Wolfspeed close to filing for bankruptcy, report says

• The report sent the company's already flailing stock price down even lower, briefly falling below $1 per share. At its peak in 2021, the company's shares were worth $140.

Driving the news: In a statement, Wolfspeed didn't deny the potential of filing for bankruptcy.

• "Optimizing our capital structure has been a stated priority for Wolfspeed, and we have been engaged in constructive discussions with our financial stakeholders to explore potential paths to support our long-term success," Tyler Gronbach, Wolfspeed's head of investor relations, told Axios in an email.
• "[W]e are evaluating a number of potential alternatives and may implement a transaction through an in-court solution," he added, noting the company has sufficient cash on hand ($1.3 billion) to support the business.

State of play: Wolfspeed, which makes silicon carbide chips and products, has a long-term debt load of $6.4 billion related to building out factories in New York and Chatham County.

• At the same time, demand for the company's chips has been affected by a slowdown in the electric-vehicle market, and it is waiting on $750 million in CHIPS Act funding that remains in negotiations with the Trump administration.
• That combination, along with some operational delays at its New York factory, led to the firing of the previous CEO, layoffs and the closure of one of its Durham factories.

Filing for Chapter 11 bankruptcy typically gives companies a chance to reorganize debts while remaining in operation.

• The Wall Street Journal, citing sources close to the matter, said Wolfspeed hopes to negotiate a bankruptcy plan that its creditors would support.
• Some of the company's largest creditors are Apollo Global Management and Renesas Electronics.

The big picture: Earlier this month, Robert Feurle, a semiconductor industry veteran, started as the CEO of Wolfspeed.

• His first order of business remains solving the company's long-term debt load, but he hopes to continue the company's diversification away from the automotive industry.

He told Axios that he hopes to expand its business into other industries, including data centers for artificial intelligence and solar farms to create more demand for its products.

What they're saying: "We have made huge investments — billions of dollars — into really amazing factories," Fuerle said at the time. "I think now it's, let's turn these [factories] into cash flow for the company and do this in a profitable way."