Wolfspeed Files for Bankruptcy as Shares Plunge Nearly 60%

CNBC AI News, May 21 — U.S.-based silicon carbide chipmaker Wolfspeed is preparing to file for bankruptcy protection within weeks amid mounting debt challenges, according to regulatory filings and sources familiar with the matter.

After rejecting multiple out-of-court debt restructuring proposals from creditors, the company is now moving to pursue Chapter 11 bankruptcy proceedings, a decision reportedly backed by a majority of its lenders. The filing would allow Wolfspeed to continue operations while restructuring its financial obligations under court supervision.

News of the impending bankruptcy sent shockwaves through the tech sector, with Wolfspeed shares plummeting over 60% in after-hours trading following the announcement. The nosedive caps months of instability for the Durham, North Carolina-based firm.

In securities filings earlier this month, Wolfspeed disclosed “substantial doubt” about its ability to continue as a going concern. The company projected 2026 revenue of $850 million – dramatically below Wall Street’s $958.7 million consensus estimate – while grappling with $5.3 billion in long-term debt.

The latest crisis follows a brutal year for the semiconductor manufacturer, including:

• A 50% stock collapse in March tied to stalled CHIPS Act funding negotiations and convertible debt refinancing issues
• Leadership upheaval with the abrupt departure of CEO Thomas Wolfenberger in Q4 2024
• Workforce reductions totaling 1,180 employees since June 2023
• The shuttering of its Durham R&D facility in January

Once celebrated as the first company to commercialize 8-inch silicon carbide wafers – critical components for EV power systems and 5G infrastructure – Wolfspeed now faces existential crossroads. Industry analysts suggest the bankruptcy filing could trigger acquisition interest from semiconductor rivals seeking to bolster next-gen manufacturing capabilities, though the company’s debt load may complicate any rescue scenarios.

As the tech sector digests this development, attention shifts to how Wolfspeed’s restructuring might affect global silicon carbide supply chains and U.S. ambitions for semiconductor self-sufficiency.