one day. Some say bankruptcy is coming soon. Investors are scared. Workers are worried. Customers are looking elsewhere. So, what happened?

This is not just a story about one company. It’s also about how fast-moving industries can change overnight. It shows how bad planning and slow sales can hurt even strong players.

We’ll walk through Wolfspeed’s rise, what caused the trouble, and what might happen next. Let’s take a closer look at how one of the brightest stars in clean tech began to fall, and what we can all learn from it.

The Rise of Wolfspeed:

Wolfspeed began as Cree Inc. in 1987. The company focused on silicon carbide (SiC) chips. These chips are great for electric cars and renewable energy. They handle high heat and power better than regular chips.

In 2021, Cree changed its name to Wolfspeed. The company wanted to focus only on SiC technology. It built a big factory in New York and planned another in Germany. Big car companies like GM and Mercedes signed deals with Wolfspeed. Things looked good.

Financial Strains: 

Wolfspeed had $6.5 billion in debt and only $1.3 billion in cash by 2025. The company was losing money fast. In the third quarter of fiscal 2025, it reported an operating loss of $194.5 million.

Wolfspeed tried to get help. It received $192.1 million in tax refunds and expected more. But this wasn’t enough. The company needed to pay $575 million to noteholders by May 2026. 

Operational Hurdles: 

Wolfspeed’s new factory in Mohawk Valley, New York, was not running well. It was operating at only 20% capacity. This made it hard to meet demand and increased costs.

The company also closed older facilities, like the one in Durham, North Carolina. This reduced its production capacity.

Market Dynamics: 

The electric vehicle (EV) market slowed down. Wolfspeed expected a big increase in EV sales, but it didn’t happen. The company projected $850 million in revenue for 2026, below analysts’ expectations of $958.7 million. 

Chinese companies started making similar chips at lower prices. This made it hard for Wolfspeed to compete.

Wolfspeed had leadership changes. CEO Gregg Lowe left, and Robert Feurle took over. The company also stopped its $3 billion German plant project. This hurt its growth plans.

Regulatory and Geopolitical Factors: 

Wolfspeed stock hoped to get $750 million from the U.S. CHIPS Act. But this money depended on refinancing its debt. The company couldn’t make it happen. 

Tariffs and export restrictions added more problems. These made it harder to do business globally.

The Road to Bankruptcy: 

Wolfspeed tried to restructure its debt. It rejected several proposals from creditors. Now, the company is preparing to file for Chapter 11 bankruptcy. Most creditors support this plan.

The company’s stock has dropped over 70% in the past six months. It is now one of the most shorted U.S. stocks.

Wrap Up

Wolfspeed’s story shows how fast things can change. The company had great technology and big plans. But debt, slow sales, and tough competition led to its fall.

We can learn from this. Companies need to manage growth carefully. They should watch market trends and keep debt under control. Wolfspeed’s future is uncertain. Bankruptcy may help it restructure and come back stronger. Only time will tell.

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Disclaimer:

This content is for informational purposes only and not financial advice. Always conduct your research.