Wolfspeed's Revenue Outlook Slumps: Navigating Stormy Waters in Silicon Carbide

Wolfspeed, a leader in silicon carbide (SiC) semiconductor technology, has faced investor skepticism after revising its fiscal 2026 revenue guidance downward to $850 million—well below the $958.7 million analysts had anticipated. This miss, coupled with a net loss of $285.5 million in Q3 2025, has triggered a sharp decline in its stock price, underscoring the challenges facing the company as it bets big on a silicon carbide future.

The Revenue Guidance Discrepancy

Wolfspeed’s Q3 2025 earnings call revealed a stark reality: its 2026 revenue guidance now sits at $850 million, a figure that falls short of Wall Street’s expectations. Analysts had projected a median of $958.7 million, reflecting optimism about the rapid adoption of electric vehicles (EVs) and renewable energy systems—both key markets for Wolfspeed’s SiC components. The gap between guidance and estimates highlights a growing disconnect between the company’s operational hurdles and investor optimism.

The downward revision stems from a trifecta of challenges:
1. Slower-than-expected EV adoption, with automakers delaying product launches amid cost pressures.
2. Rising auto part prices driven by new tariffs, which have eroded demand for Wolfspeed’s high-margin components.
3. Macroeconomic headwinds, including high interest rates and supply chain bottlenecks, which have slowed capital investments in industrial and energy sectors reliant on SiC technology.

Underlying Challenges: A Perfect Storm

While Wolfspeed’s long-term vision—$3 billion in annual revenue by 2030—remains intact, near-term execution risks loom large. The company’s new $1 billion 200mm SiC fabrication plant in North Carolina, critical to scaling production, faces a staggered ramp-up. Revenue in the first half of 2026 is expected to be weak as the facility begins operations, with meaningful contributions only materializing in the second half.

Political uncertainty further clouds the outlook. Federal funding tied to the CHIPS Act, initially slated to provide $750 million for the plant, now hangs in the balance as regulatory and policy shifts create delays. This funding is pivotal for reducing Wolfspeed’s capital costs and achieving its non-GAAP EBITDA breakeven target of $800 million by 2026.

Long-Term Outlook: Betting on Silicon Carbide’s Future

Despite the near-term turbulence, Wolfspeed’s technology remains central to the EV and renewable energy transitions. Its SiC semiconductors, which improve energy efficiency in EVs and solar inverters, are already underpinning multi-year supply agreements with major automakers. The company’s target of $950–$1.05 billion in 2026 revenue (a 38%–44% jump from 2025) hinges on these partnerships and the eventual full ramp-up of its new fab.

However, the path forward is fraught with execution risks. Wolfspeed must navigate geopolitical tensions, manage costs amid inflation, and accelerate customer adoption—all while competitors like STMicroelectronics and On Semiconductor ramp up their own SiC production.

Conclusion: A High-Reward, High-Risk Journey

Wolfspeed’s valuation hinges on its ability to bridge the gap between its ambitious 2030 targets and today’s operational realities. While the $850 million 2026 guidance reflects near-term headwinds, its long-term vision—backed by $600 million in anticipated tax refunds and strategic customer contracts—offers a compelling growth narrative.

Investors must weigh two critical questions:
1. Can Wolfspeed’s new 200mm fab achieve full capacity by late 2026, unlocking the cost efficiencies needed to drive profitability?
2. Will macroeconomic and geopolitical risks persist, or will EV adoption and supply chain stability rebound in the next 12–18 months?

For now, the company’s stock price slump—down 11% post-earnings and under pressure from broader market skepticism—suggests investors are betting on the latter. Yet with SiC demand projected to grow at a 23% CAGR through 2030, Wolfspeed’s position as a pioneer in the space remains irreplaceable. For those willing to endure the volatility, the company’s potential to dominate a $10+ billion market by the end of the decade could justify the risks. The coming quarters will reveal whether Wolfspeed can turn its silicon carbide promise into profit.