Wolfspeed bankruptcy path splits creditors, angers Reddit, and shapes NC factory
I’m Brian Gordon, tech reporter for The News & Observer, and this is Open Source, a weekly newsletter on business, labor and technology in North Carolina.
There is life after bankruptcy. Many companies, this newspaper’s parent company included, have gone through Chapter 11 and continued healthier than before. An optimistic reading is that the Durham semiconductor supplier Wolfspeed bit off more than it could chew when diving head first into the silicon carbide sector, borrowing billions to meet anticipated electric vehicle adaptation. But its signature semiconductor is still prized, and now under new leadership, the company might rebound.
But first, there is the question of bankruptcy.
Two weeks ago, Wolfspeed announced it was weighing “in-court” solutions to solve its mountain of debt. And on Tuesday, The Wall Street Journal reported the company is preparing to file for Chapter 11 within weeks. Wolfspeed did not push back on the report, which plunged its already diminished share price. And frankly, the company has not pushed back in recent months on the idea it might go bankrupt.
Wolfspeed reportedly seeks to file a prepackaged Chapter 11 and retain control over its day-to-day operations.
“A prepack bankruptcy is probably the standard operating procedure,” said Ed Boltz, a bankruptcy attorney in Durham with the Law Offices of John T. Orcutt. “It’s largely where the debtor has a deal worked out in advance with sufficient creditors (both in number and amount) to get its reorganization plan approved quickly.”
Wolfspeed negotiations have pitted investment firms against one another as they scrap over the North Carolina-based asset. The company has rejected proposals to restructure its 2026 debt obligation — which could stave off bankruptcy — saying it wants a more comprehensive answer to its debt problem. This has frustrated the investment firms that aren’t positioned to be paid back first during a court reorganization.
Instead, leading the restructuring talks has been Apollo Global Management, which has first lien and thus repayment priority.
Over on Reddit, a community of Wolfspeed retail investors sees conspiracies and blames media outlets for reporting on the company’s bankruptcy preparations. One investor I’ve spoken to periodically over the past year told me this week that he’s sitting on $500,000 in losses on Wolfspeed stock, which has gone from more than $100 as recently as 2022 to less than $2 entering Friday.
“What can you do?” the man, a New Jersey resident, said. “When all the moves happen suspiciously and suddenly from our point of view with the limited information they feed us.” For the record, I have shown some of the Redditors’ past claims of trading improprieties to three finance professors who each said the data doesn’t support these theories. Nor has Wolfspeed itself cried foul.
Then there are the many people in North Carolina who work (or have worked) at the 38-year-old company. Entering last summer with 5,000 employees worldwide, Wolfspeed has since shrunk its headcount by 25%. It has a new CEO, and will soon have a new chief financial officer and (in a first) a new chief operating officer.
Let’s see. The company still expects to open its Chatham County factory, near Siler City, next month. This factory certainly won’t meet its 1,800-worker projections right away, or likely any time soon, though Wolfspeed promises to “begin significantly ramping up production” there once “conditions” improve.
Check-in: The money Duke, UNC and NC State are missing
- As of May 20, UNC-Chapel Hill said it had received $38 million less in federal funding compared to this point last year.
- Duke University, the Triangle’s largest employer, continues to offer staff buyouts ahead of expected layoffs this summer. On a webinar last month, the university’s president communicated that federal policy changes could mean up to a half billion dollars in lost revenue.
- And NC State shared it has received $4.9 million in National Science Foundation grants so far in 2025, well off last year’s pace which ended with $69.4 million in NSF grants awarded to the Raleigh school.
Some of these lagging figures are primed to grow as the Trump administration has resumed reviewing certain National Institutes of Health grants, local researchers say. “I’m very hopeful in the next week or so, we’ll see the grant,” UNC biologist Greg Matera said. Matera, whose grant expired in March, said the university has been supporting his lab, which studies cellular memory and the regulation of gene expression.
Others know their grants are gone.
“It has created a tremendous amount of stress for people in my lab who may be laid off,” said Asiya Gusa, a Duke professor of molecular genetics and microbiology. NIH canceled her grant, titled “Stress-induced transposon mobilization in the human fungal pathogen Cryptococcus,” not because of the topic but because Gusa received the grant through a program called MOSAIC, which promoted the work of “promising postdoctoral researchers from diverse backgrounds.”
“My science was at the highest caliber and important as recognized by a study section,” she said.
A resurrected grant here and a terminated grant there pales in comparison to the belt tightening that Triangle universities face under the proposed White House budget, which slashes NIH funding from $45 billion to $27 billion and NSF funding from $8.8 billion to $3.9 billion. The proposal calls for science spending on artificial intelligence and quantum research to be protected.
“NSF will continue to support basic and use-inspired research in (science and engineering) fields that focus on protected characteristics when doing so is intrinsic to the research question and is aligned with Agency priorities,” former U.S. National Science Foundation director Sethuraman Panchanathan wrote in a message on the agency’s website.
Panchanathan announced his resignation last month amid the approaching cuts.
Apple, Epic, perjury and Fortnite
It took five years and the threat of criminal charges, but Apple has finally allowed Fortnite from the Cary video game developer Epic Games back into its App Store. The latest ruling in the long-running battle between Apple and Epic CEO Tim Sweeney has been heralded by major developers (like Spotify) as it enables them to direct users to external payments platforms free of Apple’s fees.
Apple has fought hard against a 2021 judgment that it could no longer prevent developers from steering customers to outside payment methods. The company appealed. It then “allowed” external payments but levied a 27% tax.
Last month, U.S. District Judge Yvonne Gonzalez Rogers excoriated Apple for willfully violating the ruling, going as far as to refer the matter for criminal contempt and accusing one company official of perjury.
Apple is now adhering to the district court ruling, but it has also appealed.
Clearing my cache
- Peek inside Raleigh’s newest and nearest data center.
- America’s largest Pokémon card printer, if not the entire world’s, is headquartered in the Triangle. I wrote about Millenium Print Group on National Pokémon Day and got to discuss more on the latest episode of The Broadside, a podcast from WUNC, North Carolina’s public radio station.
- RTI International laid off 76 North Carolina workers this week, as the research nonprofit continues to reel from the erosion of federal government revenue. Since President Trump retook office, the Durham organization has cut 35% of its worldwide staff.
- Novo Nordisk, Johnston County’s largest private employer, ousted its CEO late last week. The Danish drugmaker has struggled of late in its weight-loss drug rivalry with Eli Lilly (which has expanded in North Carolina). Novo Nordisk makes Wegovy and Ozempic, Eli Lilly makes Zepbound and Mounjaro.
- Should Greensboro-bound Boom Supersonic be permitted to break the sound barrier over land? The jet startup and North Carolina’s two senators say yes. An article this week in Jalopnik says it’s way too soon for that.
- Clark Nexsen, an architecture/ engineering firm with a big Raleigh office, is merging with Johnson, Mirmiran & Thompson.
- More Fortnite. Hollywood’s actors union has levied an unfair labor practice charge against Epic Games, accusing the Cary company of swapping actors’ work with artificial intelligence when voicing a Darth Vader character in Fortnite.
National Tech Happenings
- The Trump administration has prohibited Harvard University from enrolling international students. Can it do that?
After putting 7,000 probationary workers on administrative leave, the Internal Revenue Service has asked them to return.
A breakthrough in semiconductor technology? Researchers at the University of Bristol in England say a new microchip will usher in the new era of 6G cellular networks.
Thanks for reading!
This story was originally published May 23, 2025 at 9:53 AM.
