Durham-based chipmaker Wolfspeed announced that it’s cutting staff in the face of “current market conditions” and the impending closure of a wafer production line at its Durham factory.
The move will “result in an additional 10% of roles being eliminated across the global organization,” on top of a 10% reduction earlier in the year taken via “attrition and voluntary early exits,” spokeswoman Bridget Johnson said.
“This, of course, has been a difficult decision and not a move we take lightly,” she said. “We have established a robust transition program to support those employees affected. Our comprehensive transition services include a severance package as well as outplacement services to help find new opportunities.”
Wolfspeed’s in the midst of shifting production to what it calls a “pure play” of 200-millimeter chips. The line it’s closing in Durham makes 150-millimeter chips.
Another line in Durham serves the 200-millimeter market, as does a new factory near Utica, New York, and the new government-incentized wafer factory it’s in the process of standing up near Siler City.
Building and opening the two new factories has been expensive. Wolfspeed officials say the company spent $2.1 billion on capital projects in fiscal 2023-24 and expects to spend additional $1.1 billion to $1.3 billion this year.
The latter figure is about $100 million less than originally projected, while the job cutbacks and other streamlining moves should save about $200 million a year.
Those savings matter because Wolfspeed continues to lose money.
On Wednesday, it reported a net loss of $282.2 million for the first quarter of fiscal 2024-25 — which topped the company’s previous target of a $194 million to $226 million loss.
Despite the cutbacks, the company’s warning investors to expect a $362 million to $401 million loss in the second.
Suffice to say, investors aren’t happy. The company’s stock took a dive in Thursday’s early trading and, at around $9 a share as of the mid-afternoon was selling at nearly a five-year low.
Company officials have previously noted “softening demand” across the sector for power-supply chips for industrial and energy applications, but say they see increased demand for them from EV makers. They have a large backlog of orders and secured $1.3 billion in firm power-chip orders in the first quarter.
“We expect our EV revenue to continue to grow throughout calendar 2025, as the total number of car models using a Wolfspeed silicon carbide solution in the power train increased by [four times] from 2023 to 2024 and is expected to grow by another approximately 75% year over year in 2025,” CEO Gregg Lowe said.
Headcount-wise, Wolfspeed had 5,013 people on staff as of June 30, a post-pandemic high for the mid-year milestone.
“While the majority of the employee reductions will be in North Carolina, we are not disclosing specific numbers by location or function,” Johnson said.
As of Wednesday, there was no WARN Act notice for any layoffs posted with the N.C. Department of Commerce.
