Shares of Wolfspeed rocketed as much as 27% in after-hours trading Wednesday after the Durham, N.C., chipmaker disclosed a conditional $1.5 billion, 30-year loan commitment from the Pentagon's Office of Strategic Capital. The stock opened Thursday at $35.93, up 14.5%, as investors weighed a transformative financing package against the steep conditions attached to it — and the company's recent history of financial distress.
• A Post-Bankruptcy Company Just Landed a Massive Government Backstop. Wolfspeed emerged from Chapter 11 bankruptcy in September 2025. Barely a year later, it secured a conditional commitment for up to $1.5 billion of long-term financing from the Department of War to support domestic production of silicon carbide materials and wide-bandgap power devices — chips that are more energy-efficient and critical for electric vehicles, solar inverters, and military electronics. For a company that posted a GAAP net loss of $120 million last quarter on roughly $150 million in revenue , this is a survival-grade capital injection.
• The 30-Year Term Is Generous, but the Strings Are Significant. Wolfspeed must raise at least $750 million from outside equity and other sources, convert much of its existing convertible debt into stock, and meet stringent financial covenants before the money flows.
The government would also receive warrants to buy up to 7.5% of Wolfspeed's fully diluted equity — meaningful dilution for existing shareholders. The loan itself would arrive in up to four tranches: $600 million initially, then up to $900 million more in increments of $200–400 million.
• Washington Is Buying Strategic Insurance, Not Just Backing a Chipmaker. The financing will support Wolfspeed's domestic supply chain and fund upgrades to gallium nitride capabilities for next-generation communications infrastructure and electronic-warfare systems. That framing tethers Wolfspeed's future to defense spending — a more durable funding stream than the volatile EV market that has battered its revenue.
• The Balance Sheet Is Stabilizing, but Execution Risk Remains High. In March, Wolfspeed refinanced roughly $476 million in first-lien debt, cutting its debt load by $97 million and annual interest costs by an estimated $62 million, while improving its equity position by over $400 million. It held $1.2 billion in cash as of late March. Still, gross margins remain deeply negative at –27% , and the deal requires government approvals, appropriations, and third-party consents — with no assurance any financing will ultimately be provided. Investors are pricing in a lifeline that hasn't closed yet.