US semiconductor manufacturer Wolfspeed is reportedly preparing to file for Chapter 11 bankruptcy protection within weeks, as the company contends with a mounting $6.5 billion debt burden.
The development, reported by The Wall Street Journal, has prompted a sharp market response, with Wolfspeed shares falling by more than 57% in after-hours trading.
The North Carolina-based company has been under sustained pressure from softening demand in the industrial and automotive sectors, compounded by tariff-related uncertainty. According to the report, Wolfspeed is working to finalise a bankruptcy plan that would include the backing of a majority of its creditors.
Wolfspeed’s financial position appears increasingly strained. The chipmaker’s total debt reportedly includes a $575 million balloon payment due in May 2026 to holders of convertible notes. As of 31st March, it held $1.3 billion in cash reserves. Earlier this month, the company warned of “going concern” risks and forecast annual revenues of $850 million by 2026 – well below the $958.7 million anticipated by analysts.
Product demand has also been a challenge. Wolfspeed is reportedly experiencing a downturn in orders for its 150mm silicon carbide wafers, a core part of its portfolio. In a move to manage assets and costs, it placed its Farmers Branch site near Dallas, Texas, on the market in January 2025. The site comprises four buildings, including a 14MW data centre and a semiconductor fabrication facility. The site remains unsold.
In another sign of strategic retrenchment, Wolfspeed has suspended plans to construct a new device fabrication plant in Saarland, Germany, without setting a timeline for resumption.
Wolfspeed had secured a conditional agreement in October 2024 with the US Department of Commerce to receive up to $750 million in CHIPS Act funding. The grant was intended to support the development of new semiconductor facilities in North Carolina and New York. However, eligibility for the funding is contingent upon the company refinancing its 2026 convertible notes, along with additional tranches due in 2028 and 2029.
Wolfspeed, which specialises in silicon carbide technology, has been positioning itself to support emerging electric vehicle and industrial applications. The coming weeks will be critical for the future of the company.
