Chipmaker Wolfspeed soars on $1.5 bln U.S. loan commitment after bankruptcy exit

Shares of small-cap chipmaker Wolfspeed have surged more than 14% in premarket trading on Thursday after the company announced that the U.S. Department of Defense (DoD) had conditionally committed to providing it with a 30-year, $1.5 billion loan in exchange for the right to acquire up to a 7.5% equity stake. Last year, Wolfspeed filed for bankruptcy protection.

Wolfspeed jumped almost 16% in the opening minutes of premarket trading in New York before the gain was pared slightly to around 14%. The market was reacting to the company’s announcement that the U.S. DoD had approved a 30-year, $1.5 billion loan commitment to support the development of a domestic semiconductor supply chain.

In exchange, Wolfspeed will be required to issue warrants to the DoD giving it the right to purchase up to 7.5% of the company’s equity. The warrants are to be issued in stages, in proportion to the funding tranches.

The chipmaker plans to use the proceeds to produce silicon carbide materials and wide bandgap power devices used in power electronics for the aerospace and defense industries. It also will upgrade its gallium nitride epitaxy capabilities for next-generation communications infrastructure and electronic warfare systems.

The loan commitment remains conditional, according to the press release. Wolfspeed must undergo substantial due diligence before receiving the funds.

A little over a year ago, Wolfspeed was on the brink of bankruptcy. In May 2025, it reported that its $6.5 billion in debt had raised substantial doubt about its ability to continue as a going concern. In June, it filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code, which allows a business to restructure instead of liquidating. Three months later, the company emerged from bankruptcy protection. The restructuring reduced its total debt by around 70%, extended its maturities to 2030, and lowered its annual cash interest expense by around 60%.

For fiscal 2026, ended June 28, revenue fell 12.2% to $665.1 million. However, the company swung to a net profit of around $5 million from a net loss of $1.6 billion a year earlier. Both those bottom-line results, however, were largely the product of accounting items. The massive fiscal 2025 loss, more than twice the combined losses for the preceding two years, was driven by large asset write-downs and costs associated with the construction of a new silicon carbide plant. Meanwhile, the company recorded a $563.4 million gain from its reorganization in fiscal 2026.

Wolfspeed shares are up more than 80% year to date. Wall Street, however, remains cautious: the stock has three “hold” ratings. The average target price is $27.50 per share, implying 12% downside from the last close.