Chipmaker Wolfspeed Announces Sweeping Restructuring Efforts
Cost-Cutting Measures to Save $200 Million Annually
In a bid to navigate the choppy waters of the electric vehicle and industrial sectors, Wolfspeed, a leading chipmaker, has unveiled a comprehensive restructuring plan. The move, announced by President and CEO Gregg Lowe during the company’s Q1 earnings call, aims to generate annual cash savings of approximately $200 million.
Multiple Facility Closures and Headcount Restructuring
As part of the plan, Wolfspeed will shutter multiple facilities, including its 150-millimeter device fab in Durham, North Carolina, over the next nine to 12 months. The company is currently working with customers to finalize the transition timeframe. Additionally, Wolfspeed will close its production facility in Farmers Branch, Texas, and indefinitely suspend construction plans for a device fab in Saarland, Germany.
Workforce Reductions and Restructuring Charges
The restructuring effort will result in a 20% reduction in Wolfspeed’s workforce, with most layoffs already completed. The remaining layoffs are expected to be finalized by the end of the year, although specific locations were not disclosed. The company will incur restructuring charges of approximately $400 million to $450 million over the next several quarters, including $87 million incurred this quarter.
Capital Expense Guidance Revised Downward
Wolfspeed has also revised its fiscal 2025 capital expense guidance range downward by an additional $100 million, to a new range of $1.1 billion to $1.3 billion, excluding federal incentives.
CHIPS and Science Act Funding Provides Silver Lining
Just days prior to the announcement, Wolfspeed received $750 million in CHIPS and Science Act funding, which will be disbursed over the next several years, tied to operational milestones at the John Palmour Manufacturing Center in North Carolina and its Mohawk Valley facility in New York. The first disbursement is expected for mid-calendar year 2025 and will be roughly 20% to 25% of the total grant size.
EV Market Volatility Cited as Key Factor
Wolfspeed attributed the cost-cutting measures to the struggling electric vehicle market, which has experienced short-term volatility due to revised launch timelines. While the company remains confident in the long-term demand for electric vehicles, the push-out in anticipated EV demand has contributed to the need for restructuring. The industrial and energy sectors have also seen continued softness, primarily due to broader macroeconomic pressures.
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