Wolfspeed, the US-based chip component maker, is reportedly preparing to file for bankruptcy—sending shockwaves through the global semiconductor industry. The news has sparked significant concern among its key clients, particularly Japan's Renesas Electronics, which may face direct financial fallout from the potential collapse.
Wolfspeed's struggles amid shifting market dynamics
According to reports from Nikkan Kogyo Shimbun and Nikkei, Wolfspeed has long been a key player in SiC power semiconductors, particularly for electric vehicle (EV) applications, with substantial investments in SiC wafer production. However, a global slowdown in EV demand, coupled with intensifying competition from Chinese manufacturers, has eroded Wolfspeed's competitive edge.
Falling prices and narrowing technological gaps have driven a sharp deterioration in Wolfspeed's financial performance, with mounting debt casting doubt on its operational viability.
In its most recent filing with the US Securities and Exchange Commission (SEC) in early May, Wolfspeed admitted that "substantial doubt exists" about its ability to continue as a going concern.
Renesas faces potential losses from long-term SiC deal
The ripple effects of Wolfspeed's crisis are acutely felt by Renesas, who in 2023 inked a 10-year SiC wafer supply agreement with Wolfspeed, accompanied by a US$2 billion prepayment. Should Wolfspeed proceed with bankruptcy, Renesas could face significant impairment losses, compounding its strategic challenges.
Renesas had planned to leverage Wolfspeed's SiC wafers to mass-produce SiC power semiconductors at its Takasaki factory in Gunma Prefecture starting in 2025. While a 2024 decision to delay initial procurement from Wolfspeed due to unfavorable market conditions has mitigated short-term exposure, the long-term stability of Renesas' wafer supply remains a looming concern.
Japanese firms grapple with competitive pressures
Beyond Renesas, other Japanese semiconductor companies, such as Rohm and Fuji Electric, are contending with heightened competition from Chinese rivals in the SiC power semiconductor space. To remain competitive, these firms must bolster their capabilities in pricing and material supply stability. The unfolding Wolfspeed situation underscores the need for a comprehensive reassessment of supply chain strategies and a recalibration of competitive approaches within the SiC power semiconductor ecosystem.
Article edited by Jack Wu
