Wolfspeed, a semiconductor company known for its silicon carbide wafers used in electric vehicles, is facing considerable financial difficulties. According to the Financial Times, the company is carrying a hefty debt load of $6.5 billion, with a significant portion attributed to a $1.5 billion senior secured loan led by Apollo Global Management. The consideration of filing for bankruptcy has come to light following challenges in restructuring a convertible bond due in 2026.

In a bid to stave off financial insolvency, a group of junior creditors, including Balyasny Asset Management and Shaolin Capital Management, has proposed a $600 million refinancing package. This is intended to provide working capital and prevent bankruptcy. Meanwhile, Wolfspeed has also suffered on the stock market, with shares dropping 23% as concerns mount over financial instability. This decline comes amid a revised prediction for annual revenue, affected by reduced demand in the electric vehicle sector and general economic uncertainty, as reported by Reuters.

Amid these financial headwinds, Wolfspeed announced leadership changes, appointing Robert Feurle as the new CEO tasked with navigating these challenges. To support its efforts, the U.S. Commerce Department is granting the company $750 million for a new manufacturing facility in North Carolina. Despite these supports, Wolfspeed faces continued pressure from sluggish industrial and automotive sales, as well as competition from Chinese manufacturers offering competitive pricing.