Wolfspeed Surges 150% After Chapter 11 Bankruptcy Filing: What Investors Need to Know

A Strategic Restructuring to Preserve Silicon Carbide Leadership

Wolfspeed Inc. (NYSE:WOLF) shocked markets Monday by filing for Chapter 11 bankruptcy protection—and yet, shares surged over 150% in pre-market trading. The move is part of a prepackaged restructuring plan designed to cut nearly $4.6 billion in debt and trim annual interest payments by 60%. Far from a collapse, this filing is being framed as a financial reset aimed at accelerating Wolfspeed’s profitability and securing its dominance in the silicon carbide (SiC) semiconductor industry.

Why Bankruptcy Isn't Always a Bad Signal

Unlike typical bankruptcies marked by operational distress, Wolfspeed’s Chapter 11 plan is a debt reduction strategy, backed by:

• 97% of senior secured noteholders

• 67% of convertible noteholders

This support enables Wolfspeed to:

• Slash total liabilities by ~70%

• Preserve supplier relationships and customer contracts

• Maintain full operational continuity during restructuring

CEO Robert Feurle stated that the filing positions Wolfspeed to “move faster” on core strategic priorities and scale its silicon carbide capabilities.

Financial Snapshot Before Restructuring

Wolfspeed’s aggressive capital investments in its SiC fabrication facilities have weighed heavily on its balance sheet. Using Key Metrics (TTM) reveals the leverage pressures that pushed the company to pursue Chapter 11:

• TTM EBITDA Margin: -28.4%

• Debt-to-Equity Ratio: 4.72

• Interest Coverage Ratio: -3.9x (unsustainable)

The Balance Sheet shows that Wolfspeed had:

• Over $5.9 billion in total liabilities

• Just $500 million in cash and equivalents

With those levels, refinancing without restructuring would likely have been impossible.

What's Next: Timeline & Execution

Wolfspeed expects to emerge from bankruptcy by Q3 2025, pending court approval of customary motions, including:

• Employee wages and benefit protections

• Vendor payments without impairment

• Customer contracts honored as-is

Investors should monitor:

• Court approval of the support agreement

• Progress on Wolfspeed’s new Mohawk Valley fab ramp-up

• Guidance updates for fiscal 2025

Strategic Implications: Betting on the SiC Supercycle

Silicon carbide is essential to the EV transition, 5G infrastructure, and renewable energy systems, offering higher thermal conductivity and power efficiency than traditional silicon chips. Wolfspeed is uniquely positioned as a pure-play SiC manufacturer.

Despite financial challenges, its long-term market relevance remains strong:

• Tesla, GM, and other EV makers have ongoing supply agreements

• Global SiC market projected to exceed $20 billion by 2030

This makes Wolfspeed’s restructuring more of a repositioning than a retreat.

Final Thoughts

Wolfspeed’s 150% stock surge following a bankruptcy filing may seem counterintuitive—but the market is recognizing that this isn't a liquidation, it's a reset. With a lighter balance sheet and unshaken operational base, Wolfspeed could emerge stronger—especially if it executes on its silicon carbide roadmap and restores profitability by FY2026.