North Carolina Based Semiconductor Firm Wolfspeed Files Bankruptcy Protection

Wolfspeed, the North Carolina-based semiconductor company specializing in silicon carbide (SiC) technology, filed for Chapter 11 bankruptcy protection on June 30, 2025. The company disclosed "going‑concern doubts" as it struggled to meet upcoming debt obligations, including a $575 million convertible note due in the following year (2025). The key reasons in which Wolfspeed sought bankruptcy protection include, high debt loads, challenges in production and facilities changes, increased competition and restructuring due to cost cutting. 

Wolfspeed accumulated approximately $6.5 billion in debt, while holding only $1.3 billion in cash by mid-2025. This high leverage became unsustainable, especially as the company's operating losses mounted reporting an operating loss of $194.5 million in the third quarter of fiscal 2025. Moreover this has caused Wolfspeed to burn through a lot of cash, losing an alarming $1.1 billion over the past 12 months with negative operating margins exceeding 60%.

A significant portion of their issues stems from difficulties in getting new manufacturing facilities fully operational, particularly the $5 billion John Palmour facility in North Carolina and the Mohawk Valley fab in New York. . However, production delays and technical setbacks resulted in those factories operating at far below capacity, increasing costs and hampering profitability. The closure of the Durham, North Carolina facility further strained output and workforce morale.

While silicon carbide has many benefits, it's more expensive than traditional silicon. Wolfspeed has faced increased competition from cheaper manufacturers, and a slowdown in EV demand has led some vehicle manufacturers to delay product launches, impacting Wolfspeed's revenue.

As competition increased there was a steep decline in demand from the electric vehicle (EV) and industrial sectors, which are Wolfspeed’s primary customers, sharply reduced expected revenue. The slowdown in the EV market was especially damaging, as Wolfspeed had anticipated a significant ramp up in SiC chip adoption for automotive applications. While silicon carbide has many benefits, it's more expensive than traditional silicon. Wolfspeed has faced increased competition from cheaper manufacturers, and a slowdown in EV demand has led some vehicle manufacturers to delay product launches, impacting Wolfspeed's revenue.

he company had already initiated cost-cutting measures, including layoffs (20% of its workforce) and closing multiple sites, in an effort to save money and simplify operations by focusing exclusively on 200mm chip operations. The global SiC chip market saw increased pricing pressure, mainly due to new entrants from China offering similar products at lower prices, weakening Wolfspeed’s competitive advantage However, these measures weren't enough to address the significant debt burden.

In the end, Wolfspeed's bankruptcy filing is a strategic move to restructure its massive debt and create a more sustainable financial foundation. The company aims to emerge from Chapter 11 quickly (by the end of Q3 2025) with a cleaner balance sheet, reduced interest payments, and sufficient cash to fund its operations and focus on its high-growth silicon carbide business. While a bankruptcy filing is typically seen as a negative event, for Wolfspeed, it's being viewed by some as a necessary financial reset to allow them to pursue their long-term growth strategy. Like Woldspeed, if you are experiencing overwhelming debts and are unsure about what you can do about it, take a FREE over the phone consultation with the Law Offices of John T. Orcutt. We have helped over 75,600 with their debts and offered debt relief protection from creditors. Visit https://www.billsbills.com/how-make-appointment to schedule your appointment today or call +1-833-627-0115 day or night.