Wolfspeed Shares Slide Amid Manufacturing Delays

After a recent period of recovery, Wolfspeed's stock faced renewed selling pressure yesterday. The share price declined approximately 7%, closing near $19.60. This downturn was triggered by reports of setbacks in ramping up production of silicon carbide wafers, raising concerns about the company's ability to execute its ambitious expansion plans. These concerns overshadowed recent positive developments, including a new partnership with Toyota and a strengthened balance sheet.

• Share price fell roughly 7% to around $19.60.
• Delays encountered in scaling 200mm SiC wafer capacity.
• Recent Toyota supply agreement supports long-term demand outlook.
• Liquid assets have increased to approximately $1.5 billion.
• Market focus remains on cash burn, manufacturing efficiency, and upcoming Q2 results.

The current stock volatility occurs against the backdrop of a transformative period for Wolfspeed. The company's financial position was recently bolstered significantly. On December 1, Wolfspeed confirmed receipt of a $698.6 million cash tax refund from the U.S. IRS under the CHIPS and Science Act. This injection boosted available liquidity to about $1.5 billion.

Management states these funds provide a financial runway of roughly two years, reducing the immediate need for equity financing that would dilute existing shareholders. This move follows the completion of a Chapter 11 process in September, through which the company reduced debt and streamlined operations.

A key part of this restructuring is the planned closure this month of the older 150mm fabrication facility in Durham, North Carolina. Shuttering this legacy site is intended to alleviate margin pressure from less efficient capacity. However, it simultaneously increases the imperative for the new 200mm fabs to operate smoothly and at high utilization rates.

In a separate development on December 8, CFO Gregor van Issum was granted a stock award of over 172,000 Restricted Stock Units (RSUs). Such grants are often viewed as a mechanism to align executive compensation more closely with a recovery in shareholder value, though it did not influence yesterday's trading activity.

Execution Concerns Take Priority

The primary driver behind the share price decline is growing skepticism regarding Wolfspeed's capacity to meet its aggressive production targets. Market sources indicate delays in bringing 200mm silicon carbide wafer capacity online—a critical component for achieving improved margins in the medium term.

Should investors sell immediately? Or is it worth buying Wolfspeed?

The company's Mohawk Valley and Siler City facilities are central to this transition. Yet, the technical and operational complexity of this scaling effort continues to present challenges. This was reflected in trading dynamics: volume was elevated as the stock retreated from a recent recovery level near $21 to settle at $19.59.

Market experts note that while long-term demand for SiC power chips remains robust, investors are currently focused on two short-term metrics: operational execution stability and the rate of cash consumption. Strategic announcements are now being judged primarily on whether they translate into tangible manufacturing progress.

This shift in sentiment contrasts sharply with the optimism seen earlier in the week. On December 9, Wolfspeed announced an agreement to supply SiC MOSFETs for the onboard chargers in Toyota's future electric vehicle models. The news initially provided support for the equity, reinforcing Wolfspeed's technological positioning in the automotive sector. However, the subsequent sell-off underscores that for many investors, production reliability currently outweighs order book expansion.

Technical Outlook and Upcoming Catalyst

From a chart perspective, the failure to hold support around the $21 level is viewed as a near-term negative signal. Resistance is now anticipated in the $22 area. Should the current cautious mood persist, the next potential support zone could be tested between $17 and $18.

Looking ahead, the focus is squarely on whether Wolfspeed can stabilize this challenging production phase. The $1.5 billion liquidity reserve acts as a buffer, but without improving operational efficiency at its key new fabs, operating losses are likely to remain a dominant concern.

The next significant milestone is the upcoming earnings report for the second fiscal quarter. Management is expected to provide more detailed commentary on the yield rates for 200mm wafer production and the integration of the Toyota agreement. Until that release, the stock is likely to remain highly sensitive to any news regarding manufacturing progress or further delays.