Wolfspeed, Inc., the Durham-based silicon carbide semiconductor manufacturer, filed for Chapter 11 bankruptcy protection on June 30, 2025, in the United States Bankruptcy Court for the Southern District of Texas. The filing implements a prepackaged restructuring supported by more than 97% of senior secured noteholders and about 67% of convertible noteholders (and 100% of Renesas claims), targeting a roughly 70% debt reduction.

Financial Deterioration and Market Challenges

In its SEC 10‑Q, the company recorded a net loss of $939.9 million in the nine months ended March 30, 2025 (vs. $689.3 million a year earlier), and revenue declined from $606.5 million to $560.6 million. The period coincided with weaker EV and industrial demand and pricing pressure.

These financial pressures were exacerbated by the company’s substantial debt burden (about $6.5 billion as of March 30, 2025), including approximately $3.1 billion in convertible notes and a $2.062 billion customer refundable deposit from Renesas under a 10‑year supply agreement (treated as “Renesas Loans” in the RSA).

Workforce Reductions and Cost-Cutting Measures

Prior to the filing, Wolfspeed implemented aggressive cost reduction initiatives and laid off about 20% of its workforce in November 2024, closing multiple facilities to save approximately $200 million annually. Additional layoffs in March 2025 followed as the company sought to improve financial performance.

Pre-Packaged Restructuring Plan

The prepackaged plan contemplates an approximately 70% reduction in total debt—about $4.6 billion—bringing debt down to roughly $2 billion and lowering annual cash interest expense by about 60%, with emergence by the end of September 2025.

Support for the plan includes more than 97% of senior secured noteholders, about 67% of convertible noteholders, and 100% of Renesas claims, and provides approximately $275 million in new financing from existing creditors.

Creditor Recovery and Equity Treatment

The plan provides for a debt‑to‑equity conversion that transfers ownership primarily to creditors: senior secured creditors receive a mix of new equity and debt instruments, and unsecured creditors—including convertible bondholders and Renesas—receive the majority of equity. Existing shareholders are substantially diluted, receiving approximately 3%–5% of new common equity (subject to dilution and potential reduction under certain events).

CHIPS Act Complications and Government Funding

On Oct 15, 2024, the U.S. Department of Commerce and Wolfspeed signed a non‑binding preliminary memorandum of terms for up to $750 million in proposed CHIPS Act funding—not a final award or disbursement—with balance‑sheet conditions related to convertible notes maturing in 2026, 2028, and 2029.

The case raises broader questions about the effectiveness and timing of industrial policy support; despite being selected for substantial proposed federal support, domestic silicon carbide manufacturers still face cost and competition hurdles.

Impact on Key Business Relationships

Renesas Electronics, a key customer and financing counterparty, expects to record a loss of approximately ¥250 billion (roughly $1.7 billion) related to its Wolfspeed exposure and the conversion of its refundable deposit under the RSA, with further detail in the Renesas newsroom.

Supply Chain Continuity

Wolfspeed emphasized continued, normal operations during restructuring and filed an All‑Trade Motion, with vendors expected to be unimpaired and ordinary‑course payments continuing.

Silicon Carbide Market Dynamics

Wolfspeed’s filing reflects broader market challenges: competition widened and demand in EV and certain industrial/energy segments softened, pressuring margins and growth.

The filing occurred against shifting policy backdrops for EVs and renewables; regardless of policy direction, the case underscores the sensitivity of capital‑intensive SiC manufacturing to cyclical demand and pricing.

Operational Restructuring and Future Strategy

Beyond balance‑sheet changes, the reorganization contemplates operational focus on core silicon carbide materials and device businesses and potential divestitures of non‑core assets; the reduced debt burden and interest expense are expected to provide flexibility for technology investment and capacity optimization.

The plan also allows for consolidation and optimization across Wolfspeed’s manufacturing footprint, including facilities in North Carolina (Durham/Research Triangle Park and Siler City), New York (Marcy/Mohawk Valley), and Arkansas (Fayetteville), as shown on the company’s locations page.

Legal and Professional Advisors

Wolfspeed retained an experienced team—Latham & Watkins and Hunton Andrews Kurth as bankruptcy counsel, FTI Consulting as financial advisor (with Daniel Hugo serving as Deputy Chief Restructuring Officer), Perella Weinberg Partners as investment banker, KPMG as tax advisor, and Epiq as claims/solicitation agent—per the first‑day materials.

Wolfspeed’s Chapter 11 is a critical, proactive restructuring for a strategically important SiC manufacturer; with strong creditor support, a clear plan, and targeted operational focus, the company aims to emerge by late September 2025 with approximately $2 billion of debt and materially lower interest expense.

For ongoing restructuring coverage, visit ElevenFlo’s bankruptcy blog.