Wolfspeed (NYSE: WOLF), the silicon-carbide chip supplier, is reportedly preparing a Chapter 11 bankruptcy filing as it struggles with a heavy debt load and weak end-market demand. Shares plunged over 57% in after-hours trading following the report.
Chapter 11 in the Works
Sources tell the Wall Street Journal that Wolfspeed plans to file within weeks under a prearranged bankruptcy backed by most creditors. The move comes after the company rejected multiple out-of-court restructuring proposals and warned of “going-concern” doubts in its recent outlook.
Key Financial Stressors
-
Debt Burden: High leverage from aggressive expansion of its Mohawk Valley fabrication plant.
-
Sluggish Demand: Industrial and automotive chip orders have underperformed forecasts amid global economic uncertainty.
-
Tariff Risks: Ongoing U.S.–China trade frictions have clouded visibility on silicon-carbide export markets.
To gauge Wolfspeed’s evolving credit profile through this turmoil, investors can consult the Company Rating API for the latest updates on its debt ratings and outlook.
Revenue and Outlook Misses
Earlier this month, Wolfspeed projected $850 million in 2026 revenue—well below analysts’ consensus of $958.7 million. This shortfall underscores the gap between planned capacity and actual market absorption.
For a deeper look at Wolfspeed’s historical growth trends and how its top-line projections compare to past performance, the Financial Growth API offers detailed year-over-year revenue and profit metrics.
What Comes Next
-
Bankruptcy Timeline: A swift, creditor-supported Chapter 11 can allow Wolfspeed to restructure debt while maintaining operations.
-
Operational Continuity: Core fabs are likely to stay online, supplying power and automotive customers under a reorganized capital structure.
-
Investor Impact: Equity holders typically face significant dilution in such restructurings, while lenders and bondholders negotiate haircuts.
Bottom Line: Wolfspeed’s pivot toward Chapter 11 reflects the challenges of scaling in capital-intensive semiconductor markets amid uneven demand. Monitoring its credit ratings and financial growth metrics will be crucial for stakeholders tracking the restructuring’s progress.
