Jana Partners' Exit from Wolfspeed: A Wake-Up Call for Semiconductor Investors

The departure of activist investor Jana Partners from Wolfspeed (NYSE: WOLF)—a full liquidation of its stake by Q1 2025—marks a pivotal moment for the semiconductor sector. Once a darling of the silicon carbide (SiC) boom, Wolfspeed now faces scrutiny as its largest activist investor exits after years of pushing for operational turnaround. This move raises critical questions: Is Jana’s exit a sign of deteriorating confidence in Wolfspeed’s growth prospects, or a strategic reallocation to undervalued sectors like agriculture? And what does this mean for investors betting on the EV revolution’s semiconductor backbone?

The Exit Timeline: From Activism to Abandonment

Jana’s retreat was methodical. After acquiring a 6.1 million share stake in late 2023, the firm slashed holdings by 19.1% in Q1 2024, citing “execution failures” at Wolfspeed’s manufacturing plants. By Q1 2025, it had exited entirely, liquidating its remaining 4.99 million shares—a -100% reduction from its peak position. This contrasts sharply with Jana’s concurrent bets on undervalued stocks like Lamb Weston Holdings (LAM), where it added 1.4 million shares in Q1 2025. The message is clear: institutional confidence in Wolfspeed’s ability to capitalize on the EV-driven SiC boom has collapsed.

The Catalyst: Operational Stumbles Amid Rising Competition

Wolfspeed’s struggles stem from its inability to scale production. Despite securing a $2 billion customer deposit from Renesas in 2023, delays in ramping up its Mohawk Valley plant—projected to operate at just 20% capacity by late 2024—have eroded investor patience. Jana highlighted this in its April 2024 letter, warning of a “supply and ambition problem.” Meanwhile, competitors like Infineon and STMicroelectronics are accelerating SiC production, squeezing Wolfspeed’s 90% market share.

The financials underscore the risk: Wolfspeed reported a $372 million net loss in 2024, with debt soaring to $6.43 billion. Even with $750 million in CHIPS Act funding, its EBIT margin remains negative (-142%), and free cash flow is drying up.

Is This a Sector-Specific Warning or a Tactical Shift?

Critics argue Jana’s exit reflects broader sector headwinds. EV demand softness—driven by supply chain bottlenecks and rising battery costs—has stalled SiC adoption. Tesla’s (TSLA) pivot to in-house chip production and Intel’s (INTC) aggressive semiconductor investments could further disrupt Wolfspeed’s moat.

Yet Jana’s move may also signal a tactical reallocation. The firm’s focus on “value” stocks like Lamb Weston aligns with its post-2008 strategy of backing companies with tangible assets and stable cash flows—qualities Wolfspeed lacks. This suggests the exit is less about the SiC sector’s future and more about Jana’s belief that Wolfspeed’s execution risks outweigh its long-term potential.

Contrarian Buy or Sell?

Investors must decide: Is Wolfspeed a contrarian opportunity at $25/share (a 66% drop from its 2023 high) or a value trap?

Bull Case: Wolfspeed’s 90% SiC market share and $20 billion industry growth by 2030 could justify a rebound if it stabilizes production. Its partnership with Renesas and $614 million in cash offer a lifeline.

Bear Case: Rising competition, execution delays, and a valuation trading at <6x revenue (vs. 10x for peers like Coherent) suggest the stock is pricing in failure. Jana’s exit is a vote of no confidence in management’s ability to turn the ship around.

The Bottom Line: Proceed with Caution

Jana Partners’ full exit is a stark warning. While the EV revolution remains intact, Wolfspeed’s operational missteps and debt-laden balance sheet make it a risky bet. Investors should prioritize companies with clearer execution paths—like Xilinx (AMD) or Onsemi (ON)—or wait for Wolfspeed’s valuation to hit rock bottom.

For now, Jana’s shift to Lamb Weston and other “dirt-cheap” sectors signals that even the most bullish activist investors are losing faith in the semiconductor narrative’s weakest link.

Action to Take: Avoid Wolfspeed until it demonstrates meaningful progress in ramping production and improving margins. Focus instead on diversified semiconductor plays with balance sheet strength and clearer growth catalysts.

The era of “moat-based” semiconductor investing is over. From here on, execution—or the lack thereof—will define winners.