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Wolfspeed Shares Soar 48% as Bankruptcy Court Approves Restructuring Plan

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Wolfspeed (WOLF.N) saw its shares jump 48% to $1.82 on Tuesday after a U.S. bankruptcy court approved the company’s Chapter 11 reorganization plan, paving the way for an exit from bankruptcy in the coming weeks.

Key details of the restructuring

  • Debt reduction: Wolfspeed will slash its debt by about 70% (~$4.6 billion).

  • Lower costs: Annual cash interest payments will be cut by 60%.

  • Timeline: The company expects to formally emerge from bankruptcy within several weeks.

Industry role

Wolfspeed specializes in silicon carbide chips, which are prized for energy efficiency and are widely used in:

  • Electric vehicles (EVs)

  • Solar inverters

  • Industrial power systems

Leadership statement

CEO Robert Feurle said the ruling “clears the path for us to complete our restructuring process in the coming weeks.”

Background

  • Wolfspeed filed for Chapter 11 bankruptcy in June, citing going concern doubts.

  • The restructuring provides the company a financial lifeline amid surging demand for power-efficient chips, especially in EV and renewable energy markets.

Wolfspeed Eyes Bankruptcy Filing Amid Debt Struggles and Weak Demand

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Wolfspeed, a leading U.S. semiconductor firm specializing in silicon carbide chips, is reportedly preparing to file for Chapter 11 bankruptcy within weeks, according to sources cited by The Wall Street Journal. The move comes as the company faces mounting debt, weakened demand, and heightened market uncertainty due to tariffs and macroeconomic pressures.

Shares of Wolfspeed (WOLF.N) plunged more than 57% in after-hours trading following the news.

The company, which serves industrial and automotive markets, has been wrestling with declining demand and recently rejected multiple out-of-court debt restructuring proposals. It is now seeking a court-supervised process with the backing of a majority of its creditors, as part of a pre-packaged bankruptcy strategy.

Earlier this month, Wolfspeed signaled financial distress by raising “going-concern” doubts and significantly lowering its revenue outlook. It forecast $850 million in revenue for fiscal 2026, falling short of analysts’ consensus of $958.7 million.

Wolfspeed declined to comment on the bankruptcy report when contacted by Reuters.

As one of the few major U.S. producers of silicon carbide chips — vital for electric vehicles and renewable energy systems — the company’s financial woes could ripple across the supply chain, especially as global chipmakers face persistent economic headwinds and shifting trade dynamics.

Wolfspeed’s Shares Plunge to 27-Year Low Amid Uncertainty Over Federal Funding

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Shares of Wolfspeed, a prominent chipmaker, dropped by 50% on Friday, hitting their lowest point since 1998. This significant decline stems from uncertainty surrounding the company’s eligibility for federal funding under the U.S. CHIPS Act. Wolfspeed is awaiting approximately $750 million in subsidies promised by the 2022 bipartisan CHIPS Act, which allocated $52.7 billion in federal funds to boost U.S. semiconductor manufacturing.

However, Wolfspeed’s future funding remains in limbo as the company is left vulnerable to changes in the administration’s stance on the law. President Donald Trump has recently voiced opposition to the CHIPS Act, calling for its repeal in favor of using its funds for debt reduction. This has increased concern over the company’s ability to secure the much-needed funds.

Analysts warn that without the CHIPS Act grant, Wolfspeed may face devastating consequences, including the need for major restructuring. The company had hoped the funding would help it accelerate the production of silicon carbide chips, essential for electric vehicles and renewable energy.

As of Friday, Wolfspeed’s shares were trading at $2.72, marking a 59% decline in value for the year. The company has also made changes in leadership, appointing Robert Feurle as CEO, effective May 1. Additionally, Wolfspeed has secured $865 million in tax credits to strengthen its financial position.