On June 30, American chipmaker Wolfspeed announced that the company had filed for Chapter 11 bankruptcy protection. At present, the company is facingElectric vehiclehuge debt problems caused by slowing market demand.
Image credit: Wolfspeed
Wolfspeed said it held $1.3 billion in cash as of the third quarter of fiscal 2025 (January to March 2025) and expects to complete the bankruptcy restructuring process by the third quarter of this year. “Throughout the restructuring process, Wolfspeed will continue to operate normally, including delivering silicon carbide materials and equipment to customers and paying suppliers in accordance with regular processes,” the company said in a statement. ”
After completing the bankruptcy restructuring, Wolfspeed expects its total debt to be reduced by about 70%, or nearly $4.6 billion, while its annual cash interest expense will be reduced by about 60%.
Wolfspeed’s stock price rose 64.5% in after-hours trading after the above report was released. It is reported that Wolfspeed focuses on the production of silicon carbide chips, which have higher energy efficiency advantages than traditional silicon materials.
In May this year, Wolfspeed raised concerns about going concern. The company faces a series of financial challenges due to weaker-than-expected growth in the electric vehicle market and weaker demand, coupled with increased economic uncertainty caused by changes in U.S. trade policies.
Earlier in June, Wolfspeed announced that it had reached a restructuring agreement with creditors and Renesas Electronics’ U.S. subsidiary. The agreement will receive $275 million in new financing support from some existing creditors and help reduce the debt burden.
Previously, people familiar with the matter revealed that Wolfspeed will undergo bankruptcy restructuring under the takeover of creditors such as Apollo Global Management to cut billions of dollars in debt. It is reported that the company will soon announce a so-called pre-packaged bankruptcy agreement with creditors. Within weeks of signing the restructuring support agreement, Wolfspeed will ask creditors to vote on the agreement before filing a Chapter 11 bankruptcy filing.
In May of this year, Wolfspeed announced that its net loss in the third quarter of fiscal 2025 was $110.8 million, a significant increase from a net loss of $77.7 million in the same period in fiscal 2024; Meanwhile, Wolfspeed expects its revenue for fiscal 2026 to reach $850 million, lower than analysts’ previous estimatesforecastof $958.7 million.
