Wolfspeed, a US-based semiconductor manufacturer and key supplier to the electric vehicle (EV) industry, has announced plans to file for bankruptcy as part of a broad restructuring effort aimed at significantly reducing its debt load, the Financial Times reports.
The North Carolina company revealed it has reached a deal with creditors to cut its nearly $6.5 billion in debt by approximately 70%. The agreement, which includes a major swap of unsecured debt for equity, is expected to leave current shareholders with only 3% to 5% of the reorganized company, effectively wiping out most of their holdings. Wolfspeed had a market capitalization of around $4 billion as recently as last year.
Wolfspeed’s CEO, Robert Feurle, said the decision followed months of evaluating options to stabilize the company’s finances.
“After evaluating potential options to strengthen our balance sheet and right-size our capital structure, we have decided to take this strategic step because we believe it will put Wolfspeed in the best position possible for the future,” he said in a statement.
Previously known as Cree, Wolfspeed transitioned from manufacturing silicon carbide wafers for LEDs to focusing on chips for EV drivetrains and charging systems. The company had taken on substantial debt to fund the construction of three large semiconductor fabrication plants in the US, betting on long-term growth in the EV sector.
Part of Wolfspeed’s strategic vision involved support from the Biden administration through the federal Chips Act. The company had been approved for up to $750 million in government funding, contingent on meeting certain financial conditions, including resolving a $575 million convertible bond payment due in 2026. However, delays in creditor negotiations and shifting political leadership—particularly the recent return of a Trump administration—ended hopes for federal funding.
Under the terms of the restructuring, around $5 billion in unsecured debt—including $3 billion in convertible bonds and a $2 billion loan from Renesas Electronics, a Wolfspeed customer—will be converted into equity in the reorganized company. Private equity firm Apollo Global Management, which led a previous $1.5 billion senior secured loan, will also see its stake adjusted under the restructuring terms.
Wolfspeed expects to formally file for Chapter 11 bankruptcy “in the near future” and aims to complete its reorganization and emerge as a new entity by the end of 2025. The company did not confirm whether any future government support would be part of its exit plan, though it stated that projected cash flow should be sufficient to sustain operations going forward.
The announcement comes amid a broader wave of financial difficulties for clean energy and tech-focused firms, many of which are grappling with higher interest rates and evolving government policies. Several solar and EV-related companies have filed for bankruptcy in recent months under similar pressures.
