Amid slowing EV demand and challenges in industrial and energy sectors, Wolfspeed plans to cut 20% of its workforce, close key fabs, and save $200M annually.
Chip manufacturer Wolfspeed is planning to lay off 20% of its workforce and close several of its facilities, including one in North Carolina, in an effort to reduce costs and streamline operations.
Recently disclosed by CEO Gregg Lowe during the company’s Q1 earnings call last week, the company aims to save around $200 million annually through these measures. The decision follows slower-than-expected growth in electric vehicle (EV) adoption and ongoing challenges in the industrial and energy sectors.
Wolfspeed will close its 150mm device fabrication plant in Durham, North Carolina, as part of its restructuring plan, over the next nine to 12 months. The company is working with its customers to manage the transition.
Additionally, it will shut down its production facility in Farmers Branch, Texas, and indefinitely halt construction on a new device fab in Saarland, Germany. Most of the layoffs have already occurred, with the remainder expected to be completed by the end of the year.
However, the company, which employed 5,013 workers as of June 30, did not specify the locations of the remaining job cuts.
Wolfspeed expects to incur restructuring charges of $400 million to $450 million in the coming quarters, including $87 million in the current quarter. The company has also revised its fiscal 2025 capital expenditure forecast, reducing it by $100 million to a new range of $1.1 billion to $1.3 billion, excluding federal incentives.
Lowe explained that the slowdown in the EV market, with customers delaying their product launch timelines, has contributed to the company’s decision. However, he stressed that these delays do not reflect a loss of confidence in the long-term demand for EVs.
Meanwhile, the industrial and energy sectors have also been slow to recover, weighed down by macroeconomic pressures such as higher interest rates and the increasing cost of capital, which have delayed investment cycles and hindered growth.
This restructuring comes weeks after Wolfspeed received a $750 million grant through the CHIPS and Science Act, announced last month. The funding will be distributed over several years and is tied to milestones at the company’s John Palmour manufacturing centre in North Carolina and its Mohawk Valley facility in New York. The first disbursement is expected in mid-2025, representing 20% to 25% of the total grant.
