Durham-based company Wolfspeed announced Wednesday that it is reducing its workforce by 20%, with most of the layoffs coming from its Durham location. The announcement comes less than a month after the Biden Administration announced plans to spend $750 million for a manufacturing facility in Siler City, NC.

In a report to investors about its earnings for the first quarter of 2025, the company announced a loss of $282.2 million in its first fiscal quarter.

Wolfspeed manufactures wide-bandgap semiconductors focused on silicon carbide and gallium nitride materials, including microchips. General Motors and Mercedes-Benz are among its customers.

Its workforce was already reduced by 10% from attrition and voluntary early exits last quarter, with the remaining 10% coming from current layoff notices.

In its 2024 annual report, the company said it had 5,013 full and part-time employees.

The job reductions are part of the announcement in August that the 150mm production facility in Durham would close, as well as a facility in Farmers Branch, TX, and plans in Germany will be suspended indefinitely.

Wolfspeed CEO Gregg Lowe said in a statement that the company took action in FY 2025 to solidify the capital structure, simplifying their business to accelerate structural profitability and support the build-out of their state-of-the-art silicon carbide facilities, including a 200mm silicon carbide footprint at its Mohawk Valley location in New York and North Carolina materials factories that he says will generate approximately $3 billion in revenue annually.

“To drive operational improvements, we are taking action to enhance efficiency, align our business with current market conditions, and become the first silicon carbide company to transition to pure-play 200-millimeter,” he said. “The transition to a fully 200-millimeter platform allows us to take further initiatives to streamline our cost structure, including closing our manual Durham 150-millimeter Fab, other manufacturing footprint rationalization, and reducing our workforce. Combined, we expect these initiatives will yield approximately $200 million in annual cash savings.”

The restructuring announcement comes less than a month after the Biden-Harris Administration announced that it had signed the initial agreement for up to $750 million in federal funding to support the construction of a new silicon carbide wafer manufacturing facility in Siler City under the CHIPS and Science Act.

The CHIPS taxpayer-paid funding is expected to act as a catalyst for the Wolfspeed North Carolina Project, an expansion of the device manufacturing facility in New York. These combined projects are projected to create over 2,000 manufacturing and 3,000 construction jobs in the company’s $6 billion capacity expansion plan.

The company said it is still committed to building the factory.

 “Last month, we reached a significant milestone by signing a non-binding preliminary memorandum of terms (PMT) for up to $750 million in proposed direct funding under the CHIPS and Science Act and an additional $750 million from our lending group, demonstrating substantial progress towards our funding goals,” Lowe continued. “With this announcement, we now have access to up to $2.5 billion of incremental funding to support our U.S. capacity expansion plans. We remain focused on optimizing our capital structure, further reducing our fiscal 2025 CapEx guidance by $100 million to align the pace of our spend with the broader shift in EV market demand.”

Lowe added that Wolfspeed delivered 2.5 times year-over-year growth in its automotive business in the first quarter. They expect its 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 4x from 2023 to 2024 and is expected to grow by another approximately 75% year over year in 2025.

Despite that announcement, there has been a trend that shows a decline in the demand for EVs, especially in the US and Europe.

The company expects to have $174 million in restructuring-related costs in the current quarter after recording $87.1 million in such costs during its fiscal first quarter, which ended on Sept. 29, which includes severance.

Wolfspeed expects second-quarter revenue from continuing operations to be between $160 million and $200 million, below analysts’ estimates of $214.6 million.

Wolfspeed is funded by a Job Development Investment Grant (JDIG), reimbursed under the Economic Development Project Reserve. In the 2021 budget (2022 adjustments), the reserve fund allocated $57.5 million for site development to Wolfspeed.

In 2022, Gov. Cooper signed Executive Order 246, which commits the state of North Carolina to increase registered zero-emissions vehicles (ZEVs) to 1.25 million by 2030.

“If North Carolina were to achieve EO 246’s ZEV goal, then ZEVs will comprise 14 percent of the vehicular fleet by 2030,” according to a report from the John Locke Foundation.

The state’s vehicular fleet has grown by 127,000 each year. However, most of these vehicles are not ZEVs but ICE vehicles (Internal Combustion Engine).

“Since 2016, 604,600 additional conventional ICE vehicles have been registered in North Carolina, compared with only 67,900 hybrid electric vehicles. And with the sole exception of 2022, far more ICE vehicles have been registered every year in North Carolina than HAV EV and PHEV vehicles.”

According to the report, to reach the 2030 goal set by EO 246, ZEV sales would have to grow by 38 percent each year. Regarding vehicle sales, EV dealers must double sales every two years.

“There is a great deal of taxpayer money being spent at the federal and state level to boost EVs — building incentives, production incentives, purchase incentives, etc.,” Jon Sanders, Director of the Center for Food, Power and Life at the John Locke Foundation told the Carolina Journal.

“It’s a lot of government effort at other people’s expense to prop up something that isn’t anything more than a niche interest. That money could be better spent by people addressing their actual needs rather than the president’s personal preference.”

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