Wolfspeed Inc. shares collapsed by nearly 68% on Wednesday, reflecting deepening investor alarm over the chip supplier’s financial health and imminent bankruptcy risk. The dramatic selloff was triggered by reports that the company is preparing to file for Chapter 11 bankruptcy within weeks, after rejecting multiple debt restructuring proposals from its creditors.
Wolfspeed, a key player in silicon carbide and gallium nitride chips used in electric vehicles and renewable energy, has struggled with mounting debt, sluggish demand, and macroeconomic headwinds.
The company’s stock plummeted to under $1, marking a historic low and erasing nearly all of its market value. Over the past year, Wolfspeed’s shares have plunged more than 88%, with the latest rout wiping out over half of its value in a single session.
The collapse follows a series of disappointing quarterly results, as Wolfspeed reported a larger-than-expected loss and missed revenue forecasts. Despite efforts to cut costs, including a 25% workforce reduction and the closure of older manufacturing facilities, the company’s high leverage from aggressive expansion—especially at its Mohawk Valley fabrication plant—has left it vulnerable.
Analysts have downgraded the stock and slashed price targets, citing ongoing demand challenges and the company’s precarious liquidity position. The semiconductor sector’s broader struggles, including weaker-than-expected orders from industrial and automotive customers and increased competition from lower-cost Asian rivals, have further compounded Wolfspeed’s troubles. Trade tensions and tariff uncertainties have also clouded the outlook for its export markets.
Wolfspeed’s leadership has recently added new board members with financial restructuring expertise and is actively exploring both in-court and out-of-court solutions to address its debt burden. However, the looming bankruptcy filing suggests that management’s options are narrowing rapidly.
For investors, the stock’s collapse underscores the risks facing highly leveraged technology firms in a volatile market environment, and highlights the urgent need for decisive action to stabilize the business and restore confidence.
