Stock Soars 70-Fold Right After Bankruptcy Protection...What's Behind the Surge [Company & Issue]

Wolfspeed, the World's Leading SiC Company...Anticipated Surge in Demand
Financial Stability and Short-Term Surge Aftereffects Must Be Considered

Wolfspeed Homepage

Wolfspeed, a U.S. semiconductor company, has been drawing attention as its stock price has soared following the end of its bankruptcy protection proceedings at the end of last month. The combination of expectations for recovery and future revenue growth has driven its stock price to surge more than 70-fold compared to when it entered bankruptcy proceedings. Wolfspeed's status as the world's leading company in silicon carbide (SiC) semiconductors-a next-generation semiconductor technology-has been highlighted. Demand for SiC semiconductors is increasing across various sectors such as electric vehicles and solar power, making it one of the most promising semiconductor technologies for the future. However, experts have pointed out that, since the company has just completed its recovery process, investors should pay attention to its financial stability and the potential aftereffects of the recent sharp rise in its stock price.

Stock Price Surges 73-Fold Since Bankruptcy Proceedings...Recovery Expectations Rise

According to the New York Stock Exchange (NYSE), on the 23rd (local time), Wolfspeed's stock closed at $29.59. This is 72.97 times higher than the $0.40 price at the time the company filed for bankruptcy protection in late June. Wolfspeed's stock price began to soar this month as expectations for recovery grew after the company officially announced the end of its bankruptcy protection proceedings at the end of last month.

According to CNN, Wolfspeed was promised $750 million (about 1 trillion won) in semiconductor subsidies by the Biden administration in October last year and began expanding its production lines in the U.S. However, a liquidity crisis emerged this year after President Donald Trump took office and adopted a negative stance toward the semiconductor subsidies initiated by the previous Biden administration, resulting in Wolfspeed not receiving the promised funds.

As a result, Wolfspeed faced the risk of bankruptcy if it failed to repay $250 million in convertible bonds maturing in early 2026. The company attempted to negotiate an extension with creditors but ultimately failed. At the time, Wolfspeed's total debt amounted to $6.5 billion (about 9.2 trillion won), and there were additional convertible bonds maturing in 2028 and 2030, making the bankruptcy risk extremely high.

Ultimately, Wolfspeed filed for bankruptcy protection in a U.S. court and succeeded in reducing its debt from $6.5 billion to $2 billion, a reduction of more than 70%. The repayment period for the remaining debt was also extended until 2030. As a result, expectations for recovery grew, and the company was able to exit bankruptcy protection within three months. At a press conference on the day bankruptcy protection ended, September 30, CEO Robert Fueul stated, "We will lead the semiconductor industry in artificial intelligence (AI), electric vehicles, industrial, and energy sectors, based on stronger financial stability and vertically integrated manufacturing facilities."

World's No.1 SiC Company... Soaring Demand Expected in Electric Vehicles and Solar Power

Silicon carbide (SiC) semiconductor wafers, the flagship products of Wolfspeed. Wolfspeed website

Wolfspeed was founded in 1987 in Durham, North Carolina, as a manufacturer of light-emitting diode (LED) lighting. The company later focused on producing silicon carbide, a key material for both LED lighting and semiconductors, and began producing SiC semiconductors-now its flagship product-in 1991. After selling its LED lighting division in 2021, Wolfspeed became a pure semiconductor company and has grown to become the global leader in SiC semiconductors. The company holds more than 550 U.S. patents related to SiC semiconductors.

The SiC semiconductors manufactured by Wolfspeed are made from a compound of silicon (Si) and carbon (C). Compared to conventional silicon semiconductors, SiC semiconductors offer greater durability under high temperature, high voltage, and high power conditions, as well as higher energy efficiency. Thanks to these advantages, SiC semiconductors are gaining attention as next-generation semiconductors in a wide range of industries, including electric vehicles, solar power, wind power, power converters, and telecommunications.

According to CNBC, the global SiC semiconductor market was worth $2.7 billion last year. The market is expected to grow at an average annual rate of more than 26%, reaching $14.2 billion by 2032-more than five times its current size. As the SiC semiconductor market rapidly expands, Wolfspeed's revenue is also expected to increase significantly.

Financial Stability Still Lacking After Recovery...Short-Term Stock Surge Also a Concern

Reuters Yonhap News

Experts warn that, although Wolfspeed's future revenue outlook is bright, investors should be cautious until the company's financial stability is firmly established, given that it has only just emerged from bankruptcy protection. They also point out that increased volatility due to the rapid short-term rise in the stock price should be considered.

Wolfspeed is still operating at a loss due to the aftereffects of bankruptcy protection and restructuring. The company posted a net loss of $864.2 million last year, and its cumulative net loss for the first two quarters of this year has reached $1.609 billion. It is expected to take more time before the scale of losses shrinks and financial stability is secured.

Alexander Wah, Chief Investment Officer (CIO) of U.S. hedge fund Prince Capital, said in an interview with Business Insider, "Although Wolfspeed is drawing attention as a so-called meme stock on social networking services (SNS) due to its appeal as a leading SiC semiconductor company, the aftereffects of restructuring still linger. Investors should be aware that existing shareholders suffered significant losses during the restructuring process, and also take into account the substantial short-term surge in the stock price."