Chipmaker Wolfspeed announced on June 22, 2025 that it plans to file for bankruptcy in the US.

The company has reached a restructuring agreement with its creditors.

As part of the agreement, some creditors will provide US$275 million in new financing to support operations during the restructuring.

The company did not disclose details about the filing timeline or the operational impact of the bankruptcy.

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🔗 Source: Reuters

🧠 Food for thought

1️⃣ Silicon carbide promise collides with execution challenges

Wolfspeed’s bankruptcy represents the collision between technological promise and manufacturing reality in the capital-intensive semiconductor industry.

Despite operating in the high-potential silicon carbide (SiC) market critical for electric vehicles and renewable energy, the company reported declining revenue of $185 million in Q3 FY2025, down from $201 million year-over-year, with net losses widening to $1.86 million 1.

The company’s massive $6.6 billion debt burden overwhelmed its revenue generation capabilities, highlighting how semiconductor companies require extraordinary capital to scale manufacturing while maintaining profitability 2.

This follows Wolfspeed’s 2021 strategic pivot when it changed its name from Cree, Inc., divested its LED business, and focused exclusively on silicon carbide technology for power applications 3.

The company’s stock collapse, declining 84.35% over the past year, reflects how investor confidence evaporated as the gap between technological potential and financial execution became increasingly apparent 1.

2️⃣ “Prepackaged” bankruptcy signals industry confidence despite financial distress

Wolfspeed’s restructuring approach reveals how modern semiconductor companies can use bankruptcy strategically while maintaining operational continuity.

The company secured support from over 97% of its senior secured noteholders before filing, enabling a “prepackaged” bankruptcy that will reduce debt by approximately 70% ($4.6 billion) while cutting annual cash interest payments by 60% 4.

This level of creditor support is significant because it suggests industry insiders still see value in Wolfspeed’s technology and market position despite its financial troubles 2.

The restructuring includes $275 million in fresh financing from existing creditors, providing the liquidity needed to maintain operations and continue critical development of its 200mm silicon carbide wafer manufacturing capabilities 4.

With $1.3 billion in cash reserves and explicit provisions to maintain vendor payments and employee compensation, Wolfspeed is executing a controlled restructuring rather than a distressed liquidation, preserving its technological assets while shedding its unsustainable capital structure 4.

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