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Wolfspeed NYSE: WOLF executives used the company’s fiscal second-quarter 2026 earnings call to highlight progress on a strategic pivot beyond electric vehicles, while also detailing the financial impacts of its restructuring and Fresh Start Accounting following emergence from Chapter 11.
Leadership says momentum is building across key priorities
Chief Executive Officer Robert Feurle said the company has “continued to build solid momentum” since the prior quarter, pointing to 50% quarter-over-quarter growth in AI data center revenue, a milestone of producing a 300-millimeter silicon carbide wafer, new customer wins, and the completion of CFIUS clearance.
Feurle said Wolfspeed is operating under a “refreshed leadership team” with added external talent across sales, marketing, and product functions. He framed the company’s near-term execution around three priorities:
- Strict financial discipline
- Advancing technology leadership
- Driving operational excellence
As part of its operational actions, Feurle said Wolfspeed has officially completed the shutdown of all 150mm device manufacturing ahead of schedule, transitioning its entire device platform to 200mm manufacturing. He added that the company is focused on driving cost out of its footprint, processes, and products “even as we navigate underutilization headwinds,” with more benefit expected as demand recovers and utilization rises.
Go-to-market strategy reorganized around four verticals
Feurle said Wolfspeed has organized its go-to-market approach around four verticals intended to diversify the revenue base: automotive, industrial and energy, aerospace and defense, and materials.
Automotive: Management described a muted EV demand backdrop tied to macro and structural factors including higher interest rates in the U.S. and Europe, the elimination of certain U.S. incentives, excess supply, and intensifying competition. Even so, Feurle said Wolfspeed’s portfolio is aligned with OEMs prioritizing efficiency, range, and power density, and cited a recently announced partnership with Toyota related to onboard charging systems for battery electric vehicles. He also said Wolfspeed is “now sampling across several key strategic programs” with top global EV OEMs.
Industrial and energy: Feurle said Wolfspeed is targeting AI data center power, grid storage, solid-state transformers, and broader grid modernization. He argued that rising voltages in AI data centers should expand the portion of the market better served by silicon carbide versus silicon. Management said devices are already embedded in AI data center power systems and that data center revenue has doubled over the last three quarters, including 50% sequential growth from fiscal Q1 to Q2. The company also said it is working with partners to support a transition from legacy 40-volt architectures to next-generation 800-volt AI platforms. Feurle additionally pointed to silicon carbide adoption in renewables and referenced a collaboration with Hopewind for wind power solutions.
Aerospace and defense: Feurle said the company sees opportunity tied to defense modernization and electrification, adding that the U.S. government has recognized silicon carbide as strategically significant to national security, with the Department of Defense and Department of Energy designating it a critical material. He also emphasized demand for secure domestic semiconductor supply chains.
Materials: Feurle described a two-pronged materials strategy: scaling high-quality 200mm wafers for power devices, while advancing 300mm capabilities for longer-term opportunities beyond power. He said Wolfspeed recently produced a single-crystal 300mm silicon carbide wafer, but does not view 300mm as a near-term replacement for 200mm in power devices. He cited optical-grade silicon carbide as one potential future application, including use cases such as next-generation AR/VR systems where thermal conductivity and optical performance matter.
Quarterly results: revenue in line; margins pressured by accounting and utilization
Chief Financial Officer Gregor van Issum reported total revenue of $168 million, in line with the midpoint of prior guidance. Power revenue was $118 million, including approximately $75 million from Mohawk Valley; this figure also included what he described as some last-time-buy shipments from the Durham campus before closure. Materials revenue was $50 million, which van Issum said reflected a “tightening demand environment and increased competition.”
Non-GAAP gross margin was -34%. Van Issum attributed the result to several factors, including a $39 million drag linked to Fresh Start Accounting (including $23 million related to inventory step-ups), a recurring $60 million increase related to amortization for intangible assets, and $14 million of costs for specific inventory reserves. He also said underutilization across manufacturing sites was approximately $48 million in the quarter. Closing the Durham 150mm device fab at the end of November improved gross margin by $5 million in Q2, he said, with additional benefits expected as the company focuses on 200mm device manufacturing in Mohawk Valley.
Van Issum said non-GAAP operating expenses are now $200 million lower on a run-rate basis versus last year, while the company continues to invest in R&D. GAAP operating expenses totaled $83 million, including approximately $24 million of restructuring and transition-related items. Adjusted EBITDA was negative $82 million, which included impacts from Fresh Start Accounting and underutilization, he said.
Liquidity, tax credits, and Fresh Start Accounting effects
Management emphasized cash flow and liquidity. Van Issum said working capital actions contributed about $90 million to ending cash, partially offset by $64 million in final liability management payments made in Q2. Operating cash flow for the Q2 successor period was negative $43 million.
Capital expenditures were $31 million, primarily tied to prior commitments, which van Issum said compared to roughly $400 million of CapEx in the second quarter of last year. He said Wolfspeed intends to continue driving CapEx lower over time as prior commitments fall off.
Van Issum said the company received $700 million of 48D tax credit cash in the quarter and used part of its cash to reduce $175 million of first-lien debt. He added that about 1.5 million shares were converted from the second-lien convert, reducing debt by roughly $80 million. Together, he said these actions are expected to deliver $25 million in annual interest savings. Wolfspeed ended the quarter with $1.3 billion in cash and short-term investments.
Discussing Fresh Start Accounting, van Issum said the quarter’s income statement is split between predecessor and successor periods, with the successor period effectively including all operating income for the quarter. He said Fresh Start Accounting required remeasuring assets and liabilities to fair value anchored to a court-approved enterprise value midpoint of $2.6 billion. He also said the company recorded a $1.1 billion gain from emergence, reflecting approximately $3.7 billion in debt forgiveness offset by about $2.6 billion of net asset adjustments, primarily to property, plant, and equipment.
Looking forward, van Issum said the company expects a net reduction of approximately $30 million per quarter in depreciation and amortization compared to pre-emergence results, due to lower property, plant, and equipment, partially offset by stepped-up intangibles. He noted that the $23 million inventory step-up was a one-time headwind, while a $17 million step-down related to raw materials is expected to flow through the P&L over the next several quarters.
Van Issum also said Wolfspeed received final CFIUS clearance to allocate shares to Renesas under its restructuring agreement, enabling the release of approximately 16.85 million shares of new common stock to Renesas. The company also distributed a final 2% equity recovery—about 871,000 shares—to legacy pre-petition shareholders. Total shares outstanding are now 45.1 million, he said.
Guidance: revenue expected to decline sequentially; gross margin still negative
For fiscal Q3 2026, Wolfspeed guided revenue to $140 million to $160 million. Van Issum said the decline is driven primarily by accelerated customer purchases in fiscal Q1 ahead of the Durham fab’s planned closure, some customers pursuing second-sourcing, and weaker EV demand.
Operating expenses are expected to be flat to slightly down sequentially. Due to ongoing Fresh Start Accounting impacts, the company said it will not provide a numeric gross margin guide yet, though it expects quarter-over-quarter improvement from operational actions. Gross margin is still expected to remain negative in fiscal Q3.
Management reiterated plans to provide an update to its long-range plan in the first half of calendar 2026, including long-term financial targets and capital allocation plans.
About Wolfspeed NYSE: WOLF
Wolfspeed, Inc NYSE: WOLF is a leading developer and manufacturer of silicon carbide (SiC) and gallium nitride (GaN) semiconductor materials and devices. The company’s product portfolio addresses high-growth markets such as electric vehicles, renewable energy, fast-charging infrastructure, aerospace and defense, and telecommunications. By leveraging proprietary materials and device designs, Wolfspeed delivers solutions that offer improved energy efficiency, higher power density and greater thermal performance compared to conventional silicon-based semiconductors.
Founded as part of Cree, Inc and spun off to form an independent public company in October 2021, Wolfspeed traces its roots to the mid-1980s when it pioneered the commercial use of wide-bandgap semiconductor technology.
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