Wolfspeed Secures $192M in Tax Refunds, Reaffirms Fiscal Outlook

Wolfspeed, a Durham-based leader in silicon carbide technology, has received $192.1 million in cash tax refunds through the federal advanced manufacturing tax credit under Section 48D. The refund includes $186.5 million owed for fiscal years 2023 and 2024, along with accrued interest.

This refund is part of the approximately $1 billion in total Section 48D cash tax credits Wolfspeed expects to receive. As of the end of the second quarter of fiscal 2025, the company had accrued $865 million in these credits and anticipates receiving more than $600 million in additional refunds during fiscal year 2026. Wolfspeed plans to use these funds to strengthen its capital structure and support general corporate operations.

The company projects its cash balance to be around $1.3 billion by the end of the third quarter of fiscal 2025, which includes the recently received tax refunds.

What is Section 48D?

Section 48D of the Internal Revenue Code was introduced as part of the CHIPS and Science Act, which Congress passed in 2022 to boost domestic semiconductor manufacturing. The tax credit is designed to encourage companies to invest in U.S.-based advanced manufacturing by providing a 25% refundable tax credit for investments in semiconductor manufacturing facilities and equipment.

For Wolfspeed, these tax credits are critical in helping offset the high costs associated with building its new John Palmour Manufacturing Center for Silicon Carbide (also known as “The JP”) in Chatham County, just west of Durham. The $5 billion facility, expected to be the largest silicon carbide manufacturing plant in the world, will expand Wolfspeed’s capacity to meet growing demand for silicon carbide chips used in electric vehicles and other advanced technologies.

Because Section 48D tax credits are refundable, Wolfspeed receives cash payments from the federal government rather than simply reducing its tax liability. These cash refunds provide much-needed liquidity as the company navigates the significant upfront costs of its expansion projects.

Facing Financial Challenges Amid Expansion

While Wolfspeed is a pioneer in silicon carbide semiconductors, the company has faced financial challenges due to the high costs associated with its aggressive expansion efforts. The costs of building The JP and scaling up production have strained the company’s finances, leading to increased debt and negative cash flow. Wolfspeed is working toward achieving positive free cash flow by fiscal 2027 after completing operational simplifications and restructuring actions, including the planned closure of its Durham-based North Carolina Fab to consolidate operations.

In addition, Wolfspeed has been impacted by delays in securing federal funding that was expected under the CHIPS and Science Act. While Wolfspeed remains in active discussions with the U.S. Department of Commerce and other federal partners to secure this funding, delays have left the company relying heavily on tax refunds, private financing, and ongoing negotiations with lenders such as Apollo and Renesas to maintain liquidity.

This week, the company announced Robert Fuerle would become the new Wolfspeed CEO starting on May 1.

Fiscal Outlook Remains on Track

Wolfspeed reaffirmed its business outlook for the third quarter of fiscal 2025, projecting:

• Revenue between $170 million and $200 million
• Non-GAAP gross margin ranging from (3%) to 7%
• Non-GAAP operating expenses between $99 million and $104 million
• GAAP net loss between $270 million and $295 million or $(1.73) to $(1.89) per diluted share
• Non-GAAP net loss between $119 million and $138 million or $(0.76) to $(0.88) per diluted share

What Do These Numbers Mean?

Wolfspeed provides two sets of financial figures: GAAP (Generally Accepted Accounting Principles) and non-GAAP. GAAP is the standard set of accounting rules that all publicly traded companies in the U.S. must follow when reporting their financial results. These numbers include all expenses, including non-cash items such as depreciation and stock-based compensation, which can make the reported losses look larger.

Non-GAAP figures, on the other hand, exclude some of these accounting adjustments to give a clearer picture of how the company’s core business is performing. For Wolfspeed, the non-GAAP figures show a smaller loss because they focus on the company’s ongoing operations without including certain accounting costs.

In simpler terms:

• GAAP net loss is the official bottom line that includes all accounting expenses. Wolfspeed expects a loss of around $270 million to $295 million for the third quarter of fiscal 2025.
• Non-GAAP net loss gives a more focused view of Wolfspeed’s operational performance, with expected losses of $119 million to $138 million for the same period.

Engaging with Lenders and Federal Partners

Wolfspeed is continuing discussions with potential lenders, including Apollo and Renesas, as it explores alternatives for its convertible notes. The company is also maintaining an ongoing dialogue with the White House, Congress, and the U.S. Department of Commerce to secure federal funding and support efforts to strengthen domestic semiconductor manufacturing and supply chains.

As Wolfspeed works to reinforce U.S. industrial leadership in semiconductors and to reshore critical mineral derivative production, the company’s partnerships and federal engagement remain key to achieving these goals.

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