Wolfspeed Nears Bankruptcy; Renesas to Record ¥250B Loss

Amid increasing financial uncertainty surrounding silicon carbide (SiC) material manufacturer Wolfspeed, Renesas Electronics has signed a Restructuring Support Agreement (RSA) with Wolfspeed and its key creditors as of June 23. The agreement aims to facilitate a financial restructuring of Wolfspeed, with Renesas expected to record a loss of approximately ¥250 billion.

Renesas had previously entered into a long-term SiC wafer supply agreement with Wolfspeed in early July 2023. Under the 10-year deal, Wolfspeed was to begin supplying 150mm SiC bare and epitaxial wafers to Renesas starting in 2025. As part of the agreement, Renesas, through its wholly-owned U.S. subsidiary, paid a deposit of $2 billion (approximately ¥292 billion). In October 2024, this deposit amount was revised upward to $2.062 billion (approximately ¥301.1 billion).

However, Wolfspeed soon faced mounting financial challenges. During its earnings call on May 8, 2025, the company acknowledged that it might pursue an in-court solution to improve its balance sheet, prompting the inclusion of a "going concern" note in its financial statements for the quarter ending March 30, 2025.

In response to these developments, Renesas has actively engaged in discussions with Wolfspeed and has now agreed to convert its $2.062 billion deposit into a combination of convertible notes, common stock, and warrants under the restructuring framework:

· Convertible Notes: Valued at $204 million (approx. ¥29.8 billion), maturing in June 2031, convertible into 13.6% of Wolfspeed's outstanding shares (11.8% fully diluted).

· Common Stock: Equivalent to 38.7% of Wolfspeed's outstanding shares at closing (17.9% fully diluted, pre-warrant exercise).

· Warrants: Representing 5% of Wolfspeed's fully diluted share count at the time of restructuring.

Renesas noted that the restructuring is expected to proceed under Chapter 11 of the U.S. Bankruptcy Code, with Wolfspeed likely to file for court proceedings soon. Upon court approval, the restructuring is projected to take effect by the end of September 2025. If required regulatory approvals are not secured by the effective date, Renesas will retain rights to economically equivalent instruments in place of the converted securities.

As a result of this agreement, Renesas anticipates recording a loss related to the impaired deposit in its consolidated financial statements. While the exact timing and amount of this loss remain uncertain, Renesas estimates it may record approximately ¥250 billion (roughly $1.667 billion at an average exchange rate of 150 JPY/USD) in losses for the six months ending June 30, 2025. This figure is an internal estimate based on currently available information and is subject to change. The final impact will be determined in consultation with the company's auditors and publicly disclosed thereafter.

Despite this restructuring, Renesas maintains its financial forecast for the six-month period ending June 30, 2025, as announced on April 24, 2025. The forecast includes revenue, gross margin, and operating margin on a non-GAAP basis but does not include net profit attributable to shareholders.