From $18B to Bankruptcy: How Silicon Carbide Pioneer Wolfspeed Lost 97% of Its Value

May 21 – Silicon carbide powerhouse Wolfspeed is reportedly preparing to file for bankruptcy within the coming weeks, according to The Wall Street Journal. Multiple debt restructuring proposals from creditors have already received approval.

The news triggered panic selling across markets, sending Wolfspeed shares into free fall during pre-market trading. At press time, the stock had plummeted 59.74%, shrinking the company's market capitalization to under $500 million and marking its largest single-day decline in history.

source: Wolfspeed

This semiconductor giant, once considered a cornerstone supplier for the clean energy transition, now finds itself teetering on the precipice of collapse overnight.

According to disclosed information, Wolfspeed currently faces crushing debt obligations totaling $6.5 billion, including a $1.5 billion senior secured loan held by Apollo Global Management. The company's failure to reach agreement on bond restructuring has further deteriorated its financial position, serving as the immediate catalyst for the impending bankruptcy filing.

However, Wolfspeed's troubles have been brewing for some time.

Market Oversaturation and Unfulfilled Subsidies

From a market perspective, while silicon carbide (SiC) has been hailed as the "material of the future" for the clean energy revolution, the reality tells a different story. According to TrendForce data, global silicon carbide substrate revenue declined 9% year-over-year in 2024, reflecting deepening supply-demand imbalances across the industry.

Wolfspeed's core business—automotive-grade silicon carbide chips—has been particularly hard hit by sluggish electric vehicle markets in Europe and North America. Major customers including General Motors and Mercedes-Benz have delayed substantial orders, directly pressuring nearly 60% of the company's core revenue streams.

Meanwhile, Chinese silicon carbide manufacturers such as Sicrystal Advanced and Tankeblue Semiconductor have rapidly gained ground through cost advantages and technological breakthroughs. The price of 6-inch wafers has been slashed in half since 2021 to $400 per unit, with Chinese companies now commanding a combined global market share exceeding 34%.

BYD Semiconductor's integrated device manufacturing (IDM) model has driven silicon carbide module costs down 60% over three years, further squeezing Wolfspeed's profit margins with international clients.

Compounding these challenges, the $750 million in subsidies promised under the U.S. CHIPS and Science Act has yielded only $192 million in tax credits, with the remainder still pending. Given former President Trump's previous calls to repeal the legislation, whether the remaining funds will materialize remains highly uncertain.

Wolfspeed had attempted various cost-cutting measures including 25% workforce reductions, factory closures, and the replacement of CEO Robert Feurle. However, aggressive expansion that failed to align with market demand created a debt crisis, and today's bankruptcy rumors have finally shattered Wall Street's confidence entirely.

Conclusion

Since reaching its peak valuation during its first year as a public company in 2021 (with shares hitting $142.33 and market cap reaching approximately $18.2 billion), Wolfspeed has seen over 97% of its market value evaporate.

Should these bankruptcy rumors prove accurate and protection proceedings commence, this former chip industry titan may face asset sales or comprehensive restructuring. Has Wolfspeed truly reached the end of the road? What are your thoughts on this dramatic fall from grace?