Wolfspeed's board has announced the dismissal of CEO Gregg Lowe, effective at the end of November. Lowe, who has led the semiconductor company since 2017, will be replaced by Board Chair Thomas Werner on an interim basis as the company searches for a new CEO.
In a statement issued on November 18, Wolfspeed confirmed that Lowe would step down this month, with a search for his successor already underway. Lowe did not respond to requests for comment from Reuters.
What has been achieved during Lowe's tenure?
Lowe, one of the highest-paid executives in the Research Triangle, reflected on his tenure, highlighting his role in transforming Cree into Wolfspeed.
In 2021, Lowe spearheaded the rebranding of Cree as Wolfspeed after selling its LED lighting division, positioning the company as a leader in silicon carbide (SiC) chip production, according to Axios Raleigh.
Lowe stated, "While there is work still to be done, I have every confidence that Wolfspeed will deliver on its strategic priorities and strengthen its leadership in the SiC market."
Under Lowe's leadership, Wolfspeed experienced rapid growth, including the development of the Mohawk Valley fabrication facility in Marcy, New York, and plans for the John Palmour Manufacturing Center for Silicon Carbide in Siler City, Chatham County, North Carolina.
However, Lowe's aggressive growth strategy has drawn criticism from activist investors, some of whom have called for exploring a potential sale of the company.
What is the chipmaker facing?
Wolfspeed is grappling with facility closures, workforce reductions, and delays in its planned German factory, as reported by Business North Carolina.
Earlier this month, Wolfspeed reported lower-than-expected quarterly revenue and announced US$174 million in restructuring costs tied to the planned closure of one of its facilities.
Recent restructuring measures at Wolfspeed include a 20% workforce reduction, the shutdown of its Durham factory in North Carolina, and the postponement of plans to construct a new facility in Ensdorf, Germany. The company attributed these moves to slower-than-anticipated EV adoption in Europe, according to Yahoo Finance and the Rome Sentinel.
Wolfspeed has had two major facilities in North Carolina. The Durham plant is slated for closure, and the Siler City facility is poised to become the company's primary manufacturing hub in the state.
Wolfspeed stated that many of the layoffs would affect its Durham location, with most already implemented. An additional 10% reduction in global roles follows a similar cut earlier this year through attrition and voluntary exits, spokesperson Bridget Johnson confirmed.
In addition to the staffing reduction, Wolfspeed's stock price has plummeted from a peak of roughly US$140 per share to just US$7, a decline that coincides with Lowe's announced departure.
The company is transitioning to 200mm chip production, which it calls a "pure play." Its Durham facility, set to close, currently manufactures 150mm chips.
Despite its struggles, Wolfspeed plans to move forward with its Chatham County expansion, projected to create 1,800 new jobs.
Wolfspeed's cost-cutting measures are expected to save US$200 million annually, a crucial step as the company remains unprofitable.
What lies ahead?
Wolfspeed posted a US$282.2 million net loss for the first quarter of fiscal 2024-25, surpassing its expected range of US$194 million to US$226 million, according to Business North Carolina. The company has projected second-quarter losses between US$362 million and US$401 million.
Interim CEO Thomas Werner described Wolfspeed as "significantly undervalued," pledging to focus on strategic goals and work with the board's Finance Committee to unlock value.
Analysts at Charter Equity Research noted that weak demand, ongoing restructuring, and reduced fiscal 2025 capex leave the new management with limited options to boost shares, apart from a potential sale.
