Key Takeaways
- Wolfspeed shares jumped 6% after the Department of War conditionally agreed to lend the company up to $1.5 billion over 30 years.
- The Department of War would get warrants for up to 7.5% of Wolfspeed’s fully diluted equity.
- Wolfspeed burned $380 million of free cash flow in the year to June 2026, and it had $1.8 billion of debt against $1.09 billion of cash and short-term investments.
- The loan isn’t final yet: due diligence, definitive agreements, government approvals, appropriations and sign-off from existing lenders all come first.
Wolfspeed (WOLF) shares are up 6% this morning (Thursday), even though the broader market is down. The chipmaker said the Department of War has conditionally agreed to lend it up to $1.5 billion.
That’s nearly as much as the whole company is worth, since Wolfspeed’s market cap is about $1.7 billion.
What exactly happened
After Wednesday’s close, Wolfspeed said the Department of War’s Office of Strategic Capital had sent it a conditional commitment letter for a long-term loan. Here are the terms so far:
- Up to $1.5 billion, as a senior secured delayed-draw term loan
- A 30-year term
- Warrants letting the Department of War buy up to 7.5% of Wolfspeed’s fully diluted equity, issued as each tranche is funded
- The money would upgrade Wolfspeed’s gallium nitride (GaN) capabilities for communications and electronic warfare systems, and pay to radiation-harden its silicon carbide (SiC) chips and future GaN chips
As Wolfspeed CEO Robert Feurle put it: “SiC and GaN have critical national security applications.”
Why this matters
Wolfspeed has burned cash in each of the last five fiscal years. The burn has shrunk a lot, though, from $3 billion in the year to June 2024 to $380 million in the year to June 2026…
Then came bankruptcy. Wolfspeed came out of Chapter 11 on Sept. 29, 2025. Its total debt fell from $6.7 billion in June 2025 to $1.8 billion a year later, against $1.09 billion of cash and short-term investments…
So the full $1.5 billion would come close to Wolfspeed’s whole debt load today, and it’s more than the company’s cash.
Let’s talk about the warrants
Giving away up to 7.5% of the company is a real cost to today’s shareholders. Still, this chipmaker was in bankruptcy a year ago and still burns cash, so I’d take that trade for 30-year money. And the warrants are only issued as each tranche is funded, so shareholders give up equity only when Wolfspeed actually gets the cash.
Of course, none of this is money in the bank yet. The company says the deal still needs a lot of due diligence, definitive agreements, government approvals, appropriations, and waivers or amendments from the lenders on its existing debt. It also says there’s no assurance that any financing will be provided. The definitive agreement is the thing to watch.
So what is Wolfspeed stock actually worth?
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Disclaimer:
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