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May 20 (Reuters) - Semiconductor supplier Wolfspeed (WOLF.N)
Wolfspeed has been grappling with sluggish demand in industrial and automotive markets and tariff-induced uncertainty.
The company is looking to file for Chapter 11 bankruptcy that would have the support of a majority of its creditors, after rejecting several out-of-court debt restructuring proposals from creditors, the report said.
Wolfspeed declined to comment when contacted by Reuters.
The company, which manufactures chips using silicon carbide, raised going-concern doubts and forecast weaker-than-expected annual revenue earlier this month.
The company expects revenue of $850 million in 2026, below analysts' estimate of $958.7 million.
Wolfspeed is reportedly preparing to file for Chapter 11 bankruptcy within the coming weeks, driven by a combination of financial and operational challenges.
Key Factors Leading to Bankruptcy
Massive Debt Load: Wolfspeed is burdened with approximately $6.5 billion in debt, including a $1.5 billion senior secured loan led by Apollo Global Management. Despite having about $1.33 billion in cash and equivalents, the company has struggled to manage its debt obligations. Financial Times
Failed Restructuring Efforts: The company rejected multiple out-of-court debt restructuring proposals and is now pursuing a prepackaged Chapter 11 bankruptcy plan with the support of a majority of its creditors. Benzinga+3@EconomicTimes+3WSJ+3
Declining Revenue and Market Share: Wolfspeed has faced sluggish demand in the industrial and automotive markets, leading to a significant drop in revenue. The company recently slashed its 2026 revenue forecast to $850 million, well below analysts’ expectations of $958.7 million. TrendForce+1@EconomicTimes+1
Intense Competition from China: Chinese competitors have aggressively expanded into the silicon carbide market, offering products at significantly lower prices. This has eroded Wolfspeed's market share and pricing power. TrendForce
Delayed Government Funding: Wolfspeed was slated to receive $750 million in funding under the CHIPS Act. However, the disbursement has been delayed due to administrative changes, further straining the company's financial position. Financial Times
Stock Price Collapse: The company's stock has plummeted, losing over 90% of its value in the past year. As of the latest trading session, Wolfspeed's stock is trading at $0.94 per share, reflecting investor concerns over its financial stability.
ChatGPT had it all wrong.
There is only one fundamental factor, which is the relentless SiC price competition from Chinese manufacturers ALL heavily subsidized by government. All other 5 are just the symptoms of this one single factor. Repeating the same story as in steels, solar, etc etc. We all know how it works.
ChatGPT had it all wrong.
There is only one fundamental factor, which is the relentless SiC price competition from Chinese manufacturers ALL heavily subsidized by government. All other 5 are just the symptoms of this one single factor. Repeating the same story as in steels, solar, etc etc. We all know how it works.
I agree completely, I just did not want to be the first to say it. China has been product dumping for years. Sources say that the semiconductor industry will grow 10% this year. Unfortunately that is due to the prices of leading edge chips and not increased unit sales count. Meaning that a handful of semiconductor companies will make the majority of the profits. Nvidia is the easiest example but there are others and AI is driving this. Exciting times in the semiconductor industry, absolutely.
Well...Coherent is the other US SiC crystal wafer maker and the stock doesn't look too shabby (COHR). Coherent is the new name of (indeed oddly named) II-VI Inc.
Wolfspeed holds a 60% share of the global SiC wafer market, while Coherent's share is around 15%.
So still largely a US dominated market. The market remains specialized with higher yields from automotive quality wafers. There is a 6" to 8" wafer transition occurring. Wolfspeed is vertically integrated, fabbing devices on the wafers they make, which must be annoying for Infineon and ST who buy wafers from them. Vertical integration isn't always better, I guess.
Well...Coherent is the other US SiC crystal wafer maker and the stock doesn't look too shabby (COHR). Coherent is the new name of (indeed oddly named) II-VI Inc.
