Facing heavy debt and funding pressure, chipmaker Wolfspeed is turning to bankruptcy protection. However, it is not shutting down but rebooting for a leaner future.
US-based semiconductor firm Wolfspeed is preparing to file for Chapter 11 bankruptcy as part of a sweeping financial restructuring plan. According to a recent report by Manufacturing Dive, the company aims to cut $4.6 billion in debt and reduce its interest payments by 60%, it confirmed on Monday.
Despite the bankruptcy filing, Wolfspeed plans to continue operations throughout the restructuring, which it anticipates completing by the end of September. The firm has reached an agreement with key creditors to slash its debt by nearly 70%.
The move follows a challenging year for the silicon carbide chipmaker. In late 2024, Wolfspeed laid off 20% of its workforce and shut down several facilities to save $200 million. The company also received approval for $750 million in CHIPS Act funding to expand its operations.
In March 2025, Wolfspeed shares hit a 27-year low amid investor concerns over federal funding. However, executives assured investors in May that talks with the CHIPS programme office remain constructive.
Besides, Wolfspeed is also winding down its 150mm chip production to focus solely on 200mm wafers. Its leadership team has been reduced by 30% as part of broader cost-cutting measures.
CEO Robert Feurle described the bankruptcy move as a step to strengthen the company’s financial foundation. The company has pledged to pay suppliers and maintain regular operations during the process.
Japan’s Renesas Electronics, a major Wolfspeed customer, warned of a $1.7 billion loss linked to the restructuring. A $2.06 billion, 10-year supply deal between the two firms will now be converted into equity and debt instruments under the new plan.
Wolfspeed hopes to emerge from bankruptcy with a stronger balance sheet and positive cash flow.
