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Wolfspeed plans to lay off 20% of its workforce, the chipmaker’s president and CEO Gregg Lowe announced at his The profit figures for the first quarter will be announced on November 6.
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The company will close multiple locations, including one previously announced in North Carolina, and will also undergo workforce restructuring initiatives in an effort to generate annual cash savings of approximately $200 million, Lowe said.
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The decision is partly due to slower growth in electric vehicle usage and continued weakness in the industrial and energy sectors, the CEO said on the call.
Wolfspeed will begin its restructuring plan by closing it 150-millimeter device factory in Durham, North Carolina, over the next nine to 12 months. The chipmaker said it is currently working with customers to finalize the transition timeframe.
Second, the company will close its manufacturing facility in Farmers Branch, Texas, and suspend construction plans for an appliance factory in Saarland, Germany, “indefinitely,” Lowe said.
Most of the layoffs have already taken place, Lowe said, and the rest should be completed by the end of the year, but the specific locations were not disclosed in the call. According to company figures, the company had 5,013 employees as of June 30 annual securities filing.
Wolfspeed will face restructuring charges of about $400 million to $450 million in coming quarters, including $87 million this quarter, CFO Neill Reynolds said on the call.
Finally, Wolfspeed is further reducing its fiscal 2025 capital expenditure range by another $100 million to a new range of $1.1 billion to $1.3 billion, excluding federal stimulus, Lowe said on the call.
The cost savings come just days later Wolf speed received $750 million in CHIPS and Science Act funding on October 18 Wolf speed expects to receive multiple payouts in the coming years, primarily related to operational milestones at the John Palmour Manufacturing Center in North Carolina and the Mohawk Valley facility in New York.
The first disbursement is expected in mid-calendar year 2025 and will amount to approximately 20% to 25% of the total grant size, according to Reynolds.
The company cited the struggling EV market for its near-term volatility.
“As with any disruptive technology, we are seeing EV customers reconsider their launch timelines as the market works through this transition period,” Lowe said. “This decline in expected demand for electric vehicles does not reflect reduced confidence in long-term demand for electric vehicle adoption.”
The industrial and energy sectors also saw continued weakness, mainly due to broader macroeconomic pressures, including higher interest rates and the rising cost of capital, which have slowed investment cycles and contributed to a slower recovery for this sector, Lowe noted.
