Renesas Electronics Corp (TSE: 6723) said on Friday it expects to book a loss of up to ¥250 billion ($1.67 billion) after signing a restructuring support agreement with Wolfspeed Inc (NYSE: WOLF) and its major creditors, amid growing financial uncertainty at the U.S.-based silicon carbide manufacturer.
The loss stems from a $2.062 billion deposit Renesas made to Wolfspeed as part of a long-term silicon carbide wafer supply agreement. Under the new restructuring terms, Renesas will convert this deposit into Wolfspeed securities, including convertible notes, equity, and warrants. The Japanese chipmaker said the estimated loss would be reflected in its consolidated financial statements for the six months ending June 30, 2025, though the final amount remains subject to audit review and could change.
The companies first announced the supply agreement in July 2023, aimed at ensuring wafer availability for Renesas’ growing business in electric vehicles and renewable energy systems. In October 2024, the original deposit was increased to $2.062 billion. However, Wolfspeed later disclosed in May 2025 that it was considering an in-court restructuring under Chapter 11 of the U.S. Bankruptcy Code, citing the need to strengthen its balance sheet. The company also included “going concern” language in its March 2025 financial statements, indicating significant financial distress.
As part of the restructuring support agreement signed this week, Renesas will receive convertible notes worth $204 million, maturing in June 2031 and convertible into 13.6% of Wolfspeed’s issued shares on a non-diluted basis. The agreement also includes Wolfspeed common stock representing 38.7% of issued shares and warrants equivalent to 5% on a fully diluted basis. On a fully diluted basis and prior to the exercise of the warrants, Renesas would hold approximately 17.9% of Wolfspeed’s shares.
Wolfspeed is expected to initiate Chapter 11 proceedings in the near future. The restructuring is scheduled to become effective by the end of September 2025, pending court and regulatory approvals. Renesas said that if those approvals are not in place by the restructuring date, it would instead hold instruments with equivalent economic value to the promised securities.
Despite the expected impairment, Renesas confirmed that its non-GAAP guidance for revenue, gross margin, and operating margin for the six-month period remains unchanged. The company does not provide profit forecasts attributable to shareholders.
The move positions Renesas as a significant stakeholder in Wolfspeed and may offer strategic benefits as demand for silicon carbide-based components continues to rise in the automotive and industrial markets. However, the company warned that the valuation and timing of the loss could shift depending on further developments and discussions with auditors. Further disclosures are expected once the final figures are determined.
