Wolfspeed– Anatomy of a Failed Company

Silicon carbide (SiC) is a semiconductor popular in power electronics for electric vehicles such as Teslas, broadband wireless communications moving to 5G and 6G, power generation for AI datacenters, and military and space applications. Because of its stability at high frequencies, temperatures, powers, and pressures, it’s hot stuff for the technology future.

Recent Gilder reports have celebrated a Georgia Tech Program under Walter de Heer, described in an article in Nature (January 2024), that details the secretion of a two-dimensional graphene semiconductor on a silicon carbide wafer.

A single layer of carbon atoms with unique strength and conductivity—you lay down multilayer graphene every time you use a lead pencil—Georgia Tech graphene emerged from a process of sublimating out the silicon in the top layer of the silicon carbide wafer.

Switching in the terahertz like light, these results portend the possibility of using the material for wafer-scale integration, ultimately transforming electronics by putting hyperscale AI computers not on millions of chips linked with complex wiring, but on single wafers. I am currently working on a book on “Electronics Beyond Chips” that predicts datacenters on wafers. Such results led to high expectations for companies producing silicon carbide.

Investment is treacherous, however, and a simple plunge into silicon carbide companies could take your portfolio over a cliff.

Wolfspeed Inc. (NYSE: WOLF) offers a lesson that the road to become a top-tier technology company can be bumpy and leave some promising entrants in the dust.

We have written numerous articles on silicon carbide (SiC). One by Dr. Robert Castellano, a senior analyst of Gilder’s Technology Report,  starting in March 2022 told Seeking Alpha readers about the technology in an article entitled II-VI: Eyes On Carbide Automotive Chip Market As Semiconductor Shortage Ends. He also wrote on this topic to alert readers of his marketing report at The Information Network entitled “Power Semiconductors: Markets, Materials, and Technologies.”

II-VI acquired Coherent (COHR), and renamed the company Coherent. Consolidation is part of the business world, but combinations can fall short of expectations.

Since that time, Robert has written more than a dozen articles on SiC, focusing on companies such as ON Semiconductor Corp. (NASDAQ: ON), STMicroelectronic (NYSE: STM), and Wolfspeed (WOLF). His first article on WOLF came in my September 21, 2022. The Seeking Alpha article entitled Wolfspeed: Separating Automotive SiC Hype From Reality, was when I rated the company a Sell, and later a Strong Sell following more miscues.

On November 18, 2024, the board of directors fired the CEO, as the cracks in the company’s foundation became more apparent, but it was two years too late. As shown in Chart 1, the share price had been dropping since a high of $136.00 on November 10, 2021. By then, the share price had slid to $8.36.

Shares crashed more than 60% in early trading on Wednesday, May 21, 2025, after The Wall Street Journal reported that the Durham, N.C.-based company has prepared to file bankruptcy in the next few weeks.

This article consolidates key insights from Robert’s past analyses and explains why Wolfspeed remains a strong sell. Below are six issues I’ve identified that shows the rational for this rating.

1. Ten Quarters Without Profitability

Wolfspeed has been unable to turn a profit for seven consecutive quarters, a critical indicator of its ongoing operational and financial struggles. The company’s Non-GAAP EPS has remained negative, with no sign of improvement. This performance is particularly concerning given the growth of the Silicon Carbide (SiC) market and the successes of competitors like Onsemi and STM.

Chart 2 illustrates Wolfspeed’s inability to achieve profitability over the last seven quarters, with negative earnings per share (EPS) widening through Q2 2025 ending December 2024.

2. EV Market Slowdown and Competitive Pressures

The EV industry, a major driver of SiC demand, had slowed significantly in 2023, which persisted into 2024 and early 2025 due to rising interest rates, regulatory uncertainties, and shifting consumer preferences. Wolfspeed’s reliance on OEMs like GM and Volkswagen exacerbates its vulnerability to these headwinds.

Robert first alerted readers to a slowdown in EV sales and its impact on the SiC market in a January 10, 2024 article entitled “Tracking A 2024 Slowdown In Silicon Carbide For EVs With Eyes On ON Semiconductor And Wolfspeed.”

Chart 3 shows Wolfspeed vs. competitor market share for SiC Devices, between CY Q4 2021 and Q2 2024. Wolfspeed has consistently underperformed competitors such as Onsemi (ON), STMicroelectronics (STM), and Infineon (XETR: IFNNY), according to my report, Power Semiconductors: Markets, Materials and Technologies. Details are available on The Information Network’s website.

3. Hype and Delays in Silicon Carbide Shipments

The Silicon Carbide (SiC) market has immense potential, but Wolfspeed’s execution has been far from ideal:

• Delayed Mohawk Valley Fab: Announced in 2019, the $1.2 billion facility has consistently missed production milestones. Initially slated to begin production in mid-2022, it now targets just 20% utilization by June 2024, two years behind schedule. Robert alerted readers in his September 21, 2022, article entitled “Wolfspeed: Separating Automotive SiC Hype From Reality,” which was not mentioned in the company’s prior earnings call.

• Overpromising market projections: Wolfspeed has repeatedly touted SiC’s transformative potential. However, my data indicates the global SiC device market is significantly smaller than Wolfspeed claims, with fierce competition from established players like Infineon, STM, and Onsemi eroding Wolfspeed’s market share.

Table 1 summarizes the repeated delays and underutilization of Wolfspeed’s $1.2 billion Mohawk Valley facility.

4. Cancelled Fab in Germany

Wolfspeed’s plan to build a €3 billion SiC wafer fab in Saarland, Germany, was scrapped, marking a significant failure in its global expansion strategy. With the company already struggling to ramp production at its existing facilities, the additional financial burden proved untenable.

Table 2 details Wolfspeed’s major facility investments and the status of each project.

5. Increasing Debt Burden

Wolfspeed’s long-term debt has skyrocketed, putting significant strain on its financial health. Its debt-to-equity ratio of 0.602 far exceeds that of competitors like STM (0.069), reflecting its heavy reliance on borrowing to fund its operations and expansion plans.

Table 3 compares Wolfspeed’s debt-to-equity ratio to its peers, highlighting its over-leveraged financial position.

6. Revenue and Profitability Comparisons

While Wolfspeed’s revenues have stagnated, competitors like Onsemi continue to post strong growth in the SiC space. This disparity underscores Wolfspeed’s operational inefficiencies and inability to capitalize on market opportunities.

Table 4 compares Wolfspeed’s revenue to Onsemi’s, highlighting the stark difference in performance.

Investor Takeaway

The tables and charts provide a clear and compelling case for why Wolfspeed remains on a bumpy road. From more than 10 consecutive quarters of losses to operational delays, cancelled projects, and increasing debt, the company’s struggles are deeply entrenched like a car trying to navigate through mud to compete with its rivals in a race for success. Competitors like Onsemi and STM have outpaced Wolfspeed in every meaningful metric, from market share to profitability. Investors should take heed of these systemic issues and avoid Wolfspeed in favor of more stable and successful peers.