Wolfspeed's Post-Bankruptcy Rebirth: A Silicon Carbide Play for the EV and AI Era

The semiconductor industry is undergoing a quiet revolution, driven by the rise of silicon carbide (SiC) technology—a material critical to the electrification of vehicles, renewable energy systems, and next-generation AI infrastructure. At the center of this shift is Wolfspeed, a company emerging from Chapter 11 bankruptcy with a leaner balance sheet and a renewed focus on dominance in the SiC market. Its prepackaged restructuring, finalized in Q3 2025, positions it to capitalize on a sector projected to grow at 22% annually through 2030. For investors, the question is clear: Is this a rare entry point into a foundational tech play, or a risky bet on a turnaround?

The Restructuring Breakthrough: Debt Under Control, Focus on Growth

Wolfspeed's bankruptcy exit was anything but a failure. The Restructuring Support Agreement (RSA) reduced its total debt by 70%, slashing liabilities by $4.6 billion and cutting annual interest expenses by 60%. This was achieved through a clever mix of debt-for-equity swaps and new financing. Senior lenders received 109.875% of their claims, while convertible debtholders backstopped $275 million in new second-lien notes. Crucially, existing equity holders retained 3%–5% of the post-restructuring common stock—a small stake, but one that could amplify if Wolfspeed's SiC dominance translates into outsized profits.

The restructuring's brilliance lies in its preservation of operational continuity. With $1.3 billion in cash and an All-Trade Motion ensuring vendor payments, Wolfspeed avoided the chaos of a disorderly bankruptcy. Management now has the freedom to focus on scaling its 200mm SiC manufacturing facility, a capability that gives it a leg up over rivals still using smaller wafer sizes.

The chart below shows Wolfspeed's stock price halving over the past year, reflecting restructuring-related uncertainty. However, post-exit, its valuation now trades at just 3x projected 2026 EBITDA—a discount to peers trading at 5–7x despite its leading-edge technology.

Silicon Carbide's Market Surge: The $21 Billion Backlog and EV Demand

Wolfspeed's crown jewel is its SiC technology, which enables smaller, more efficient power systems. In EVs, SiC reduces energy loss, extending battery range by up to 5%. For data centers and AI hardware, it slashes cooling costs. The market's growth is undeniable: Yole Développement forecasts the SiC market to hit $7.3 billion by 2029, with Wolfspeed already holding a 40% share of the global EV semiconductor supply chain.

Wolfspeed's $21 billion design-win backlog—orders locked in for future production—provides a clear runway. Its Mohawk Valley Fab, dedicated to EV applications, is operating at 90% capacity. The $750 million in federal CHIPS Act funding will further scale output, reducing the industry's reliance on Taiwan and China for SiC supply.

Competitors like Infineon and Rohm are scrambling to catch up, but Wolfspeed's 200mm wafer capability (versus industry-standard 150mm) gives it a 30% cost advantage. This is a structural edge in a capital-intensive sector where scale matters most.

Valuation and Risks: A Discounted Leader with Execution Risks

The case for Wolfspeed rests on two pillars: its valuation and the SiC market's trajectory. Post-restructuring, its enterprise value is now $2.1 billion—well below its $3.5 billion market cap in 2022. Even if we assign it a conservative 6x 2026 EBITDA (vs. peers at 8x), the stock has 30% upside.

Risks are significant but manageable. Regulatory hurdles, particularly around Renesas' 95% equity stake post-restructuring, could delay execution. Competitors' capacity expansions might compress margins. And while EV demand is robust, a slowdown in global auto sales could hurt volumes.

Yet Wolfspeed's technical lead and the structural scarcity of SiC supply in critical markets suggest these risks are overpriced. The $21 billion backlog alone covers three years of revenue at current rates—a moat few companies can boast.

Investment Thesis: A Long-Term Bet on Electrification

For investors with a three-to-five-year horizon, Wolfspeed offers a compelling asymmetry. The stock trades at a discount to its peers and its own potential, while the SiC market's growth is secular, not cyclical. The 3%–5% equity stake for existing shareholders may seem small, but if Wolfspeed's margins expand to 30% (from 22% in 2024) as it scales, even a modest valuation multiple would deliver outsized returns.

The chart below underscores Wolfspeed's market leadership and the industry's exponential growth trajectory. Its revenue share is expected to grow from $500 million in 2023 to over $2 billion by 2028, a 4x increase.

Conclusion: A Silicon Carbide Pioneer's Time to Shine

Wolfspeed's bankruptcy exit was a masterclass in restructuring—a technical debt reset that preserved its crown as the SiC market's kingmaker. While near-term dilution and execution risks are real, the company's cost advantages, backlog, and the electrification megatrend argue for a long-term buy. For investors willing to look past the scars of restructuring, Wolfspeed offers a rare chance to own a foundational technology at a fraction of its true worth.

The next 12 months will be pivotal. Regulatory approvals and the ramp-up of Mohawk Valley Fab's output will test management's execution. But with $1.3 billion in cash and a market that's starving for SiC supply, the odds favor a comeback story. This is a stock to buy on dips—and hold for the EV and AI revolution.