(The Center Square) – Wolfspeed, the silicon carbide power solutions company headquartered in North Carolina once in line for three-quarters of $1 billion from the Biden administration, is filing for Chapter 11 bankruptcy.
In a release on Sunday, the company that calls Durham home and had plans for a manufacturing facility in Siler City said the move strengthens its capital structure. Wolfspeed said it would move fast and hope to emerge from bankruptcy by the end of the third quarter this calendar year.
Wolfspeed in October had a memorandum of understanding for $750 million from the previous presidential administration. The infusion was to “support the construction of a new silicon carbide wafer manufacturing facility in Siler City, helping to secure a reliable domestic supply of the semiconductors that will underpin the future energy economy and AI boom,” a release from U.S. Department of Commerce said.
CEO Gregg Lowe was fired in November and Robert Feurle took over May 1. On May 23, Feurle announced David Emerson’s addition as chief operating officer.
The CHIPS Act grant to Wolfspeed, largest of the Biden presidency to not be awarded, was subject of negotiation with the Trump administration earlier this year. Major restructuring was forecast in late March if the money didn’t come.
Since 2004, Wolfspeed has been recipient of 38 awards valued at $1.4 billion from local and state officials, and another $119 million from federal grants and allocated tax credits. It has not gotten loans or bailouts, according to the Good Jobs First website that tracks subsidies.
Layoffs are impacting the $5 billion factory in Chatham County, with 73 announced two weeks ago. That’s about one-third of the workforce. At its Durham headquarters in November, 20% of the workforce was trimmed, according to published reports.
Sunday’s release from the company says key lenders are in a pact with Wolfspeed, called a restructuring support agreement. Overall debt is expected to go down by 70% – about $4.6 billion – with execution of the agreement.
“Wolfspeed has tremendous core strengths and great potential,” said Robert Feurle, Wolfspeed’s Chief Executive Officer. “We are a global leader in silicon carbide technology with an exceptional, purpose-built, fully automated 200mm manufacturing footprint, delivering cutting-edge products for our customers. A stronger financial foundation will enable us to focus acutely on innovation in rapidly scaling verticals undergoing electrification where quality, durability and efficiency matter most.”
