Wolfspeed, a U.S.-based silicon carbide (SiC) wafer vendor, is reportedly on the brink of filing for bankruptcy due to fierce competition from expanding Chinese rivals as well as weak demand in the automotive and industrial sectors.
The fallout could impact much more than just the company directly.
Most notably, Japanese chipmaker Renesas plans to abandon its SiC power semiconductors for electric vehicles (EVs), according to Nikkei. The company cited slowing growth in the EV market coupled with a supply glut driven by increased production from Chinese manufacturers.
According to market research firm TrendForce, Wolfspeed held the top spot in the SiC market with a 33.7% share in 2024. However, Chinese-based TanKeBlue and SICC are rising quickly with 17.3% and 17.1% shares, respectively — good enough for second and third place.
According to the Nikkei report, China’s aggressive push into the SiC market is driving prices to record lows. Wolfspeed’s 6-inch SiC wafers once sold for $1,500 each. Chinese rivals are offering them for as little as $500 or less.
Additionally, China’s largest SiC wafer plant has officially launched production in Wuhan, China, according to local news media YiCai Global. The goal is to supply 30% of SiC semiconductor domestic output for automotive power systems to more than 10 Chinese models.
Prior agreements
In July of 2023, Renesas and Wolfspeed entered into a wafer supply agreement to secure a supply of SiC bare and epitaxial wafers. The $2 billion deal would have scaled production of SiC power semiconductors from Renesas beginning this year.
It is unknown what will become of this agreement if the bankruptcy goes through and with Renesas’ pending exit from the SiC market.
But that’s not the only agreement Wolfspeed has made in the past few years. It also has a multi-year capacity reservation agreement with Infineon to supply a secure source of SiC semiconductor products on Wolfspeed’s 150 mm process technology. Infineon has been expanding its push into the SiC market with additional deals like:
- Expanding its SiC production at its Kulim, Malaysia, fab
- Converting its Villach, Germany, fab into a 200 mm SiC facility
- Securing a SiC chip deal with Hyundai and Kia
We will have to wait to see what happens with this agreement as well as if Wolfspeed goes forward with a potential bankruptcy.
Wolfspeed spending and direct funding
Wolfspeed has been expanding its investment into SiC production in the past few years with a prior planned $6.5 billion in capital expenditures through 2027 with the John Palmour Manufacturing Center for Silicon Carbide being one investment. Other investments include:
- Expanding its Durham, North Carolina, materials facility.
- Ramping its 200 mm SiC fab in Marcy, New York.
- A second planned 200 mm fab in Saarland, Germany.
- Establishing a multi-site epitaxy footprint at Farmers Branch, Texas.
Through the CHIPS and Science Act, the company also received up to $750 million in direct funding to help support the construction of the John Palmour center as well as the Marcy, New York, expansion.
It is unclear if this funding will be revoked or if Wolfspeed’s facilities will be sold at a bankruptcy auction or as part of a bigger selloff.
