What happened
Next-generation chipmaker Wolfspeed (WOLF 5.55%), a volatile stock even in the best of times, was having one of its better weeks on the exchange as August barreled to a close. Data compiled by S&P Global Market Intelligence showed that the shares were up by over 6% week to date as of midafternoon Thursday. Investors were cheered by news of an asset divestment.
So what
Wolfspeed specializes in silicon carbide (SiC) semiconductors, which can function in more-extreme conditions than the more silicon-based chips common these days. Manufacturing is a challenging business, though, and this company has had its struggles.
Investors traded out of its stock last week after the company released a disappointing set of fourth-quarter and full-year earnings for fiscal 2023.
The gloom that this engendered began to lift early this week. On Tuesday, Wolfspeed announced that it was selling one of its business units, its radio frequency operation Wolfspeed RF.
The buyer is Macom Technology Solutions, and the price is roughly $75 million in cash plus 711,528 shares of its common stock. The latter is worth about $50 million, Wolfspeed said.
Now what
It's always good for a company facing challenges to receive a fresh infusion of cash and/or relatively liquid securities. And investors were likely cheered by the fact that the sale slims and trims Wolfspeed's business, allowing it to focus on segments with solid potential.
The company quoted CEO Gregg Lowe as saying, "Given the significant growth we've seen in automotive, industrial and renewable energy markets, we believe this is the right time to further focus on scaling our Power device and materials businesses to meet this accelerated demand."
Lowe and his team expect the Wolfspeed RF sale to close by the end of this year.
