The semiconductor manufacturer Wolfspeed is showing tentative signs of revival following its exit from Chapter 11 bankruptcy protection at the end of September. However, financial results released on October 29 paint a stark picture of the difficulties that remain. While the company posted a slight revenue increase to $197 million, a deeply negative gross margin of 39 percent continues to weigh heavily on its share price.
For the first time in six quarters, Wolfspeed managed to report revenue growth, albeit minimal. The situation was far less encouraging on the bottom line, where the loss per share ballooned to $4.12, a significant deterioration from the $2.23 loss reported in the same period last year. A substantial $504 million in restructuring costs further impacted the results, underscoring the severity of the corporate overhaul the company has undergone.
A Strategic Hire from Germany
In a strategic move, Wolfspeed has appointed former Infineon manager Matthias Buchner to lead its global sales and marketing efforts, effective December. Buchner brings considerable industry clout, having previously overseen a $3 billion business unit at Infineon. His expertise is seen as precisely what Wolfspeed requires to navigate its corporate reboot.
This leadership change coincides with a strengthened balance sheet. Post-restructuring, the company holds $926 million in cash and has successfully reduced its debt load by 70 percent. While these steps have shattered its financial shackles, significant operational headwinds persist.
A Cautious Outlook Dampens Momentum
The company’s guidance for the second fiscal quarter has tempered any budding optimism. Management forecasts revenue will fall to a range of just $150 to $190 million. This anticipated decline is attributed to customers building up their inventories in the first quarter ahead of the planned closure of the Durham fabrication facility by year’s end.
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A more troubling long-term risk has also emerged. During the bankruptcy process, several clients sought out alternative suppliers. This “dual-source” procurement strategy could permanently erode Wolfspeed’s market share. On a brighter note, the new Mohawk Valley fab increased its contribution to $97 million, though this was partially offset by $47 million in costs related to underutilization, which continue to suppress margins.
Diversification into Wind Power
Seeking new avenues for growth, Wolfspeed announced a partnership with Chinese wind energy specialist Hopewind on November 10. The collaboration aims to develop the first fully silicon carbide-based power conversion system for wind turbines, promising a 38 percent increase in power density.
This initiative signals a potential strategic pivot. The company is looking to diversify away from the volatile electric vehicle sector and into more stable markets like wind power, AI data centers, and aerospace. The critical question remains whether these new segments can expand rapidly enough to offset ongoing losses.
Following the bankruptcy process, ownership of the company has effectively transferred to its creditors, with previous shareholders largely wiped out. A comprehensive financial update scheduled for the first half of 2026 is expected to provide clarity on Wolfspeed’s long-term strategic direction.
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