1Sem.·

Wolfspeed on the brink of insolvency

Wolfspeed is being crushed by its debts. Trump had canceled a government subsidy for the silicon carbide manufacturer with factories in the USA.

The manufacturer of silicon carbide semiconductors Wolfspeed will file for bankruptcy in the coming weeks. This was reported by the Wall Street Journal (paywall), citing sources familiar with the matter. The reason for this is the listed company's high level of debt.

After Wolfspeed rejected several proposals from creditors to restructure its debts out of court, the company is now seeking a plan under the US Chapter 11 procedure, which is supported by the majority of its shareholders.

The company's shares fell by over 57 percent in extended trading.

Wolfspeed is struggling with sluggish demand in the industrial and electric car markets as well as uncertainty caused by the Trump administration's tariffs. Wolfspeed did not issue a statement

made no statement.

3,500 employees could lose their jobs

The company expressed doubts about its ability to continue operations earlier this month and forecast weaker-than-expected annual sales. Wolfspeed expects revenue of USD 850 million for its 2026 financial year, which is below analysts' estimates of USD 958.7 million.

Wolfspeed is headquartered in Durham in the US state of North Carolina. The Group has 3,500 employees in 17 countries. It has its own modern factory in Marcy, New York.

Wolfspeed wanted to build the world's largest plant for silicon carbide (SiC) semiconductors in Saarland. The transmission manufacturer ZF had agreed to take a minority stake in the factory. Wolfspeed wanted to build on the site of a former coal-fired power plant in Ensdorf. The project has been postponed indefinitely.

Wolfspeed was actually supposed to receive a total of 1.5 billion US dollars for two construction projects from the US Chips Act, the 52 billion US dollar funding program for the semiconductor industry in the USA set up under the Biden administration. However, while Intel, Samsung and TSMC received funding shortly before the end of Joe Biden's term of office, Wolfspeed did not receive any government aid. Wolfspeed's debt stands at 6.4 billion US dollars, plus convertible debt of 575 million US dollars, which is due by May 2026.

In 2017, Infineon tried to buy Wolfspeed, but the acquisition was blocked by CFIUS, the Committee on Foreign Investment in the United States.

https://www.golem.de/news/siliziumkarbid-halbleiter-wolfspeed-steht-kurz-vor-der-insolvenz-2505-196400.html

8 Commentaires

DieEnte7@DieEnte7

1Sem.

Wow, I had it on my radar 2 years ago, but quickly decided against it due to years of losses. Didn't want a second Plug Power in my portfolio 😅 Seems to have been the right call. Fingers crossed for those who are invested!

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Klein-Anleger1@Klein-Anleger1

1Sem.

Can you actually still short them?

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Null@Frei

1Sem.

Will Aixtron also be affected by this?

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Tenbagger2024@Tenbagger2024

1Sem.

@Frei
I hope not, $STMPA might even benefit

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nassimcanim@nassimcanim

1Sem.

I haven't been involved in something like this for very long. If they get investors again or are bought out, doesn't it make sense to build up a small position, as the company is basically doing relatively well with the chips? The only thing that needs to be managed is the debt? As I said, I have little idea about such a situation, whether it is standard for the company to be as good as closed or something similar because otherwise it would be an ideal entry point :)

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Tenbagger2024@Tenbagger2024

1Sem.

@nassimcanim
Look at Varta, it didn't work there either.
So I wouldn't necessarily speculate on that

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DieEnte7@DieEnte7

1Sem.

@nassimcanim There are very different models, of which very few are good for the current investors. Let's take a very simplified example: If Elon Musk wanted to integrate Wolfspeed into Tesla, he could simply buy a lot of shares now and that would be good for everyone who is already invested. But then he would also have to pay Wolfspeed's debts. But he could also wait until the company is insolvent and then possibly integrate IP, factories etc. from the insolvency estate without having to integrate the debt. In 9/10 cases, this is exactly what happens, and investors are left empty-handed. Extreme capital dilution would also be conceivable and also very bad for existing investors, because your share, which previously accounted for 1% of the company value, now only accounts for perhaps 0.1%. The company value would then have to increase tenfold before you could even get back into the black. So of course it CAN go up again, but that is associated with an extremely high risk and will take a long time in any case, if it ever happens at all. So my advice, if you do it, really only with money that you can lose 100% tomorrow.

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nassimcanim@nassimcanim

1Sem.

@DieEnte7 normally you would have gone in with a 20i max, but it sounds logical the way you describe it and it makes sense somewhere

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