Renesas Anticipates Significant Loss Amid Wolfspeed Restructuring Agreement
Renesas Electronics Corporation (TSE: 6723), a leading provider of advanced semiconductor solutions, has announced its participation in a Restructuring Support Agreement (RSA) with Wolfspeed, Inc. (NYSE: WOLF) and its principal creditors to facilitate the financial restructuring of Wolfspeed. As part of this agreement, Renesas anticipates recording a substantial loss related to its existing deposit with Wolfspeed, underscoring the financial challenges faced by the silicon carbide (SiC) leader.
Background of the Agreement
In July 2023, Renesas entered into a strategic silicon carbide wafer supply agreement with Wolfspeed, under which Renesas provided a deposit of $2 billion (approximately 292.0 billion yen) through its wholly owned U.S. subsidiary. This deposit was intended to secure a long-term supply of high-quality SiC wafers, a critical material for advanced semiconductor manufacturing. In October 2024, the agreement was amended, increasing the outstanding principal amount of the deposit to $2.062 billion (approximately 301.1 billion yen).
However, Wolfspeed’s financial struggles have complicated the arrangement. During its quarterly earnings call on May 8, 2025, Wolfspeed disclosed that it may pursue an in-court restructuring solution to strengthen its balance sheet. The company also included required going concern language in the footnotes of its financial statements for the quarter ended March 30, 2025, signaling potential liquidity concerns.
Terms of the Restructuring Support Agreement
To address these challenges, Renesas has agreed to convert its $2.062 billion deposit into a combination of convertible notes, common stock, and warrants issued by Wolfspeed. The restructuring is expected to be executed through proceedings under Chapter 11 of the U.S. Bankruptcy Code, with court approval anticipated by the end of September 2025. Key terms of the conversion include:
- Convertible Notes: Renesas will receive $204 million (approximately 29.8 billion yen) in aggregate principal amount of convertible notes, maturing in June 2031. These notes are convertible into 13.6% of Wolfspeed’s total issued shares on a non-diluted basis at the time of restructuring. On a fully diluted basis, prior to the exercise of warrants granted to Renesas, this corresponds to 11.8% ownership.
- Common Stock: Renesas will acquire common stock equivalent to 38.7% of Wolfspeed’s total issued shares upon completion of the restructuring. On a fully diluted basis, this represents 17.9% ownership before exercising the warrants.
- Warrants: Renesas will also receive warrants equivalent to 5% of Wolfspeed’s total issued shares on a fully diluted basis.
If necessary regulatory approvals are not obtained by the time the restructuring takes effect, Renesas will hold instruments with equivalent economic value to the convertible notes, common stock, and warrants until such approvals are secured.
Financial Implications for Renesas
As a result of entering into the RSA, Renesas expects to record a significant loss on the receivables related to the deposit. While the exact timing and amount of the loss remain undetermined, Renesas estimates that it could incur a loss of approximately 250 billion yen (based on an average exchange rate of 150 yen to the dollar during the period). This estimate is subject to change based on various factors, including market conditions and further consultations with Renesas’ auditor.
The definitive amount and timing of the loss will be finalized and announced once determined. Renesas emphasized that this figure is an internal estimate based on currently available information and may fluctuate as additional details emerge.
Strategic Considerations and Future Outlook
Despite the anticipated financial impact, Renesas remains committed to securing a stable supply of SiC wafers, a critical component for its advanced semiconductor solutions. The company views its equity stake in Wolfspeed as a strategic investment that aligns with its long-term growth objectives in the rapidly expanding SiC market. By converting the deposit into a combination of debt and equity instruments, Renesas aims to preserve its relationship with Wolfspeed while mitigating potential risks associated with the supplier’s financial restructuring.
Renesas’ decision to support Wolfspeed’s restructuring reflects its confidence in the broader SiC market and its commitment to maintaining leadership in advanced semiconductor technologies. The global demand for energy-efficient solutions, particularly in electric vehicles (EVs), renewable energy systems, and industrial applications, continues to drive growth in the SiC sector. By ensuring access to high-quality SiC materials, Renesas is positioning itself to capitalize on these opportunities and deliver innovative solutions to its customers.
About Renesas Electronics Corporation
Renesas Electronics Corporation (TSE: 6723) empowers a safer, smarter and more sustainable future where technology helps make our lives easier. A leading global provider of microcontrollers, Renesas combines our expertise in embedded processing, analog, power and connectivity to deliver complete semiconductor solutions. These Winning Combinations accelerate time to market for automotive, industrial, infrastructure and IoT applications, enabling billions of connected, intelligent devices that enhance the way people work and live.
