Wolfspeed, a chip company, saw its stock price fall by about 48% on Friday, reaching its lowest point since 1998. This happened right after they announced a new CEO, Robert Feurle, who will start on May 1. The previous CEO, Gregg Lowe, was let go last November.
Wolfspeed has been having trouble because demand for its chips, especially from car companies, has dropped, hurting their profits. Last November, they shut down a plant in Durham, North Carolina, and planned to lay off 20% of their workers.
The company is also waiting for $750 million in federal funding from the U.S. CHIPS Act, which is a law that supports American semiconductor manufacturing. However, there are concerns because earlier this month, former President Donald Trump suggested that lawmakers should scrap this law to pay off debt. This puts Wolfspeed in a tricky situation since their grant is the largest one from the CHIPS Act that hasn’t been approved yet. If they don’t get the money, it could lead to big changes that would help them save money.
Getting this grant is important for Wolfspeed because it will help them grow their production of silicon carbide semiconductors, which are used in various technologies. Their shares were last priced at $2.81, and so far this year, the stock has lost over 59% of its value. According to estimates, around 32.5% of Wolfspeed’s shares were borrowed for short-selling as of March 27, indicating that many people think the stock price will continue to fall.
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