Wolfspeed (WOLF +17.61%), a leading maker of silicon carbide (SiC) and gallium nitride (GaN) chips, filed for bankruptcy protection on June 30 as its sales stalled out, its losses widened, and its debt levels spiraled. On that dark day, its stock closed at a record low of $0.39.
But on Sept. 29, Wolfspeed emerged from Chapter 11 bankruptcy after reducing its total debt by approximately 70%, extending its maturities to 2030, and reducing its annual cash interest expenses by roughly 60%. Today, it trades at about $23 -- so a $1,000 investment at its all-time low would have grown to nearly $59,000 in just three months.
Image source: Getty Images.
Wolfspeed pulled itself back from the brink, but will it stabilize its business and generate even bigger gains for its investors over the next 12 months? Let's review this niche chipmaker's business model, growth rates, and valuations to decide.
What does Wolfspeed do?
Wolfspeed's SiC and GaN chips can operate at higher voltages, temperatures, and frequencies than traditional silicon chips. That resilience makes them well-suited for short-length LEDs, lasers, 5G base stations, military radars, solar panels, wind turbine systems, and electric vehicles (EVs).
Unlike other "fabless" SiC and GaN chipmakers which outsource their production to third-party foundries, Wolfspeed is an integrated device manufacturer (IDM) which manufactures its chips and power devices at its own foundries. It mainly produces SiC wafers, SiC power devices, and GaN radio frequency (RF) and power devices.
To ramp up the production of its newest SiC and GaN chips, Wolfspeed opened a new 200mm plant at Mohawk Valley, New York in 2022. It also started building an even larger 200mm plant in Siler City, North Carolina in 2023, and it's gradually winding down the production of its older 150mm chips at its older plants in Texas and North Carolina.
NYSE: WOLF
Key Data Points
How fast is Wolfspeed growing?
Wolfspeed was known as Cree until late 2021, when it spun off its LED and lighting segments to focus on selling its Wolfspeed-branded SiC and GaN products. From fiscal 2021 to 2025 (which ended in June), its revenue expanded at a compound annual growth rate (CAGR) of 9.6%, from $526 million to $758 million.
However, most of that growth occurred immediately after its restructuring and rebranding, and it initially benefited from a shift toward wide-bandgap (WBG) SiC and GaN chips across the EV, industrial, and renewable energy markets. But over the following three years, its revenue growth decelerated and its adjusted gross margins crumbled.
|
Period |
FY 2022 |
FY 2023 |
FY 2024 |
FY 2025 |
|---|---|---|---|---|
|
Revenue Growth |
42% |
24% |
(12%) |
(6%) |
|
Adjusted Gross Margin |
36% |
33% |
13% |
2% |
Data source: Wolfspeed.
Inflation, rising interest rates, supply chain disruptions, and other macro headwinds all reduced its shipments to its EV and industrial customers. It also faced fresh competition from Chinese SiC and GaN chipmakers, which flooded the market with an excess inventory of cheaper chips.
Instead of cutting costs to cope with that slowdown, Wolfspeed continued to ramp up the production of its 200mm chips at its Mohawk Valley plant, while pouring more cash (and securing more CHIPS Act funds) for the construction of its Siler City plant. That's why its total year-end liabilities rose nearly fivefold from $1.5 billion in fiscal 2022 to $7.3 billion in fiscal 2025.
That mix of slowing growth, declining margins, and soaring debt spooked Wolfspeed's investors, and its board ousted its CEO, Gregg Lowe, in late 2024.
Where will Wolfspeed be in a year?
Prior to filing for bankruptcy protection, Wolfspeed appointed Robert Feurle -- an industry veteran who previously worked at Micron Technology and ams-OSRAM AG -- as its new CEO. In a recent press release, Feurle said Wolfspeed was still "well positioned to capture rising demand" for SiC chips and devices across the "AI, EVs, industrial, and energy" markets. He noted its "improved financial stability" and "vertically integrated 200mm facility footprint" would put it in a better position to profit from the nascent market's expansion.
From fiscal 2025 to 2027, analysts expect Wolfspeed's revenue to grow at a CAGR of 15% from $758 million to $998 million as the macro environment stabilizes. But it will remain unprofitable for the foreseeable future as it continues to expand its first-party foundries.
Yet with a market cap of about $640 million (which was reduced by the cancellation of its old shares in exchange for new common shares), its stock looks dirt cheap at less than 1 times this year's sales. Assuming Wolfspeed gets its act together, matches analysts' estimates, and trades at a more reasonable 1 times its forward sales, its stock could rise 55% over the next 12 months.
I wouldn't go all-in on Wolfspeed's stock right now, since fabless SiC and GaN chipmakers like Navitas (NVTS 5.04%) are safer and less capital-intensive plays on the same trend. But it might be worth nibbling on if you expect its new CEO to successfully stabilize its business.
