Wolfspeed, a pioneer in silicon carbide (SiC) technologies, announced on June 22 (local time) that it plans to file for bankruptcy under a restructuring agreement that would eliminate billions in debt and transfer control to its creditors. The plan, which has received sufficient backing from key creditors—including Renesas Electronics and Apollo Global Management—seeks additional support before formal filing.

CEO Gregg Lowe stated the move positions the company for long-term success. Under the proposed restructuring, creditor debt will convert to equity, with existing shareholders retaining up to 5% of the new shares—higher than typical in bankruptcy scenarios. Wolfspeed aims to remain listed on the NYSE but may temporarily delist. The company emphasized that customer and supplier commitments will remain unaffected.

Founded in 1987 as Cree Research, Wolfspeed was a pioneer in SiC applications, introducing the first SiC-based blue LED in 1989. By 2017, its LED business still accounted for two-thirds of revenue, but the company had begun pivoting toward SiC-based compound semiconductors. Wolfspeed built the world's first 8-inch SiC wafer fab and once led the industry in materials and process technology.

However, the company has since faced mounting financial troubles. In fiscal Q3 2025, revenue declined 7% year-over-year to $185 million, with adjusted losses widening to $0.72 per share. Full-year revenue guidance of $850 million missed analyst expectations of $958.7 million. The company holds $1.3 billion in cash but faces over $6 billion in debt maturing between 2026 and 2033. Wolfspeed rejected partial debt restructuring in favor of a comprehensive solution, which ultimately failed to ease its financial strain.

Operational challenges have compounded its woes. Softening EV demand, uncertain CHIPS Act subsidies, and persistently low fab utilization—such as just 20% at its Mohawk Valley facility—have eroded efficiency and driven up costs.

In addition, intense global competition has further destabilized Wolfspeed. Chinese SiC substrate suppliers have rapidly expanded, slashing prices by 30% in 2024 and capturing nearly 40% of the global market by 2025. Wolfspeed's former lead in premium SiC materials has diminished, with its global conductive SiC substrate market share dropping to 33.7% in 2024.

The bankruptcy opens opportunities for competitors. Wolfspeed's 33.7% market share is now up for grabs. Chinese firms like TankeBlue and SICC, which together hold 34% of the SiC substrate market, are well-positioned to expand their footprint. Non-U.S. suppliers such as STMicroelectronics may also benefit as Wolfspeed's market presence wanes during restructuring.

In a related development, Renesas Electronics announced it has signed a Restructuring Support Agreement with Wolfspeed and key creditors. In 2023, Renesas paid a $2 billion deposit for SiC wafers. As part of the restructuring, this deposit will be converted into a mix of Wolfspeed convertible notes, common stock, and warrants—collectively representing over 38% of Wolfspeed's post-restructuring equity on a non-diluted basis.

Renesas expects to record an estimated ¥250 billion ($1.7 billion) loss on the receivable for the six months ending June 30, 2025. While the restructuring is expected to conclude by the end of September 2025 pending court approval, Renesas will retain instruments of equivalent economic value until necessary regulatory clearances are obtained.

Wolfspeed's collapse marks a pivotal moment in the global SiC industry. It reflects not only internal strategic missteps but also external forces reshaping the market—including weakening demand, policy uncertainty, and the rapid rise of low-cost competitors. As Wolfspeed's dominance fades, rivals—especially in China—are poised to capitalize and reshape the future of the silicon carbide landscape.