Wolfspeed Posts 2% Revenue Drop in Q4

Wolfspeed (WOLF -3.65%), a leading semiconductor manufacturer specializing in silicon carbide power devices, released its earnings for the fourth quarter of fiscal 2025 on August 25, 2025. The most notable news was the company’s confirmation of ongoing bankruptcy proceedings, paired with continuing financial challenges. For the quarter, revenue was $197.0 million, This represented a decline of 1.8% compared to the fourth quarter of fiscal 2024. Non-GAAP earnings per share was ($0.77). This compares to ($0.89) in the fourth quarter of fiscal 2024. Key metrics, including gross margin and operating losses, remained negative, highlighting ongoing operational struggles. The quarter underscored a difficult period marked by heavy losses, cost reductions, and transition-related expenses, as actual outcomes fell short of prior internal targets and market expectations.

Wolfspeed’s Business and Strategic Focus

Wolfspeed specializes in producing silicon carbide (SiC) and gallium nitride (GaN) semiconductor materials and devices. These advanced materials power high-efficiency products used in electric vehicles, renewable energy, and other demanding power applications. The company’s operations span manufacturing advanced wafers and devices at multiple production facilities, including its Mohawk Valley Fab, a new plant that focuses on large-format 200mm silicon carbide technology.

In recent years, Wolfspeed has concentrated on growing its core SiC and GaN product offerings, expanding manufacturing capacity, and narrowing its focus by divesting non-core product lines such as its radio frequency (RF) division. Key to its strategy is ramping up production at its Mohawk Valley plant while securing federal and state incentives for ongoing capital investments. Success factors include manufacturing yield improvements, scaling SiC capacity, and maintaining supply chain resilience to serve rapidly growing markets such as electric vehicles.

Quarterly Financial and Operational Highlights

The most recent quarter marked a period of significant transition and financial stress for Wolfspeed. Revenue (GAAP) slipped to $197.0 million, down 1.8% from Q4 FY2024. This drop fell short of previous management targets—a threshold viewed internally as necessary to achieve non-GAAP EBITDA break-even operations.

Power Products, which include SiC-based transistors and diodes for electric vehicles and energy infrastructure, delivered $118.6 million in revenue. The Materials Products business, focused on silicon carbide wafers and substrates, declined 18% to $78.4 million compared to Q4 FY2024. The Mohawk Valley Fab contributed $94.1 million in revenue, more than doubling its prior-year figure.

Gross margin, a profitability metric that shows how much profit is left after subtracting the cost to produce goods, remained deeply negative at (1)% on a non-GAAP basis. Operating loss improved year over year, yet remained wide at ($94.0 million) on a non-GAAP basis. A series of non-recurring GAAP charges weighed on results, including $359.2 million for goodwill impairment and $417.6 million in restructuring and other costs during FY2025. Factory underutilization at the Mohawk Valley Fab—where fixed costs outpace revenue contributions during ramp-up—remained a key drag, though those costs did decline modestly from last year.

The company continued to burn cash but reported notable improvement: free cash flow was deeply negative at ($454.0 million) This represented an improvement of 48.7% compared to Q4 FY2024. Wolfspeed finished the period with $955.4 million in cash, partly offset by new debt and equity issuance in the year. Shareholders’ equity (GAAP) moved into negative territory at ($447.1 million) as of period end, reflecting large cumulative losses and restructuring charges. All existing long-term debt was reclassified as current, marking a critical liquidity risk and highlighting the urgency of ongoing Chapter 11 protection proceedings.

Strategically, Wolfspeed pressed ahead with its SiC focus by closing older 150mm manufacturing lines and redesigning its cost structure. The RF product line was formally reclassified as discontinued, signaling a complete exit from that segment. The company also secured $240.4 million in reimbursements from tax credits and incentives during FY2025. However, these efforts were not sufficient to restore financial stability in the quarter.

Outlook and What to Watch

Management did not offer financial guidance for future quarters or the upcoming fiscal year. The company instead focused on its pending court approval for a restructuring plan as it aims to emerge from bankruptcy with a revised capital structure. No specific targets for revenue, profitability, or operating cash flow were outlined in this release. The lack of definitive forward-looking statements is notable given the company’s ongoing reorganization efforts.

In the months ahead, key issues for investors and industry observers include the progress of Wolfspeed’s Chapter 11 process and customer concentration risks in end markets such as electric vehicles. Ongoing cost-cutting, capital raising, and efforts to secure additional government incentives will remain in focus. The outcome of these efforts and the bankruptcy process will determine whether Wolfspeed can stabilize its operations over the next several quarters.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.