Wolfspeed's Strategic Turnaround: Can New Leadership Steer the EV Semiconductor Giant to Profitability?

Wolfspeed (WOLF), a pioneer in silicon carbide (SiC) semiconductors for electric vehicles (EVs), faces a pivotal juncture. While its Q2 2025 results highlighted margin pressures and underutilization costs, the appointment of Gregor van Issum as CFO signals a bold pivot toward cost discipline and capital efficiency. With EV demand surging and Wolfspeed holding a dominant 60–65% share of the EV SiC market, the question is whether this leadership shift can unlock the company's full potential—and silence skeptics who see its $3.5 billion market cap as overvalued.

The Q2 2025 Crossroads: Challenges and Hidden Strengths

Wolfspeed's Q2 revenue of $181 million missed sequential growth expectations but still edged above estimates, underscoring uneven demand dynamics. Industrial and energy markets softened, dragging power device revenue down 6% to $91 million. Yet, EV revenue soared 92% year-over-year, reflecting design wins with General Motors and others. This divergence highlights Wolfspeed's reliance on EV adoption as its primary growth lever—a bet that hinges on scaling efficiently.

The gross margin collapse to 1.8% (down 160 bps) was stark, driven by $29 million in underutilization costs at its Mohawk Valley Fab. Management projects a further $62 million in Q3 start-up and underutilization costs, raising near-term pain. However, the company's $1.3 billion liquidity buffer (post-$200M ATM offering and tax refunds) buys time to execute its restructuring.

Enter the New CFO: A Veteran of Restructuring and Capital Allocation

On July 7, 2025, Wolfspeed announced the hiring of Gregor van Issum, a veteran of semiconductor turnarounds, as CFO. His 20-year track record at ams-OSRAM and NXP Semiconductors—where he led cost-saving programs and strategic initiatives—aligns perfectly with Wolfspeed's needs. Key priorities:

1. Debt Restructuring: Van Issum will spearhead Wolfspeed's Chapter 11 bankruptcy process, targeting a $4.6 billion debt reduction. His experience with complex capital structures could accelerate this without sacrificing operational control.
2. Cost Optimization: The $260M restructuring to close older 150mm facilities aims to lower breakeven revenue to $800M by 2026. Van Issum's focus on agile capital allocation could prioritize high-margin EV projects over slower-growing industrial segments.
3. Transparency and Investor Confidence: With Wolfspeed's stock down ~60% year-to-date (as of July 2025), van Issum's emphasis on “clarity during transformation” may help address valuation skepticism.

Why the EV Thesis Still Holds Water

The EV market's growth trajectory remains a tailwind. By 2030, the global SiC market is forecast to hit $11.7 billion, with Wolfspeed's 200mm wafer platform—a first in the industry—offering 50% higher yields and cost efficiencies. Its Gen 4 MOSFET, now in production, provides 5–10% efficiency gains, critical for automakers chasing range and performance.

WOLF's underperformance relative to EV stocks reflects margin concerns, but its market leadership in SiC positions it to benefit from industry growth.

Near-Term Catalysts and Long-Term Risks

Catalysts to Watch:
- Q3 2025: Margin stabilization as restructuring costs peak.
- 200mm Wafer Ramp: Volume production should lower unit costs, improving gross margins by 2026.
- EV Design Wins: New contracts with automakers could accelerate revenue growth.

Risks:
- Competitor Pressure: STMicroelectronics and Infineon are scaling 200mm SiC, compressing margins.
- Geopolitical Risks: China's push to localize 60% of SiC supply by 2030 could disrupt Wolfspeed's global dominance.
- Demand Volatility: EV adoption hinges on macroeconomic stability, which remains uncertain.

Investment Thesis: Buy the Dip, or Wait for Proof?

Wolfspeed trades at 2.5x sales, well below peers like Infineon (4.2x) and ON Semiconductor (3.8x). This discount reflects near-term execution risks, but the company's moat—a 60% EV SiC market share and 200mm wafer lead—suggests it's undervalued if it can stabilize margins.

Recommendation: Buy with a 12–18 month horizon. The stock's low valuation and Wolfspeed's structural EV advantage make it a compelling contrarian play. A catalyst-driven rebound in 2026, as restructuring costs decline and 200mm yields improve, could revalue WOLF to $12–$15+—a 100–200% upside from current levels. However, investors must brace for volatility until margin trends stabilize.

In the EV supply chain race, Wolfspeed's silicon carbide dominance is irreplaceable. With van Issum's financial acumen steering the ship, the next 18 months could prove whether this semiconductor giant is a turnaround story—or a cautionary tale.

Disclosure: This analysis is for informational purposes only. Always consult a financial advisor before making investment decisions.