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Item 1A. Risk Factors

2025-08-26 compared with 2024-08-22 · 389 added, 132 removed, 359 unchanged (59% of the section changed)

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If any of the risks described below actually occurs, our business, financial condition or results of operations could be materially and adversely affected.

Risk categories and certain principal risks under each category (each described more fully below):

Risk categories and certain principal risks under each category include (each described more fully below):

– Risks related to our Chapter 11 Cases

• We are subject to risks and uncertainties associated with our Chapter 11 Cases.

• We may not be able to obtain confirmation of the Plan as outlined in the Restructuring Support Agreement.

• If the Restructuring Support Agreement is terminated, our ability to confirm and consummate the Plan could be materially and adversely affected.

• The Restructuring Support Agreement is subject to significant conditions and milestones that may be difficult for us to satisfy.

• Trading in our securities during the pendency of our Chapter 11 Cases is highly speculative and poses substantial risks.

If the Plan becomes effective, the ownership interest of holders of our existing common stock will be substantially diluted.

• Following the effectiveness of the Plan, certain Consenting Convertible Noteholders and Renesas, if they choose to act together, will have the ability to significantly influence all matters submitted to shareholders of the reorganized company for approval.

• Our business could suffer from a long and protracted restructuring.

• As a result of the Chapter 11 Cases, our historical financial information will not be indicative of our future performance.

• The Chapter 11 Cases raise substantial doubt regarding our ability to continue as a going concern.

• Our planned Reincorporation from the State of North Carolina to the State of Delaware could have significant legal, tax and governance implications for us and our stockholders, could expose us to additional risks and uncertainties and we may not realize the expected benefits of the Reincorporation.

• We will be required to reduce certain of our tax attributes due to the exclusion of cancellation of indebtedness ("COD") income from gross income upon emergence from the Chapter 11 Cases.

– Risks related to our global operations, including global macroeconomic and market risks

• Our business may be adversely affected by the state of the global economy, uncertainties in global financial markets, our ability, or our customers' or suppliers' ability, to access funding, and possible trade tariffs and trade restrictions.

• Our business may be adversely affected by the state of the global economy, uncertainties in global financial markets, our ability or our customers' or suppliers' ability to access funding, and the impact of trade tariffs and trade restrictions on the supply chains and global demand for our products or our customers' or suppliers' products.

• We are subject to risks related to international sales and purchases.

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• We face significant challenges managing our growth strategy.

• Variations in our production could impact our ability to reduce costs and could cause our margins to decline and our operating results to suffer.

• Our results of operations, financial condition and business could be harmed if we are unable to balance customer demand and capacity.

• Variations in our production could impact our ability to reduce costs and could cause our margins to decline and our operating results to suffer.

– Risks associated with our strategic transactions

• If we fail to evaluate and execute strategic opportunities successfully, our business may suffer.

• We are subject to a number of risks associated with the sale of our former RF product line (the RF Business), and these risks could adversely impact our operations, financial condition and business.

• We are subject to a number of risks associated with our restructuring plan, and these risks could impact our operations, financial condition and ability to realize expected cost savings.

• We are subject to a number of risks associated with the sale of our former Lighting Products, LED Products and RF business units, and these risks could adversely impact our operations, financial condition and business.

– Risks associated with our capital structure

• We have outstanding debt which could materially restrict our business and adversely affect our financial condition, liquidity and results of operations.

– Risks associated with cybersecurity, intellectual property and litigation

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– Risks related to legal, regulatory, accounting, tax and compliance matters

• We may be required to recognize a significant charge to earnings if our goodwill or other assets become impaired.

• We and certain of our former executive officers have been named as defendants in securities class action lawsuits.

These lawsuits may require significant time and attention from our management and may result in significant legal expenses, which could materially adversely affect our results and financial condition.

• We may be required to recognize a significant charge to earnings if our assets become impaired.

• The adoption of or changes in government and/or industry policies, standards or regulations relating to the efficiency, performance, vehicle range or other aspects of our products and the products in which they are utilized could impact the demand for our products.

• We may be limited in our ability to utilize, or may not be able to utilize, U.S.

federal and state net operating loss ("NOL") carryforwards to reduce our future tax liability.

– General risk factors

• We have outstanding debt which could materially restrict our business and adversely affect our financial condition, liquidity and results of operations.

Risks related to our Chapter 11 Cases

We are subject to risks and uncertainties associated with our Chapter 11 Cases.

We and our wholly owned subsidiary Wolfspeed Texas LLC have entered into a Restructuring Support Agreement and commenced a voluntary proceeding as the Debtors under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court.

The Restructuring Support Agreement contemplates a comprehensive restructuring of Wolfspeed’s funded debt obligations and capital structure to be implemented through the Plan.

We plan to continue to operate our business as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

We have sought and obtained approval of certain “first day” motions containing customary relief intended to assure our ability to continue our ordinary course operations.

The filing of the Chapter 11 Cases could have a material adverse effect on our business, financial condition, results of operations, and liquidity.

Our senior management has spent and will continue to spend a significant amount of time and effort focusing on the reorganization instead of focusing exclusively on our business operations.

Public reports regarding Wolfspeed’s liquidity, execution of the Restructuring Support Agreement, and filing of the Chapter 11 Cases also have made it more difficult to retain management and the key personnel necessary for the success and growth of our business.

Furthermore, we may not realize any or all of the intended benefits of the Chapter 11 Cases.

Additionally, while we remain subject to the provisions of the Bankruptcy Code in the Chapter 11 Cases, our customers and vendors may lose confidence in our ability to reorganize our business successfully and may seek to establish alternative commercial relationships.

Other significant risks also include or relate to the following:

• our ability to obtain the Bankruptcy Court’s approval with respect to motions or other requests made to the Bankruptcy Court in the Chapter 11 Cases, including maintaining strategic control as a debtor-in-possession;

• the effects of the filing of the Chapter 11 Cases on our business and the interests of various constituents, including our creditors and shareholders;

• our ability to comply with the milestones set forth in the Restructuring Support Agreement and the Bankruptcy Court's final order authorizing the use of cash collateral;

• the high costs of the Chapter 11 Cases and related fees;

• the Bankruptcy Court’s rulings and orders in the Chapter 11 Cases, as well as the outcome of all other pending litigation and the outcome of the Chapter 11 Cases in general;

• the length of time that we anticipate we will operate under the protection and jurisdiction of the Bankruptcy Court and the continued availability of operating capital during the pendency of the proceeding;

• our ability to negotiate agreements with our creditors to be entered into in connection with the Restructuring Support Agreement and the Plan on favorable terms;

• third-party motions and objections in the Chapter 11 Cases;

• potential delisting by the New York Stock Exchange due to the Chapter 11 Cases or the impact to our stock price in connection with the Chapter 11 Cases;

• limitations on our ability to utilize our NOL carryforwards (and/or certain other tax attributes, excluding certain refundable tax credits such as the AMIC (as defined below)) that are generated before the Plan Effective Date and risks related to an "ownership change" under Section 382 of the Code, including as a result of the transactions contemplated by the Chapter 11 Cases;

• our ability to continue as a going concern as a result of the Chapter 11 Cases to the extent the Plan is not confirmed;

• the potential adverse effects of the Chapter 11 Cases on our liquidity and results of operations.

Because of the risks and uncertainties associated with the Chapter 11 Cases, we may not be able to predict or quantify the ultimate impact the Chapter 11 Cases may have on our business, cash flows, liquidity, financial condition, and results of

operations, nor can we accurately predict the ultimate impact the Chapter 11 Cases may have on our corporate or capital structure.

In addition, while the Chapter 11 Cases are ongoing, certain transactions are subject to the prior approval of the Bankruptcy Court, which may limit our ability to respond in a timely manner to certain events or take advantage of certain opportunities.

If the Chapter 11 Cases are not successful, any other strategic options that we would pursue to address the impact of our Senior Secured Notes and Convertible Notes, including any recapitalization, restructuring, reorganization, bankruptcy, or liquidation, may not be successful, and holders of our common stock could be diluted to a greater extent or suffer a total loss of their investment.

We may not be able to obtain confirmation of the Plan as outlined in the Restructuring Support Agreement.

There can be no assurance that the Plan as outlined in the Restructuring Support Agreement (or any other plan of reorganization) will be approved by the Bankruptcy Court.

The success of any reorganization will depend on approval by the Bankruptcy Court and the willingness of existing debt and security holders to agree to the treatment as outlined in the Plan, and there can be no guarantee of success with respect to the Plan or any other plan of reorganization.

We cannot predict the impact that any objection to confirmation of the Plan from the various stakeholders in the Chapter 11 Cases might have on the Plan or on a Bankruptcy Court's decision to confirm the Plan.

Any objection may cause us to devote significant resources in response that could materially and adversely affect our business, financial condition, and results of operations.

Additionally, it is possible that an official committee of equity holders is appointed, which could materially impact the length and cost of the Chapter 11 Cases or the ability to consummate the Plan as contemplated in the Restructuring Support Agreement.

If the Plan is not confirmed by the Bankruptcy Court, it is unclear whether we would be able to reorganize our business and what, if any, distributions holders of claims against us, including holders of our unsecured debt and equity, as well as holders of the Notes, would ultimately receive with respect to their claims and interests.

There can be no assurance as to whether we will successfully reorganize and emerge from Chapter 11 or, if we do successfully reorganize, as to when we would emerge from Chapter 11.

If no plan of reorganization can be confirmed, or if the Bankruptcy Court otherwise finds that it would be in the best interest of holders of claims and interests, the Chapter 11 Cases may be converted to a case under Chapter 7 of the Bankruptcy Code, pursuant to which a trustee would be appointed or elected to liquidate our assets for distribution in accordance with the priorities established by the Bankruptcy Code, which would provide for different recoveries than those set forth in the Plan.

If the Restructuring Support Agreement is terminated, our ability to confirm and consummate the Plan could be materially and adversely affected.

The Restructuring Support Agreement contains a number of termination events, upon the occurrence of which certain parties to the Restructuring Support Agreement may terminate the agreement.

If the Restructuring Support Agreement is terminated as to all parties thereto, each of the parties will be released from its obligations in accordance with the terms of the Restructuring Support Agreement.

Such termination may result in the loss of support for the Plan by the parties to the Restructuring Support Agreement, which could adversely affect our ability to confirm and consummate the Plan.

If the Plan is not consummated, there can be no assurance that any new plan would be as favorable to holders of claims against Wolfspeed as contemplated by the Restructuring Support Agreement.

The Restructuring Support Agreement is subject to significant conditions and milestones that may be difficult for us to satisfy.

There are certain material conditions we must satisfy under the Restructuring Support Agreement, including the timely satisfaction of milestones for the progress of the Chapter 11 Cases, including, among other things, obtaining certain bankruptcy court orders and confirmation of the Plan.

See Note 2, "Basis of Presentation and Summary of Significant Accounting Policies," in our consolidated financial statements included in Item 8 of this Annual Report.

Our ability to timely complete such milestones is subject to risks and uncertainties that may be beyond our control.

Trading in our securities during the pendency of our Chapter 11 Cases is highly speculative and poses substantial risks.

If the Plan becomes effective, the ownership interests of holders of our existing common stock will be substantially diluted.

Trading prices for our common stock may bear little or no relationship to the actual recovery by holders of the common stock in the Chapter 11 Cases.

Additionally, among the customary first-day motions that we filed, the Bankruptcy Court granted our motion for an order establishing certain procedures with respect to trades and transfers of our common stock, including options to acquire beneficial ownership of our common stock.

These procedures restrict transactions involving, and require notices of the holdings of and proposed transactions by, any person, group of persons, or entity that is or would become a “substantial stockholder,” defined as any person or entity that beneficially owns, directly or indirectly, approximately 4.5% or more of our common stock.

We cannot assure investors of the liquidity of an active trading market, the ability to sell shares of the common

stock when desired, or the prices that an investor may obtain for the shares of the common stock.

The Restructuring Support Agreement contemplates the transactions set forth therein to be implemented through the Chapter 11 Cases and the Plan.

In connection with the restructuring and subject to the confirmation of the Plan, trade creditors and all other general unsecured creditors will be unimpaired.

The Plan, as contemplated by the Restructuring Support Agreement, provides that upon our emergence from Chapter 11, (i) holders of the existing Convertible Notes will receive, among other things, their pro-rata share of 56.3% of the common stock in the reorganized company as of the Plan Effective Date, subject to dilution from other equity issuances, including the conversion of the New 2L Convertible Notes, and the convertible notes and warrants provided to Renesas, (ii) subject to regulatory approvals, Renesas will receive, among other things, (a) 38.7% of the common stock in the reorganized company as of the Plan Effective Date, subject to dilution from other equity issuances, including the conversion of the New 2L Convertible Notes, and the convertible notes and warrants provided to Renesas, (b) warrants to purchase 5% of the common stock in the reorganized company as of the Plan Effective Date (assuming conversion of convertible notes issued to Renesas and all New 2L Convertible Notes), and (c) if certain regulatory approvals have not been obtained prior to the deadline described in the Restructuring Support Agreement, certain contingent consideration, including, among other things, 2.0% of common stock in the reorganized company as of the Plan Effective Date, subject to dilution from other equity issuances, and (iii) that the holders of our existing common stock will receive their pro-rata share of 3 or 5% of the common stock in the reorganized Company as of the Plan Effective Date (depending on whether Renesas obtains certain regulatory approvals), subject to dilution from other equity issuances, including the conversion of the New 2L Convertible Notes, and the convertible notes and warrants provided to Renesas.

In addition, if the Plan as contemplated in the Restructuring Support Agreement is consummated, 10% of the common stock outstanding as of the Plan Effective Date (assuming all New 2L Convertible Notes are treated as having converted into shares of New Common Stock on such date and subject to dilution from the conversion of the New 2L Convertible Notes and exercise of warrants issued to Renesas) will be reserved for issuance as awards under a post-restructuring management incentive plan for the benefit of officers and other key employees, including a reserve for initial grants of the New Common Stock under the management incentive plan equivalent to approximately $40 million in value.

After the Plan Effective Date, 5% of all issued and outstanding shares of the New Common Stock (assuming all New 2L Convertible Notes are treated as having converted into shares of New Common Stock on such date and subject to dilution from the conversion of the New 2L Convertible Notes and exercise of warrants issued to Renesas) will be reserved for issuance as awards under a post-restructuring long-term incentive plan for the benefit of the broader employee group.

Issuances of common stock (or securities convertible into or exercisable for common stock) under the Plan, the management incentive plan, the long-term incentive plan and any exercises of the warrants or conversion rights for shares of common stock will dilute the voting power of the outstanding common stock and may adversely affect the trading price of such common stock.

In addition, in connection with the Plan, we are expected to provide Renesas and certain holders of the existing Convertible Notes with certain registration rights with respect to shares of common stock underlying the warrants provided to Renesas and the New 2L Convertible Notes.

These registration rights would entitle Renesas and such holders of the existing Convertible Notes to demand that we register the resale of such securities, and would also provide Renesas and such holders with certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of the Plan.

The trading of these additional securities in the public market may have an adverse effect on the market price of our securities.

Following the effectiveness of the Plan, certain Consenting Convertible Noteholders and Renesas, if they choose to act together, will have the ability to significantly influence all matters submitted to shareholders of the reorganized company for approval.

Certain of the Consenting Convertible Noteholders and Renesas are expected to acquire a significant ownership interest in the common stock of the reorganized company pursuant to the Plan.

Such Holders may be in a position to control the outcome of all actions requiring shareholder approval, including the election of directors, without the approval of other shareholders.

This concentration of ownership could also facilitate or hinder a negotiated change of control of the reorganized company and, consequently, have an impact upon the value of the common stock of the reorganized company.

The significant ownership stake may allow these Holders to appoint a majority of the board of directors, potentially influencing the company's management and strategic direction.

This could lead to changes in corporate governance practices, business strategies, and capital allocation policies that align with the interests of the major shareholders.

The concentrated ownership might also affect the liquidity of the common stock of the reorganized company in the market, potentially impacting its trading price and volatility.

The interests of these significant Holders may not always align with those of other shareholders or the reorganized company, potentially leading to conflicts in decision-making.

Lastly, this ownership structure could either attract potential acquirers due to the ease of negotiating with a small group of major shareholders or deter them if the Holders are not interested in selling their stakes.

Our business could suffer from a long and protracted restructuring.

Our future results are dependent upon the timely confirmation and consummation of the Plan.

A long period of operating under Bankruptcy Court protection could have a material adverse effect on our business.

Our financial condition, results of operations,

liquidity, and relationships with suppliers, customers, and other counterparties may deteriorate while we are in bankruptcy.

Failure to obtain confirmation of a Chapter 11 plan in a timely manner may harm our ability to finance our operations adequately or have continued access to cash collateral, and there is a significant risk that the value of Wolfspeed would be substantially eroded to the detriment of all stakeholders.

If the Plan or an alternative Chapter 11 plan that complies with the applicable provisions of the Bankruptcy Code cannot be confirmed, we would have to pursue other strategic options to address the impact of the outstanding Senior Secured Notes and Convertible Notes.

Any other strategic option that we pursue, including any recapitalization, restructuring, reorganization, bankruptcy, or liquidation, may not be successful, and holders of our common stock could be diluted to a greater extent or suffer a total loss of their investment.

For as long as the Chapter 11 Cases continue, we will be required to incur substantial costs for professional fees and other expenses associated with the administration of the Chapter 11 Cases.

If we are unable to continue funding our operations, our chances of successfully reorganizing our business may be seriously jeopardized, increasing the likelihood that we will be required to liquidate our assets, and as a result, our common stock could become further devalued or become worthless.

There can be no assurance of whether, or when, we will be able to successfully confirm or implement a Chapter 11 plan, or whether we will be able to do so in a timely fashion.

Even if a Chapter 11 plan is confirmed and implemented, our operating results may be adversely affected by the possible reluctance of prospective lenders, suppliers, and other counterparties to do business with a company that recently emerged from bankruptcy proceedings.

As a result of the Chapter 11 Cases, our historical financial information will not be indicative of our future performance.

During the Chapter 11 Cases, we expect our financial results to continue to be volatile.

Further, we anticipate that our capital structure will be significantly altered if and when we are able to emerge from bankruptcy proceedings.

As a result, our historical financial performance is likely not indicative of our financial performance after the date of the filing of the Chapter 11 Cases.

In addition, if we emerge from Chapter 11, the amounts reported in subsequent consolidated financial statements may materially change relative to our historical consolidated financial statements.

We may also be required to adopt fresh start accounting, in which case our assets and liabilities will be recorded at fair value as of the fresh start reporting date, which may differ materially from the recorded values of assets and liabilities on our consolidated balance sheets.

Our financial results after the application of fresh start accounting may be different from historical trends.

We are subject to claims that will not be discharged in the Chapter 11 Cases, which could have a material adverse effect on our financial condition and results of operations.

While certain prepetition litigation claims will be treated as unimpaired 510(b) Claims (as defined in the Plan) during the Chapter 11 Cases, we are involved in certain other litigation, which, so long as it remains unresolved, represents legal issues of uncertain outcome and potential claims for monetary damages.

If the outcomes of such litigation are unfavorable, they could have a material impact on our operations and financial health.

Additionally, there is a risk of future litigation.

In general, litigation can be expensive and time-consuming to bring or defend against.

Such litigation could result in settlements or damages that could significantly affect the reorganized company’s financial results.

It is also possible that certain parties will commence litigation with respect to the treatment of their claims and interests under the Plan.

It is not possible to predict what, if any, future litigation the reorganized company may become involved in, nor the final resolution of such litigation.

The impact of any such litigation on the reorganized company’s businesses and financial stability, however, could be material.

The Chapter 11 Cases will consume a substantial portion of the time and attention of our management, which may have an adverse effect on our business and results of operations, and we may experience increased levels of employee attrition.

Our management has spent a significant amount of time and effort focusing on the entry into the Restructuring Support Agreement and the Chapter 11 Cases, and our management will be required to continue to spend significant time and effort focusing on the Chapter 11 Cases and the implementation of the Plan instead of focusing exclusively on our business operations.

This diversion of attention may materially adversely affect the conduct of our business, and, as a result, our financial condition and results of operations, particularly if the Chapter 11 Cases are protracted.

Furthermore, during the pendency of the Chapter 11 Cases, we may experience increased levels of employee attrition, and our employees may face considerable distraction and uncertainty.

A loss of key personnel or material erosion of employee morale could adversely affect our business and results of operations.

Our ability to engage, motivate, and retain key employees or take other measures intended to incentivize key employees to remain with us through the pendency of the Chapter 11 Cases is limited by restrictions on implementation of incentive programs under the Bankruptcy Code.

The loss of services of members of our senior management team could impair our ability to execute our strategy and implement operational initiatives, which would likely have a material adverse effect on our financial condition, liquidity, and results of operations.

In addition, the longer the Chapter 11 Cases continue, the more likely it is that vendors, sub-contractors, customers and employees will lose confidence in our ability to reorganize our business successfully.

Upon our emergence from bankruptcy, if at all, the composition of our board of directors is expected to change.

Under the Plan, the composition of our board is expected to change.

The composition of the initial board of the reorganized company shall be determined by a selection committee comprised of (i) one member of the existing board of directors, (ii) the Chief Executive Officer, and (iii) three individuals from certain Consenting Creditors.

As contemplated by the Plan, Renesas will also have the right to select one member of the board of the reorganized company, subject to receipt of certain regulatory approvals and Renesas holding in the aggregate in excess of 10% of the common stock of the reorganized company.

Any new directors are likely to have different backgrounds, experiences, and perspectives from those individuals who currently serve or previously served on the board and thus may have different views on the issues that will determine our future.

As a result, our future strategy and plans may differ materially from those of the past.

The Chapter 11 Cases raise substantial doubt regarding our ability to continue as a going concern.

As a result of the Chapter 11 Cases, our operations and ability to develop and execute our business plan are subject to significant risks and uncertainties.

Our ability to continue as a going concern is contingent upon, among other things, our ability to, subject to the approval of the Bankruptcy Court, implement a comprehensive restructuring, successfully emerge from the Chapter 11 Cases, and maintain sufficient liquidity following the restructuring to meet our obligations and operating needs.

The Plan contemplated by the Restructuring Support Agreement could fail to be confirmed or become effective, or the Bankruptcy Court may grant or deny motions or objections in a manner that is adverse to us and our subsidiaries.

Our planned Reincorporation from the State of North Carolina to the State of Delaware could have significant legal, tax, and governance implications for us and our stockholders, could expose us to additional risks and uncertainties and we may not realize the expected benefits of the Reincorporation.

Our planned Reincorporation could subject us to different or more stringent corporate governance and disclosure requirements.

Delaware law differs from North Carolina law in various respects that could affect the rights and obligations of us and our stockholders.

Furthermore, the Reincorporation could involve significant costs, delays, and uncertainties.

The Reincorporation is subject to the satisfaction of certain conditions, such as the consummation of the Plan and the filing of appropriate documents with the North Carolina and Delaware authorities, and the completion of certain corporate formalities.

The Reincorporation could also result in litigation or disputes with our stockholders, creditors, regulators, or other parties, which could divert our resources and attention from our core operations.

There can be no assurance that the anticipated benefits of the Reincorporation will be achieved.

Achieving the anticipated benefits of the Reincorporation is subject to a number of risks and uncertainties, including factors that we do not and cannot control.

If the Reincorporation is not completed successfully or is delayed, we may incur additional expenses, lose potential opportunities, or face adverse consequences for our business and reputation.

In addition, if the expected benefits of the Reincorporation do not meet expectations of investors or securities analysts, the price of our common stock may decline.

We cannot assure you that we will be able to achieve our goals after the Plan is consummated and we emerge from the protection of the Bankruptcy Court.

We will continue to face a number of risks, including certain risks that are beyond our control, such as further deterioration or other changes in economic conditions, changes in our industry and potential revaluing of our assets due to the Chapter 11 Cases even after the Plan is consummated.

Accordingly, we cannot assure you that we will achieve our stated goals after consummation of the Plan.

Furthermore, we may need to raise funds through public or private debt or equity financing or other various means to fund our business after emergence from the protection of the Bankruptcy Court.

We may not be able to obtain sufficient funds when needed or on favorable terms.

Our operating results may also be adversely affected by any reluctance of vendors or customers to do business with a company that recently emerged from the protection of the Bankruptcy Court or from any decline in listeners resulting from our operation under new equity ownership.

Although our Plan contemplates reducing our overall funded debt, we cannot assure you that we will be able to successfully meet our debt service costs or our planned continuing obligations after emergence from the protection of the Bankruptcy Court.

Any failure to pay our debt service obligations or to obtain cost savings upon emergence could materially impair our ability to operate profitably and result in our inability to continue as a going concern.

We will be required to reduce certain of our tax attributes due to the exclusion of COD income from gross income upon emergence from Chapter 11.

Generally, any discharge of our debt obligations for an amount less than the debt’s adjusted issue price will give rise to COD income.

Under section 108 of the Code, a taxpayer is required to exclude COD from gross income if the debtor is under the

jurisdiction of a court in a case under Chapter 11 of the Bankruptcy Code and the discharge of debt occurs pursuant to that proceeding.

As a consequence of such an exclusion, a taxpayer generally must reduce certain of its tax attributes by the amount of COD income that it excluded from gross income.

federal income tax attributes subject to reduction generally include (i) NOLs and NOL carryforwards;

(ii) general business credit carryovers;

(iii) capital loss carryovers;

(iv) tax basis in assets;

and (v) foreign tax credit carryovers.

In connection with the implementation of the Plan, we expect to realize a substantial amount of COD income for U.S.

federal income tax purposes and our tax attributes will be subject to the foregoing attribute reduction rules.

While the ultimate effect of the attribute reduction is uncertain because, among other things, it will depend on the amount of COD income we realize, loss of these tax attributes may have an adverse effect on our future cash flow.

Risks related to our global operations, including global macroeconomic and market risks

Our business may be adversely affected by the state of the global economy, uncertainties in global financial markets, our ability, or our customers' or suppliers' ability, to access funding, and possible trade tariffs and trade restrictions.

Our business may be adversely affected by the state of the global economy, uncertainties in global financial markets, our ability or our customers' or suppliers' ability to access funding, and the impact of trade tariffs and trade restrictions on the supply chains and global demand for our products or our customers' or suppliers' products.

Our operations and performance depend significantly on worldwide economic and geopolitical conditions.

Uncertainty about global economic conditions could result in customers postponing purchases of our products and services in response to tighter credit, unemployment, negative financial news, higher interest rates and/or declines in income or asset values and other macroeconomic factors, which could have a material negative effect on demand for our products and services and, accordingly, on our business, results of operations or financial condition.

For example, current global financial markets continue to reflect uncertainty, including as a result of the ongoing military conflict between Russia and Ukraine and the ongoing conflicts in the Middle East, as well as a slowdown of the economy in China, which could impact demand for our products used in industrial and energy applications.

For example, current global financial markets continue to reflect uncertainty, including as a result of the ongoing military conflict between Russia and Ukraine and the ongoing conflicts in the Middle East, as well as tariff policies announced by the Trump administration and ongoing trade tensions between certain countries including the United States, the EU and China, which has impacted and could continue to impact demand for our products.

Given these uncertainties, there could be further disruptions to the global economy, financial markets and consumer confidence.

If economic conditions deteriorate unexpectedly, our business and results of operations could be materially and adversely affected.

The Trump administration is also ending the EV credit and has positioned against solar and other similar projects, which could leverage out some of our technology.

For example, our customers, including our distributors and their customers, may experience difficulty obtaining the working capital and other financing necessary to support historical or projected purchasing patterns, which could negatively affect our results of operations.

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Economic slowdowns or recessions and inflationary pressures could have a negative impact on our business, including decreased demand, increased costs, and other challenges.

Government actions to address economic slowdowns and increased inflation, including increased interest rates, also could result in negative impacts to our growth.

General trade tensions between the United States and China continue, and any economic and political uncertainty caused by the United States tariffs imposed on goods from China, among other potential countries, and any corresponding tariffs or currency devaluations from China or such other countries in response, has negatively impacted, and may in the future negatively impact, demand and/or increase the cost for our products.

Government actions to address economic slowdowns and increased inflation, including elevated interest rates, also could result in negative impacts to our growth.

In April 2025, the Trump administration announced a baseline tariff of 10% on products from all countries and an additional individualized reciprocal tariff on the countries with which the United States has the largest trade deficits.

The Trump administration has announced or imposed additional tariffs on Chinese imports, potentially subject to certain exceptions, prompting announcements of retaliatory tariffs by China on goods from the United States.

General trade tensions between the United States and China are expected to continue, and economic and political uncertainty caused by the United States tariffs imposed on goods from China, among other countries, and any corresponding tariffs or currency devaluations from China or such other countries in response, has negatively impacted, and may in the future negatively impact, demand and/or increase the cost for our products.

Additionally, Russia’s invasion of Ukraine in early 2022 triggered significant sanctions from the United States and European countries.

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Further, the use of cyberattacks could expand as part of the conflict, which could adversely affect our ability to maintain or enhance our cyber-security and data protection measures.

Although we believe we have adequate liquidity and capital resources to fund our operations for at least the next 12 months, we expect to need additional funding to fully complete all of our intended expansion initiatives, which we may seek to obtain through, among other avenues, government funding in both the United States and Europe, public or private equity offerings, and debt financings (which may involve retiring, refinancing, or modifying some of our existing debt).

If unfavorable capital market conditions exist, we may not be able to raise sufficient capital on favorable terms and on a timely basis, if at all.

If we issue equity or convertible debt securities to raise additional funds, our existing shareholders may experience dilution and the new equity or debt securities may have rights, preferences and privileges senior to those of our then-existing shareholders.

We also face uncertainty in the interpretation of new tariffs and their applicability, including with respect to customs valuation, product classification and country-of-origin determinations.

Although we and our vendors seek to comply with applicable customs laws and regulations, the application of rules regarding new tariffs can be subject to varying interpretations or future re-interpretations.

It is possible that U.S.

Customs and Border Protection or other relevant authorities could, upon review or audit, disagree with the valuation, rules of origin or classification methods applied to certain products.

Any such disagreement has in the past and could in the future result in the retroactive assessment of additional duties with interest, the imposition of penalties, or other enforcement actions without the ability to mitigate such penalties, thereby adversely affecting our operations or financial results.

Assuming we successfully emerge from the Chapter 11 Cases and implement the Plan, and although we believe we will have adequate liquidity and capital resources to fund our operations for at least the next 12 months, we expect to need additional funding to fully complete all of our intended expansion initiatives, which we may seek to obtain through, among other avenues, federal funding opportunities, equity offerings or other non-debt funding sources, and debt financings (which may involve retiring, refinancing or modifying some of our existing debt).

If unfavorable capital market conditions exist, we may not be able to raise sufficient capital or restructure or refinance our outstanding convertible notes on favorable terms and on a timely basis, if at all, which would impact our ability to access federal funding and/or raise additional capital.

As discussed in Note 10, "Shareholders' Equity," to our consolidated financial statements in Part II, Item 8 of this Annual Report, we sold 27.8 million shares of common stock under the ATM Program, and if we further issue equity or convertible debt securities to raise additional funds, our existing shareholders may experience dilution and the new equity or debt securities may have rights, preferences and privileges senior to those of our then-existing shareholders.

If we incur additional debt, it may impose financial and operating covenants that could restrict the operations of our business.

In a rising interest rate environment, debt financing will become more expensive and may have higher transactional and servicing costs.

In addition, our existing indebtedness may limit our ability to obtain additional financing in the future.

In a rising interest rate environment, debt financing would become more expensive and could have higher transactional and servicing costs.

In addition, our then-existing indebtedness may limit our ability to obtain additional financing in the future.

The potential inability to obtain adequate funding from debt or capital sources in the future could force us to self-fund strategic initiatives or even forego certain opportunities, which in turn could potentially harm our performance.

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Our international sales and purchases are subject to numerous United States and foreign laws and regulations, including, without limitation, tariffs, trade sanctions, trade barriers, trade embargoes, regulations relating to import-export control, technology transfer restrictions, the International Traffic in Arms Regulation promulgated under the Arms Export Control Act, the Foreign Corrupt Practices Act and the anti-boycott provisions of the United States Export Administration Act.

States Government has imposed, and in the future may impose, restrictions on shipments to some of our current customers.

The United States Government has imposed, and in the future may impose, restrictions on shipments to some of our current customers.

Government restrictions on sales to certain foreign customers will reduce our revenue and profit related to those customers in the short term and could have a potential long-term impact.

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• protection of intellectual property and trade secrets;

• tariffs, customs, trade sanctions, trade embargoes and other barriers to importing/exporting materials and products in a cost-effective and timely manner, or changes in applicable tariffs or custom rules, such as the additional customs duties incurred related to our former Lighting Products business unit;

Trump administration and retaliatory tariffs implemented by other countries in response and the additional customs duties incurred in fiscal 2024 related to our former Lighting Products business unit;

• the burden of complying with and changes in United States or international taxation policies;

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• difficulties in collecting accounts receivable;

• difficulties ensuring compliance with contracts;

• difficulties in staffing and managing international operations;

• the burden of complying with foreign and international laws and treaties.

For example, the United States has imposed significant tariffs on Chinese-made goods, which the Biden administration has largely left in place, and in certain instances increased or proposed to increase such tariffs.

The tariffs imposed on Chinese goods, among other potential countries and any corresponding tariffs from China or such other countries in response has, and may in the future, negatively impact demand and/or increase the costs for our products.

In some instances, we have received and may continue to receive incentives from foreign governments to encourage our investment in certain countries, regions or areas outside of the United States.

For example, the Trump administration has announced an aggressive policy for implementing tariffs, including a baseline tariff of 10% on products from all countries and an additional individualized reciprocal tariff on the countries with which the United States has the largest trade deficits.

While most of the initially proposed reciprocal tariffs were suspended while the Trump administration negotiated bilateral trade deals with impacted countries, the United States has since imposed significant tariffs on U.S.

trading partners, including China.

The tariffs imposed on Chinese goods, among other countries and any corresponding tariffs from China or such other countries in response has negatively impacted, and may in the future negatively impact, demand and/or increase the costs for our products.

The volatility and unpredictability of international trade policies and conditions in the current political and international economic environment add further complexity to our operations, making it challenging to forecast and plan effectively.

Government incentives may include tax rebates, reduced tax rates, favorable lending policies and other measures, some or all of which may be available to us due to our foreign operations.

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These same governments also may provide increased incentives to or require production processes that favor local companies, which could further negatively impact our business and results of operations.

Changes in regulatory, geopolitical, social, economic, or monetary policies and other factors, including those which may result from the outcome of the 2024 United States Presidential election, if any, may have a material adverse effect on our business in the future, or may require us to exit a particular market or significantly modify our current business practices.

Changes in regulatory, geopolitical, social, economic, or monetary policies and other factors may have a material adverse effect on our business in the future or may require us to exit a particular market or significantly modify our current business practices.

Abrupt political change, terrorist activity and armed conflict pose a risk of general economic disruption in affected countries, which could also result in an adverse effect on our business and results of operations.

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Our potential for growth depends significantly on the adoption of our products within the markets we serve and for other applications, and our ability to affect this rate of adoption.

In order to manage our growth and business strategy effectively relative to the uncertain pace of adoption, we must continue to:

• maintain, expand, construct and purchase adequate manufacturing facilities and equipment, as well as secure sufficient third-party manufacturing resources, to meet customer demand, including specifically the expansion of our

silicon carbide capacity with ramping of our state-of-the-art, automated 200mm capable silicon carbide device fabrication facility in New York, an expansion of our materials factory in Durham, North Carolina, the construction of a new materials manufacturing facility in Siler City, North Carolina, the renovation of an epitaxy facility in Farmers Branch, Texas, and the planned construction of a new 200mm capable silicon carbide device fabrication facility in Saarland, Germany;

In order to manage our growth and business strategy effectively relative to the uncertain pace of adoption, we must:

• timely complete the Restructuring contemplated by the Plan and the Chapter 11 Cases to implement the Plan or otherwise address our outstanding indebtedness;

• maintain, expand, construct and/or purchase adequate manufacturing facilities and equipment, as well as secure sufficient third-party manufacturing resources, including specifically the expansion of our silicon carbide capacity with the ramping of our state-of-the-art, automated 200mm capable silicon carbide device fabrication facility in New York and the ongoing construction of a new materials manufacturing facility in Siler City, North Carolina;

• receive the expected benefits from the refundable Advanced Manufacturing Investment Credit ("AMIC") under Section 48D of the Internal Revenue Code of 1986, as amended (the "Code");

• meet our production capacity and delivery commitments to our customers, including those customers who provide us with capacity reservation deposits or similar payments;

• manage an increasingly complex supply chain (including managing the impacts of ongoing supply constraints in the semiconductor industry and meeting purchase commitments under take-or-pay arrangements with certain suppliers) that has the ability to supply an increasing number of raw materials, subsystems and finished products with the required specifications and quality, and deliver on time to our manufacturing facilities, our third-party manufacturing facilities, our logistics operations, or our customers;

• manage an increasingly complex supply chain and meet purchase commitments under take-or-pay arrangements with certain suppliers that have the ability to supply an increasing number of raw materials, subsystems and finished products with the required specifications and quality, and deliver on time to our manufacturing facilities, our third-party manufacturing facilities, our logistics operations, or our customers;

• manage the economic conditions around the commodities used in our business;

• meet the volume and spend requirements for our long term electricity supply agreements;

• expand the skills and capabilities of our current management team;

• add experienced senior level managers and executives;

• retain and add experienced senior level managers and executives;

• attract and retain qualified employees;

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• be successful in securing design-ins across our end markets, including automotive applications;

• realize our expected local, state and federal government incentives, including capital investment reimbursements, property tax reimbursements and sales tax exemptions from state, county and local governments;

• finalize negotiations on a Preliminary Memorandum of Terms and, if an agreement can be reached, complete comprehensive due diligence, finalize award documentation, and fulfill all conditions and milestones for and receive the expected benefits from capital grants through the United States CHIPS and Science Act of 2022 (the CHIPS Act);

• confirm our eligibility for and receive the expected benefits from refundable income tax credits through the CHIPS Act, and receive and potentially sell any tax credits for which we may apply under the Inflation Reduction Act;

• access capital markets to fund our growth initiatives, including our ongoing and planned capacity expansions;

• realize our expected local and state government incentives, including capital investment reimbursements, property tax reimbursements and sales tax exemptions from state, county and local governments;

• continue to pursue potential federal funding opportunities;

• access capital markets as needed to fund our growth initiatives;

• safeguard confidential information and protect our intellectual property;

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Our operations may also be negatively impacted if any of these contract manufacturers or other service providers do not have the financial capability to meet our growing needs.

There are also inherent execution risks in starting up a new factory or expanding production capacity, whether one of our own factories or that of our contract manufacturers, as well as risks to moving production to different contract manufacturers, that could increase costs and reduce our operating results.

There are also inherent execution risks in starting up a new factory or expanding production capacity, whether one of our own factories or that of our contract manufacturers, as well as risks to moving production to different contract manufacturers, which could increase costs and reduce our operating results.

In the fourth quarter of fiscal 2022, we opened the Mohawk Valley Fab to complement the materials factory expansion underway at our United States campus headquarters in Durham, North Carolina and the Mohawk Valley Fab began revenue production in late fiscal 2023.

We also commenced work on our new materials manufacturing facility in Siler City, North Carolina in the first quarter of fiscal 2023.

In addition, we purchased and began renovating an existing epitaxy facility in Farmers Branch, Texas in the fourth quarter of fiscal 2023.

We also commenced work on our new materials manufacturing facility in Siler City, North Carolina in the first quarter of fiscal 2023, and the construction of the buildings and critical infrastructure was substantially completed in late fiscal 2025.

The establishment and operation of a new manufacturing facility or expansion of an existing facility involves significant risks and challenges, some of which we have experienced and may experience in the future, including, but not limited to, the following:

• design and construction delays and cost overruns;

• issues in installing and qualifying new equipment and ramping production;

• poor production process yields and reduced quality control;

• insufficient personnel with requisite expertise and experience to operate an automated silicon carbide device fabrication facility and a materials manufacturing facility;

• issues in installing new equipment and ramping production;

If we receive government incentives through federal funding opportunities, or through state and local grants, the restrictions and operational requirements that are associated with such grants would add complexity to our operations and increase our costs.

For example, we have signed a non-binding preliminary memorandum of terms ("PMT") with the Department of Commerce relating to proposed funding under the United States CHIPS and Science Act of 2022 (the "CHIPS Act") to support expansion of our new facilities in North Carolina and New York.

The terms for awards of funding under the PMT are preliminary and are subject to a comprehensive due diligence process and continued negotiations.

There is uncertainty whether any grant approved by the recently established United States Investment Accelerator office within the Department of Commerce will be on the same or similar terms as the PMT.

It is also uncertain how the implementation of the Plan as a result of the Chapter 11 Cases could impact the terms, diligence process and negotiations relating to the PMT or any other potential grant or award, as well as the timing or collectability of amounts due under existing state and local incentives.

There can be no assurance that we will conclude grant negotiations or receive the full amount of federal funding set forth in the PMT, if at all.

In addition, there is uncertainty regarding the impact of the Trump administration's policies with respect to the semiconductor industry and government funding, tax credits and tariffs.

We are also increasingly dependent on information technology to enable us to improve the effectiveness of our operations and to maintain financial accuracy and efficiency.

Allocation and effective management of the resources necessary to successfully implement, integrate, train personnel and sustain our information technology platforms will remain critical to ensuring that we are not subject to transaction errors, processing inefficiencies, loss of customers or suppliers, business disruptions or loss of or damage to intellectual property through a security breach in the near term.

damage to intellectual property through a security breach in the near term.

Additionally, we face these same risks if we fail to allocate and effectively manage the resources necessary to build, implement, upgrade, integrate and sustain appropriate technology infrastructure over the longer term.

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We are continually taking steps to address our manufacturing capacity needs for our products.

Currently, we are focusing on increasing production capacity that utilizes 200mm substrates.

If we are not able to increase our production capacity at our targeted rate, if there are unforeseen costs associated with increasing our capacity levels, or if we are unable to obtain advanced semiconductor manufacturing equipment in a timely manner, we may not be able to achieve our financial targets.

Currently, we are focused on the acceleration of the transition of our offerings from 150mm to 200mm substrates.

However, if we are not able to increase our production capacity at our targeted rate, if there are unforeseen costs associated with increasing our capacity levels, or if we are unable to obtain advanced semiconductor manufacturing equipment in a timely manner, we may not be able to achieve our financial targets.

We may be unable to build or qualify new capacity on a timely basis to meet customer demand and customers may fulfill their orders with one of our competitors instead.

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Additionally, if product demand decreases or if we fail to forecast demand decreases or changes accurately, we may experience a mismatch between current product demand and manufactured product mix, adversely impacting our results, including due to higher costs resulting from lower factory utilization, causing higher fixed costs per unit produced.

For example, in fiscal and calendar 2024, we and other semiconductor companies experienced, and have been continuing to experience, softer demand for power products in industrial and energy applications than expected.

For example, in fiscal 2024 and fiscal 2025, we and other semiconductor companies experienced and have continued to experience softer demand for our products than expected.

In response, we adjusted our production mix in our North Carolina fab to manufacture power products for automotive applications, which have higher unit costs in this fab.

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In addition, our ability to convert volume manufacturing to larger diameter substrates is an important factor in providing a more cost-effective manufacturing process.

We continue to prepare for production using 200mm substrates and if we are unable to make this transition in a timely or cost-effective manner, our results could be negatively impacted.

Our operating results are substantially dependent on the acceptance of new products.

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If any of these or other similar factors becomes problematic, we may not be able to deliver and introduce new products in a timely or cost-effective manner.

We face risks relating to our suppliers, including that we rely on a number of key sole source and limited source suppliers, are subject to high price volatility on certain commodity inputs, variations in parts quality, and raw material consistency and availability, and rely on independent shipping companies for delivery of our products.

We continue to focus on the acceleration of our transition to production using 200mm substrates and if we are unable to balance capacity with customer demands or are unable to continue making this transition in a timely or cost-effective manner, our results could be negatively impacted.

We face risks relating to our suppliers, including that we rely on a number of key sole source and limited source suppliers, are subject to high price volatility on certain commodity inputs, including as a result of tariffs, variations in parts quality, and raw material consistency and availability, and rely on independent shipping companies for delivery of our products.

We depend on a number of sole source and limited source suppliers for certain raw materials, components, services and equipment used in manufacturing our products, including key materials and equipment used in critical stages of our manufacturing processes.

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We generally purchase these sole or limited source items with purchase orders, and we have limited guaranteed supply arrangements with such suppliers, including take-or-pay arrangements and capacity reserve deposit agreements.

sources can have variations in attributes and availability which can affect our ability to produce products in sufficient volume or quality.

We do not control the time and resources that these suppliers devote to our business, and we cannot be sure that these suppliers will perform their obligations to us.

Some of our sources can have variations in attributes and availability which can affect our ability to produce products in sufficient volume or quality.

We do not control the time and resources that these suppliers devote to our business, and we cannot be sure that these

suppliers will perform their obligations to us.

Additionally, general shortages in the marketplace of certain raw materials or key components may adversely impact our business.

In the past, we have experienced decreases in our production yields when suppliers have varied from previously agreed upon specifications or made other modifications we did not specify, which impacted our cost of revenue.

We also may encounter issues with our vendors delaying orders or requiring more onerous terms during the pendency of the Chapter 11 Cases and following the implementation of the Plan.

Additionally, the inability of our suppliers to access capital efficiently could cause disruptions in their businesses, thereby negatively impacting ours.

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If they are not successful, our growth and profitability may be adversely impacted.

Distributors must balance the need to have enough products in stock in order to meet their customers’ needs against their internal target inventory levels and the risk of potential inventory obsolescence.

Distributors must balance the need to have enough products in stock in order to meet their customers’ demand against their internal target inventory levels and the risk of potential inventory obsolescence.

The risks of inventory obsolescence are especially relevant to technological products.

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Similarly, we have the ability to add, consolidate, or remove distributors.

We typically recognize revenue on products sold to distributors when an item is shipped and title passes to the distributor (sell-in method).

We typically recognize revenue on products sold to distributors when an item is shipped and title passes to the distributor.

Certain distributors have limited rights to return inventory under stock rotation programs and have limited price adjustment rights for which we make estimates.

We evaluate inventory levels in the distribution channel, current economic trends and other related factors in order to account for these factors in our judgments and estimates.

As inventory levels and

product return trends change or we make changes to our distributor roster, we may have to revise our estimates and incur additional costs, and our gross margins and operating results could be adversely impacted.

As inventory levels and product return

trends change or we make changes to our distributor roster, we may have to revise our estimates and incur additional costs, and our gross margins and operating results could be adversely impacted.

We depend on a limited number of customers, including distributors, for a substantial portion of our revenue, and the loss of, or a significant reduction in purchases by, one or more of these customers could adversely affect our operating results.

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incorrectly forecasting end market demand for their products;

altering their purchasing practices as a result of the Chapter 11 Cases and/or the implementation of the Plan;

or experiencing a reduction in their market share in the markets for which they purchase our products.

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Brand value could diminish significantly due to a number of factors, including adverse publicity about our products (whether valid or not), a failure to maintain the quality of our products (whether perceived or real), the failure of our products to deliver consistently positive consumer experiences, the products becoming unavailable to consumers or consumer perception that we have acted in an irresponsible manner.

Similarly, customers and other third parties may be less likely to invest time and resources in developing business relationships with us if they are not convinced that our business will succeed, including the perception that we may not be able to successfully stabilize our business following emergence from the Chapter 11 Cases.

Accordingly, to build, maintain and grow our business, we must establish and maintain confidence among customers, suppliers, the investment community and other parties with respect to our liquidity and long-term business prospects.

Damage to our brand, reputation or loss of customer confidence in our brand or products could result in decreased demand for our products and have a negative impact on our business, results of operations or financial condition.

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If failures or defects occur, they could result in significant losses or product recalls.

A significant product recall

could also result in adverse publicity, damage to our reputation and a loss of customer confidence in our products.

A significant product recall could also result in adverse publicity, damage to our reputation and a loss of customer confidence in our products.

We also may be the target of product liability lawsuits against us if the use of our products at issue is determined to have caused injury or contained a substantial product hazard.

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If we choose to enter into such strategic transactions, we face certain risks including:

• the inability to realize the expected benefits, both from a timing and amount perspective, from our ongoing and planned capacity expansions, including the construction of a new materials manufacturing facility in Siler City, North Carolina, the planned construction of a new 200mm capable silicon carbide device fabrication facility in Saarland, Germany and the renovation of an epitaxy facility in Farmers Branch, Texas;

• the inability to realize the expected benefits, both from a timing and amount perspective, from our ongoing and planned capacity expansions, including the expansion of a new materials manufacturing facility in Siler City, North Carolina;

• the failure of an acquired business, investee or joint venture to meet our performance and financial expectations;

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Any failure to successfully evaluate strategic opportunities and address risks or other problems that arise related to any such business transaction could adversely affect our business, results of operations or financial condition.

We are subject to a number of risks associated with the sale of our former RF Business, and these risks could adversely impact our operations, financial condition and business.

On December 2, 2023, we completed the sale of the RF Business to MACOM Technology Solutions Holdings, Inc.

(MACOM) pursuant to the Asset Purchase Agreement dated August 22, 2023 (the RF Purchase Agreement).

We are subject to a number of risks associated with this transaction, including risks associated with:

• issues, delays or complications in completing required transition activities to allow the RF Business to operate under MACOM, including incurring unanticipated costs to complete such activities;

• the diversion of our management's attention away from the operation of the business we retained;

• the restrictions on and obligations with respect to our business set forth in the RF master supply agreement and the transition services agreement, in each case between us and MACOM;

• the need to provide transition services in connection with the transaction;

• any required payments of indemnification obligations under the RF Purchase Agreement for retained liabilities and breaches of representations, warranties or covenants;

• our failure to realize the full purchase price anticipated under the RF Purchase Agreement, including due to fluctuations in the market price of MACOM’s common stock before we are able to sell the shares received as partial consideration for the RF Business (the MACOM Shares) following MACOM's assumption of control of the Company's 100mm GaN wafer fabrication facility in Research Triangle Park, North Carolina, approximately two years following the closing of the transaction (the RTP Fab Transfer) and/or the forfeiture of one-quarter of the MACOM Shares in the event that the RTP Fab Transfer is not completed within four years following the closing of the transaction.

As a result of these risks, we may be unable to realize the anticipated benefits of the transaction, including the total amount of cash we expect to realize.

Our failure to realize the anticipated benefits of the transaction would adversely impact our operations, financial condition and business and could limit our ability to pursue additional strategic transactions.

We are subject to risks associated with the sale of our former Lighting Products and LED Products business units, and these risks could adversely impact our financial condition.

We are subject to a number of risks associated with our restructuring plan, and these risks could impact our operations, financial condition and ability to realize expected cost savings.

In the first quarter of fiscal 2025, we initiated a headcount reduction and facility consolidation plan intended to reduce costs, increase our operational efficiency and align our manufacturing capacity with our customers' demand (the "2025 Restructuring Plan").

This plan may result in business disruptions, including impacts to our customer relationships, unfavorable publicity and reputational harm, and loss of productivity from our employees.

The expected costs and charges of the 2025 Restructuring Plan may be greater than we have forecasted, and the estimated cost savings may be lower than we have forecasted.

For example, the 2025 Restructuring Plan may result in unintended consequences and costs, including costs associated with attrition beyond our intended reduction in force, a decrease in morale among team members following the completion of the 2025 Restructuring Plan and the Chapter 11 Cases, adverse impacts to our ability to recruit and hire qualified personnel in the future, and the loss of institutional knowledge and expertise, which could result in losses in future periods or otherwise prevent us from realizing, in full or in part, the anticipated benefits and savings from the 2025 Restructuring Plan and the Chapter 11 Cases.

We may not be able to implement our restructuring program as planned, and we may need to take additional measures and incur additional costs to fulfill the objectives of our restructuring.

In addition, the shutdown of our 150mm device fabrication could cause a customer demand impact if they prefer not to purchase our 200mm products.

If we experience any of these adverse consequences, the 2025 Restructuring Plan may not achieve or sustain the intended benefits and could adversely affect our business, results of operations or financial condition.

We are subject to risks associated with the sale of our former Lighting Products, LED Products and RF business units, and these risks could adversely impact our financial condition.

On May 13, 2019, we closed the sale of our former Lighting Products business unit to IDEAL Industries, Inc.

(IDEAL) and on March 1, 2021, we completed the sale of our former LED Products business unit (the LED Business) to SMART Global Holdings, Inc.

We are subject to risks associated with these transactions, including risks associated with any required payments of indemnification obligations under the Purchase Agreement with IDEAL and the Asset Purchase Agreement with SGH for retained liabilities and breaches of representations, warranties or covenants.

("IDEAL"), on March 1, 2021, we completed the sale of our former LED Products business unit (the "LED Business") to SMART Global Holdings, Inc.

("SGH"), and on December 2, 2023, we completed the sale of the RF Business to MACOM Technology Solutions Holdings, Inc.

("MACOM") pursuant to the Asset Purchase Agreement dated August 22, 2023 (the "RF Purchase Agreement").

We are subject to risks associated with these transactions, including risks associated with any required payments of indemnification obligations under the Purchase Agreement with IDEAL, the Asset Purchase Agreement with SGH, and the RF Purchase Agreement with MACOM for retained liabilities and breaches of representations, warranties or covenants.

As a result, we may be unable to realize the anticipated benefits of these transactions.

Our failure to realize the anticipated benefits of these transactions would adversely impact our financial condition and could limit our ability to pursue additional strategic transactions.

Risks associated with our capital structure

We have outstanding debt which could materially restrict our business and adversely affect our financial condition, liquidity and results of operations.

As of June 29, 2025, our indebtedness consisted of $575.0 million aggregate principal amount of our 2026 Notes, $750.0 million aggregate principal amount of our 2028 Notes, $1,750.0 million aggregate principal amount of our 2029 Notes and $1,521.2 million aggregate principal amount of Senior Secured Notes and an aggregate principal amount of $2,062.0 million of deposits under the CRD Agreement with Renesas.

As discussed in Note 9, "Debt," to our consolidated financial statements in Part II, Item 8 of this Annual Report, on October 11, 2024, we entered into the Amended and Restated Indenture (the 2030 Senior Notes Indenture), which amends certain terms and conditions of the Senior Secured Notes and permits us to issue and sell $750.0 million of additional notes, subject to the fulfillment of certain conditions.

On October 22, 2024, we issued an additional $250.0 million of Senior Secured Notes.

In connection with the Chapter 11 Cases, we are no longer able to borrow the $500 million undrawn commitment under the 2030 Senior Notes Indenture.

The level of our outstanding debt may adversely affect our operating results and financial condition by, among other things:

• increasing our vulnerability to downturns in our business, to competitive pressures and to adverse general economic and industry conditions;

• requiring the dedication of an increased portion of our expected cash flows from operations to service our indebtedness, thereby reducing the amount of expected cash flow available for other purposes, including capital expenditures, or research and development;

• limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

• placing us at a competitive disadvantage compared to our peers that may have less indebtedness than we have by limiting our ability to borrow additional funds needed to operate and grow our business;

• increasing our interest expense if interest rates increase.

Our ability to pay interest and repay the principal for or to refinance any outstanding indebtedness under the Convertible Notes, the Senior Secured Notes and the CRD Agreement is dependent upon our ability to manage our business operations, generate sufficient cash flows to service such debt and/or raise additional capital, which is subject to economic, financial, competitive and other factors beyond our control.

There can be no assurance that we will be able to manage any of these risks successfully.

The 2030 Senior Notes Indenture includes a liquidity maintenance financial covenant requiring us to have an aggregate amount of unrestricted cash and cash equivalents maintained in accounts over which the trustee and collateral agent for the Senior Secured Notes has been granted a perfected first lien security interest of at least $750 million as of the last day of any calendar month ending after April 1, 2025, which amount will be reduced over time upon the fulfillment of certain conditions.

In addition, the 2030 Senior Notes Indenture contains certain restrictions that could limit our ability to, among other things:

incur additional indebtedness, dispose of assets, create liens on assets, make acquisitions or engage in mergers or consolidations, and engage in certain transactions with our subsidiaries and affiliates.

The 2030 Senior Notes Indenture also requires us to make an offer to repurchase the Senior Secured Notes with 100% of the net cash proceeds of certain non-ordinary course asset sales and casualty events, subject to the ability to reinvest the proceeds of such casualty events and asset sales (subject to certain limitations), or upon a change of control.

The Indentures governing the Convertible Notes (the "Convertible Notes Indentures") require us to repurchase the Convertible Notes upon certain fundamental changes relating to our common stock, and also prohibit our consolidation, merger, or sale of all or substantially all of our assets except with or to a successor entity assuming our obligations under the Indentures.

The CRD Agreement contains certain restrictions on our ability to incur debt and liens, consummate non-arm’s-length transactions with affiliates, consummate mergers and consolidations whereby obligations under the CRD Agreement are not assumed and change the nature of our business.

The restrictions imposed by the 2030 Senior Notes Indenture, the Convertible Notes Indentures, and the CRD Agreement could limit our ability to plan for or react to changing business conditions or could otherwise restrict our business activities and plans.

The filing of the Chapter 11 Cases constituted events of default that accelerated our obligations under the Indentures.

As a result, the principal and interest due under our outstanding Senior Secured Notes, Convertible Notes, and CRD Agreement became immediately due and payable.

However, any efforts to enforce such payment obligations are automatically stayed as a result of the filing of the Chapter 11 Cases, and the creditors’ rights of enforcement are subject to the applicable provisions of the Bankruptcy Code.

We do not have sufficient cash on hand or available liquidity to repay such outstanding debt.

We may be unable to comply with the restrictions imposed by the Cash Collateral Order.

As part of the Restructuring Support Agreement, we and the other parties agreed on the terms of a proposed order authorizing our use of cash collateral (as modified and entered by the Bankruptcy Court on a final basis on August 1, 2025, the “Cash Collateral Order”), in connection with the Chapter 11 Cases on certain terms and conditions set forth therein.

The Debtors intend to use the cash collateral to, among other things, permit the orderly continuation of their business, pay the costs of administration of their estates and satisfy other working capital and general corporate purposes.

The Cash Collateral Order imposes a number of restrictions on us.

For example, the Cash Collateral Order requires the Debtors to maintain (i) from the Petition Date until three months after the Petition Date, at least $650.0 million of “liquidity,” calculated at the end of every two week period as unrestricted cash and cash equivalents subject to a lien in favor of the Collateral Agent and (ii) from three months after the Petition Date until the Plan Effective Date, at least $600.0 million of “liquidity,” calculated at the end of every two week period as unrestricted cash and cash equivalents subject to a lien in favor of the Collateral Agent.

The Cash Collateral Order also requires (a) compliance with variance covenants that compare actual operating disbursements and receipts to the budgeted amounts set forth in the budgets delivered from time to time pursuant to the terms of the Cash Collateral Order and (b) that the Debtors not spend more than $200.0 million on capital expenditures between the Petition Date and the Plan Effective Date.

In addition, the Cash Collateral Order imposes certain milestones on the Debtors in connection with the Chapter 11 Cases.

Our ability to comply with these provisions may be affected by events beyond our control and our failure to comply could result in an event of default under the Cash Collateral Order, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Risks associated with cybersecurity, intellectual property and litigation

We may be subject to confidential information theft or misuse, which could harm our business and results of operations.

We face attempts by others to gain unauthorized access to our information technology systems on which we maintain proprietary and other confidential information and such attempts may increase in terms of frequency and severity in light of the sanctions imposed on Russia in response to its invasion of Ukraine.

Our security measures may be breached as the result of industrial or other espionage actions of outside parties, employees, employee error, malfeasance or otherwise, and as a result, an unauthorized party may obtain access to our systems.

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We actively seek to prevent, detect and investigate any unauthorized access, which sometimes occurs and is usually not recognized until after it has occurred.

To date, we do not believe that such unauthorized access has caused us any material damage.

We might be unaware of any such access or unable to determine its magnitude and effects.

We are also at risk of security breaches and disruptions occurring at third parties that we work with, including our customers and suppliers.

To date, we do not believe that such unauthorized access to these systems has caused us any material damage.

In addition, these threats are constantly evolving, thereby increasing the difficulty of successfully defending against them or implementing adequate preventative measures.

procedures, cause us to incur significant costs to remedy the damage caused by the incident, divert management's attention and other resources, and reduce the value of our investment in research and development.

The theft and/or unauthorized use or publication of our trade secrets and other confidential business information as a result of such an incident could adversely affect our competitive position, result in a loss of confidence in the adequacy of our threat mitigation and detection processes and procedures, cause us to incur significant costs to remedy the damage caused by the incident, divert management's attention and other resources, and reduce the value of our investment in research and development.

In addition, the increased prevalence of employees working from home may exacerbate the aforementioned cybersecurity risks.

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Our disclosure controls and procedures address cybersecurity and include elements intended to ensure that there is an analysis of potential disclosure obligations arising from security breaches.

In addition, we are subject to data privacy, protection and security laws and regulations, including the European General Data Protection Act (GDPR) that governs personal information of European persons.

In addition, we are subject to data privacy, protection and security laws and regulations, including the European General Data Protection Act (the "GDPR") that governs personal information of European persons.

We also maintain compliance programs to address the potential applicability of restrictions against trading while in possession of material, nonpublic information generally and in connection with a cyber-security breach.

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Litigation could adversely affect our operating results and financial condition.

We are often involved in litigation, primarily patent litigation, such as our patent dispute with The Trustees of Purdue University, as discussed further in Note 15, “Commitments and Contingencies,” in our consolidated financial statements included in Item 8 of this Annual Report.

We are often involved in litigation, primarily patent litigation, such as our patent dispute with The Trustees of Purdue University that was settled during the third quarter of fiscal 2025, and we and certain current and former executive officers and directors were named as defendants in multiple securities class action lawsuits regarding past public disclosures, each as discussed further in Note 14, "Commitments and Contingencies," in our consolidated financial statements in Part II, Item 8 of this Annual Report.

Defending against existing and potential litigation will likely require significant attention and resources and, regardless of the outcome, result in significant legal expenses, which could adversely affect our results unless covered by insurance or recovered from third parties.

If our defenses are ultimately unsuccessful or if we are unable to achieve a favorable resolution, we could be liable for damage awards that could materially affect our results of operations and financial condition.

Where necessary, we may initiate litigation to enforce our patent or other intellectual property rights, which could adversely impact our relationship with certain customers.

Where necessary, we may initiate litigation to enforce our patent or other intellectual property rights or to enforce restrictive covenants to prevent damage to or loss of our intellectual property, which could adversely impact our relationship with certain customers.

Any such litigation may require us to spend a substantial amount of time and money and could distract management from our day-to-day operations.

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indemnify our customers;

stop the manufacture, use

and sale of products found to be infringing;

stop the manufacture, use and sale of products found to be infringing;

incur asset impairment charges;

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There can be no assurance that third parties will not attempt to assert infringement claims against us, or our customers, with respect to our products.

In addition, our customers may face infringement claims directed to the customer’s products that incorporate our products, and an adverse result could impair the customer’s demand for our products.

In addition, our customers may face infringement claims directed to that customer’s products that incorporate our products, and an adverse result could impair the customer’s demand for our products.

We have also promised certain of our customers that we will indemnify them in the event they are sued by our competitors for infringement claims directed to the products we supply.

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Risks related to legal, regulatory, accounting, tax and compliance matters

We may be required to recognize a significant charge to earnings if our goodwill or other assets become impaired.

Goodwill and other assets are reviewed for impairment annually and when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

We and certain of our former executive officers have been named as defendants in securities class action lawsuits.

This lawsuit may require significant time and attention from our management and may result in significant legal expenses, which could materially adversely affect our results and financial condition.

On November 15, 2024, the Company and certain of its former executive officers were named as defendants (“Defendants”) in a securities class action lawsuit captioned Gary Zagami v Wolfspeed, Inc., et al., Case No.

6:24-cv-01395, which was filed in the United States District Court for the Northern District of New York.

The complaint alleges that Defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder by making false and/or misleading statements between August 16, 2023 and November 6, 2024 in connection with the operational status, profitability, and growth potential of the Mohawk Valley fabrication facility, among other things.

The complaint seeks unspecified compensatory damages and other relief.

On January 8, 2025 and January 13, 2025, respectively, two additional lawsuits captioned Maizner v.

Wolfspeed, Inc., et al., Case No.

6:25-cv-00046 and Ferreira v.

Wolfspeed, Inc., et al., Case No.

6:25-CV-00062 were filed in the United States District Court for the Northern District of New York by shareholders regarding these same matters and naming the same Defendants.

On February 24, 2025, the Court consolidated the Zagami, Maizner, and Ferreira actions and appointed co-lead plaintiffs and co-lead counsel.

On May 5, 2025, co-lead plaintiffs filed an amended complaint.

On June 4, 2025, Defendants filed a motion to transfer the consolidated action to the US.

District Court for the Middle District of North Carolina and as of July 22, 2025, briefing on the motion to transfer was complete.

Pursuant to section 362 of title 11 of the United States Code (the “Bankruptcy Code”), the class action was stayed upon the filing of the Company’s voluntary petition for relief under chapter 11 of the Bankruptcy Code on June 30, 2025 in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) as to the Company but not as to the individual defendants.

On April 21, 2025, a derivative action was filed by a putative shareholder purportedly on behalf of the Company in the United States District Court for the Middle District of North Carolina against certain current and former directors and officers of the Company (collectively, “Derivative Action Defendants”) for breach of fiduciary duty, waste, unjust enrichment, aiding and abetting, insider trading, and a violation of Section 14(a) of the Exchange Act.

The complaint seeks to implement reforms to the Company’s corporate governance and internal procedures and to recover on behalf of the Company for any liability the Company might incur as a result of the Derivative Action Defendants’ alleged misconduct, as well as declaratory and other monetary relief, including attorneys’ fees and other costs.

The derivative action is based substantially on the same facts alleged in the consolidated securities class action described above.

Pursuant to section 362 of the Bankruptcy Code, the derivative action was stayed upon the filing of the Company’s voluntary petition for relief under chapter 11 of the Bankruptcy Code on June 30, 2025 in the Bankruptcy Court.

The Company intends to vigorously defend against the claims in the above-referenced actions.

We may be required to recognize a significant charge to earnings if our assets become impaired.

Long-lived and other assets are reviewed for impairment annually and when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

Factors that may indicate that the carrying value of our goodwill may not be recoverable include a significant decline in our stock price and market capitalization and slower growth rates in our industry.

For other assets such as finite-lived intangible assets and fixed assets, we assess the recoverability of the asset balance when indicators of potential impairment are present.

For example, in the first quarter of fiscal 2024, we recorded an impairment to assets held for sale associated with the then pending RF Business Divestiture of $144.6 million.

The recognition of a significant charge to earnings in our consolidated financial statements resulting from any impairment of our goodwill or other assets could adversely impact our results of operations.

For example, during fiscal 2025, we recorded impairment charges related to abandoned assets of $170.2 million in connection with our 2025 Restructuring Plan, and in the first quarter of fiscal 2024, we recorded an impairment to assets held for sale associated with the then-pending RF Business Divestiture of $144.6 million.

The recognition of a significant charge to earnings in our consolidated financial statements resulting from any impairment of our long-lived or other assets could adversely impact our results of operations.

The adoption of or changes in government and/or industry policies, standards or regulations relating to the efficiency, performance, vehicle range or other aspects of our products and the products in which they are utilized could impact the demand for our products.

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For example, efforts to change, eliminate or reduce industry or regulatory standards could negatively impact our business.

These constraints may be eliminated or delayed by legislative action, which could have a negative impact on demand for our products.

These constraints may be eliminated or delayed by legislative action, such as the elimination of tax credits for the purchase of electric vehicles by the OBBBA (as defined below), in addition to other actions that may be taken by the Trump administration, which could have a negative impact on demand for our products.

Our ability and the ability of our competitors to meet evolving government and/or industry requirements could impact competitive dynamics in the market.

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• the jurisdiction in which profits are determined to be earned and taxed;

• potential changes in tax laws or alterations in the interpretation of such tax laws and changes in generally accepted accounting principles, for example interpretations and United States regulations issued as a result of the significant changes to the United States tax law included within the Tax Cuts and Jobs Act of 2017 (the TCJA), the Coronavirus Aid, Relief and Economic Security Act of 2020 and the IRA;

• changes in available tax credits, including the eligibility for or the receipt of the expected benefits from refundable investment tax credits obtained through the CHIPS Act;

• potential changes or expirations in tax laws or alterations in the interpretation of such tax laws and changes in generally accepted accounting principles, for example the changes in tax laws under the recently enacted Public Law No:

119-21, informally known as the "One Big Beautiful Bill Act" (the "OBBBA"), including state and local tax conformity to the OBBBA;

• changes or recapture of available tax credits, including our eligibility for or the receipt of the expected benefits from refundable investment tax credits obtained under the AMIC;

• the limitation on the utilization of federal and state NOL carryforwards following certain ownership changes (as defined by Section 382 of the Code);

• the implementation of international tax and profit shifting rules in countries in which we operate, as recommended by the Organization for Economic Co-operation and Development’s Base Erosion, including the establishment of a minimum tax of 15% on global income;

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• adjustments to estimated taxes upon finalization of various tax returns;

• increases in expenses not deductible for tax purposes, including impairment of goodwill in connection with acquisitions;

• increases in expenses not deductible for tax purposes, including impairment of goodwill in connection with acquisitions or charges associated with the Chapter 11 Cases;

• the recognition and measurement of uncertain tax positions;

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• the repatriation of non-United States earnings for which we have not previously provided for taxes or any changes in legislation that may result in these earnings being taxed, regardless of our decision regarding repatriation of funds.

For example, the TCJA included a one-time tax on deemed repatriated earnings of non-United States subsidiaries.

Any significant increase or decrease in our future effective tax rates could impact net (loss) income for future periods.

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To the extent our income tax liability materially differs from our income tax provisions due to factors, including the above, which were not anticipated at the time we estimated our tax provision, our net (loss) income or cash flows could be affected.

Additionally, in July of 2025, the OBBBA was signed into law.

The OBBBA made multiple changes to United States federal income tax laws which may affect our future effective tax rates and income tax liability.

Moreover, various aspects of the OBBBA are unclear, and administrative guidance is anticipated regarding the application of numerous provisions in the OBBBA.

There can be no assurance that the OBBBA and any resulting administrative guidance will not materially adversely affect our future financial condition, cash flows and results of operations.

We may be limited in our ability to utilize, or may not be able to utilize, NOL carryforwards to reduce our future tax liability.

We have substantial NOL carryforwards, the utilization of which may be limited annually due to certain change in ownership provisions of Section 382 of the Code.

An “ownership change” (generally defined as greater than 50-percentage-point cumulative changes in the equity ownership of certain stockholders over their lowest ownership percentage over a rolling three-year period) under Section 382 of the Code may limit our ability to utilize fully our pre-ownership change NOL carryforwards (and certain other tax attributes) to reduce our taxable income in periods following the ownership change.

In general, an ownership change would limit our ability to utilize U.S.

federal NOL carryforwards (and certain other tax attributes) to an amount equal to the aggregate value of our equity immediately before the ownership change multiplied by a specified tax-exempt interest rate, subject to increases or decreases by certain built-in gains or built-in losses as of the date of the ownership change, unless the ownership change occurs pursuant to the Plan, in which case, the annual limitation would generally be determined by reference to the aggregate value of our equity immediately after (rather than before) the ownership change and after giving effect to the discharge of creditors' claims.

Any portion of the annual limitation that is not used in a given year may be carried forward, thereby adding to the annual limitation for the subsequent taxable year.

Similar provisions of state tax law may also apply to our state NOL carryforwards.

The transactions contemplated by the Chapter 11 Cases are expected to result in an ownership change, which is expected to limit our ability to utilize our NOL, interest expense and certain credit carryforwards that are generated before the Plan Effective Date.

addition, future changes in our stock ownership, some of which may be beyond our control, could result in additional ownership changes under Section 382 of the Code.

Failure to comply with applicable environmental laws and regulations worldwide could harm our business and results of operations.

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Our results could vary as a result of the methods, estimates and judgments that we use in applying our accounting policies, including changes in the accounting standards to be applied.

The methods, estimates and judgments that we use in applying our accounting policies have a significant impact on our results (see “Critical Accounting Estimates” in Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" of this Annual Report).

The methods, estimates and judgments that we use in applying our accounting policies have a significant impact on our results (see “Critical Accounting Estimates” in Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" of this Annual Report).

Such methods, estimates and judgments are, by their nature, subject to substantial risks, uncertainties and assumptions, and factors may arise over time that lead us to change our methods, estimates and judgments.

Changes in those methods, estimates and judgments could significantly affect our results of operations or financial condition, such as the change in estimated useful lives of certain assets applied in the first quarter of fiscal 2022.

Likewise, our results may be impacted due to changes in the accounting standards to be applied, such as the changes in convertible debt recognition requirements.

Changes in those methods, estimates and judgments could significantly affect our results of operations or financial condition.

Regulations related to conflict-free minerals may force us to incur additional expenses.

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We may face challenges with government regulators, our customers and our suppliers if we are unable to sufficiently verify that the metals used in our products are conflict free.

Our most recent disclosure regarding our due diligence was filed on May 31, 2024 for calendar year 2023.

Our most recent disclosure regarding our due diligence was filed on June 2, 2025 for calendar year 2024.

General risk factors

We have outstanding debt which could materially restrict our business and adversely affect our financial condition, liquidity and results of operations.

As of June 30, 2024, our indebtedness consisted of $575.0 million aggregate principal amount of our 1.75% convertible senior notes due May 1, 2026 (the 2026 Notes), $750.0 million aggregate principal amount of our 0.25% convertible senior notes due February 15, 2028 (the 2028 Notes), $1,750.0 million aggregate principal amount of our 1.875% convertible senior notes due December 1, 2029 (the 2029 Notes, and together with the 2026 Notes and the 2028 Notes collectively, the Outstanding Convertible Notes), $1,250.0 million aggregate principal amount of senior secured notes due 2030 (the 2030 Senior Notes) and an aggregate principal amount of $2,000.0 million of deposits under the Unsecured Customer Refundable Deposit Agreement (the CRD Agreement) with Renesas Electronics America Inc.

(Renesas America).

Our ability to pay interest and repay the principal for any outstanding indebtedness under the Outstanding Convertible Notes, the 2030 Senior Notes and the CRD Agreement is dependent upon our ability to manage our business operations and generate sufficient cash flows to service such debt.

There can be no assurance that we will be able to manage any of these risks successfully.

The level of our outstanding debt may adversely affect our operating results and financial condition by, among other things:

• increasing our vulnerability to downturns in our business, to competitive pressures and to adverse general economic and industry conditions;

• limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

• increasing our interest expense if interest rates increase.

The Indenture governing the 2030 Senior Notes (the 2030 Senior Notes Indenture) includes a liquidity maintenance financial covenant requiring us to have an aggregate amount of unrestricted cash and cash equivalents maintained in accounts over which the trustee and collateral agent for the 2030 Senior Notes has been granted a perfected first lien security interest of at least $500 million as of the last day of any calendar month, which amount will be reduced over time upon the fulfillment of certain conditions.

In addition, the 2030 Senior Notes Indenture contains certain restrictions that could limit our ability to, among other things:

The 2030 Senior Notes Indenture also requires us to make an offer to repurchase the 2030 Senior Notes with 100% of the net cash proceeds of certain non-ordinary course asset sales and casualty events, subject to the ability to reinvest the proceeds of such casualty events and asset sales (subject to certain limitations), or upon a change of control.

The Indentures governing the Outstanding Convertible Notes (the Convertible Notes Indentures) require us to repurchase the Outstanding Convertible Notes upon certain fundamental changes relating to our common stock, and also prohibit our consolidation, merger, or sale of all or substantially all of our assets except with or to a successor entity assuming our obligations under the Indentures.

The restrictions imposed by the 2030 Senior Notes Indenture, the Convertible Notes Indentures, and the CRD Agreement could limit our ability to plan for or react to changing business conditions, or could otherwise restrict our business activities and plans.

Our ability to comply with the provisions of the 2030 Senior Notes Indenture, the Convertible Notes Indentures, and the CRD Agreement may also be affected by events beyond our control and if any of these restrictions or terms is breached, it could lead to an event of default under the 2030 Senior Notes, the Outstanding Convertible Notes, and the CRD Agreement.

A default, if not cured or waived, may permit acceleration of our indebtedness.

In addition, our lenders could terminate their commitments to make further loans under the 2030 Senior Notes Indenture or the CRD Agreement.

If our indebtedness is accelerated, we cannot be certain that we will have sufficient funds to pay the accelerated indebtedness or that we will have the ability to refinance accelerated indebtedness on terms favorable to us or at all.

Our business could be negatively impacted by shareholder activism.

We have been subject to shareholder activism and may be subject to such activism in the future, which could result in substantial costs and divert management’s and our board’s attention and resources from our business.

For example, on April 22, 2024, JANA Partners LLC delivered a letter to our board of directors calling for a comprehensive review of strategic alternatives.

Responding to actions by activist shareholders, such as potential nominations of candidates for election to our

board of directors, requests to pursue a strategic combination or other transaction, or other special requests may disrupt our business and divert the attention of management and employees.

In addition, any perceived uncertainties as to our future direction resulting from such a situation could result in the loss of potential business opportunities, be exploited by our competitors, cause concern to our current or potential customers and make it more difficult to attract and retain qualified personnel and business partners, any of which could negatively impact our business.

Shareholder activism could result in substantial costs.

In addition, actions of activist shareholders may cause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals of our business.

The capped call transactions may not prevent dilution of our common stock upon conversion of the 2028 Notes or the 2029 Notes.

In connection with the pricing of the 2028 Notes and the 2029 Notes, we entered into privately negotiated capped call transactions with the option counterparties.

The capped call transactions are expected generally to reduce the potential dilution to our common stock upon any conversion of the 2028 Notes and 2029 Notes and/or offset any potential cash payments we are required to make in excess of the principal amount of the converted 2028 Notes and 2029 Notes, as the case may be, upon conversion of the 2028 Notes and 2029 Notes.

If, however, the market price per share of our common stock, as measured under the terms of the capped call transactions, exceeds the cap price of the capped call transactions ($212.04 for the 2028 Notes and $202.538 for the 2029 Notes), there would nevertheless be dilution and/or there would not be an offset of such potential cash payments, in each case, to the extent that such market price exceeds the cap price of the capped call transactions.

Catastrophic events and disaster recovery may disrupt business continuity.

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Hiring and retaining qualified personnel is critical to our business, and competition for experienced employees in our industry can be intense.

As a global company, this issue is not limited to the United States, but includes our other locations such as Europe and Asia.

As a global company, this issue is not limited to the United States but includes our other locations where we do business such as Europe and Asia.

For example, there is substantial competition for qualified and capable personnel, particularly experienced engineers and technical personnel, which may make it difficult for us to recruit and retain qualified employees.

If we are unable to staff sufficient and adequate personnel at our facilities, we may experience lower revenue or increased manufacturing costs, which would adversely affect our results of operations.

If we are unable to staff sufficient and adequate personnel at our facilities, including as a result of attrition beyond the intended 2025 Restructuring Plan or adverse impacts in our ability to recruit and hire qualified personnel in the future as a result of the 2025 Restructuring Plan or the Chapter 11 Cases, we may experience lower revenue or increased manufacturing costs, which would adversely affect our results of operations.

To help attract, motivate and retain key employees, we use benefits such as stock-based compensation awards.

If the value of such awards does not appreciate, as measured by the performance of the price of our common stock or if our stock-based compensation otherwise ceases to be viewed as a valuable benefit, our ability to attract, retain and motivate employees could be weakened, which could harm our business and results of operations.

Our stock price may be volatile.

Our stock price has experienced and may continue to experience volatility.

Historically, our common stock has experienced substantial price volatility, particularly as a result of significant fluctuations in our revenue, earnings and margins over the past few years, and variations between our actual financial results and the published expectations of analysts.

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If our future operating results or margins are below the expectations of stock market analysts or our investors, our stock price will likely decline.

Speculation and opinions in the press or investment community about our strategic position, financial condition, results of operations or significant transactions can also cause changes in our stock price.

Speculation and opinions in the press or investment community about our strategic position, financial condition, results of operations or significant transactions have caused, and may continue to cause changes in our stock price.

In the past, we have been subject to shareholder activism and may be subject to such activism in the future with our decline in share price, which could result in substantial costs and divert management's and our board's attention and resources from our business.

In addition, competition in some of the markets we address such as electric vehicles or the industrial and energy markets, the ramp up of our business, and the effect of tariffs on our business, may have a dramatic effect on our stock price.

Additionally, actions taken by the option counterparties in the capped call transactions entered into in connection with the 2028 Notes and the 2029 Notes may affect our stock price, including the potential modifications of their hedge positions by entering into or unwinding various derivatives with respect to our common stock.

We are exposed to fluctuations in the market value of our investment portfolio and in interest rates, and therefore, impairment of our investments or lower investment income could harm our earnings.

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However, these investments are generally not Federal Deposit Insurance Corporation insured and may lose value and/or become illiquid regardless of their credit rating.

In addition, we currently hold the MACOM Shares that we acquired in connection with the RF Business Divestiture.

These shares are subject to risks inherent in the business of that company and to trends affecting the equity markets as a whole.

As more fully discussed in Note 3, "Discontinued Operations" in our consolidated financial statements in Item 8 of this Annual Report, the shares are also subject to restrictions on transfer prior to the RTP Fab Transfer and one quarter of the shares are subject to the risk of forfeiture in the event that the RTP Fab Transfer is not completed within four years following the closing of the transaction.

Should the value of these shares decline, the related write down in value could have a material adverse effect on our financial condition and results of operations.

From time to time, we have also made investments in public and private companies that engage in complementary businesses.

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Restrictions on access to our manufacturing facilities or on our support operations or workforce, or similar limitations for our vendors and suppliers, and restrictions or disruptions of transportation, such as reduced availability of air transport, port closures, and increased border controls or closures in connection with future outbreaks of infectious diseases or similar public health events could limit our ability to meet customer demand, lead to increased costs and have a material adverse effect on our financial condition and results of operations.

Risks relating to the adoption, use or application of emerging technologies, including AI, by our customers and in our business, may impact financial results and could result in reputational and financial harm and liability.

Concerns relating to the responsible use of new and evolving technologies, such as AI, in our and our customers’ products and services may result in reputational and financial harm and liability.

We and our customers are increasingly building AI capabilities into our products and internal processes.

AI poses emerging ethical and regulatory issues and presents risks and challenges that could affect its adoption, and therefore our business.

If we or our customers enable or offer solutions that draw controversy due to their perceived or actual impact on society, such as AI solutions that have unintended consequences or are controversial, we may experience reputational harm, competitive harm or legal liability.

Further, if the models underlying the AI we use are:

incorrectly designed or implemented;

trained or reliant on incomplete, flawed, inadequate, inaccurate, biased, or otherwise poor quality data, or on data to which we do not have sufficient rights or in relation to which we and/or the providers of such data have not implemented sufficient legal compliance measures;

used without sufficient oversight and governance to ensure their responsible use;

and/or adversely impacted by unforeseen defects, technical challenges, cybersecurity threats or material performance issues, any of which may not be easily detectable, our performance, as well as our reputation and the reputations of our customers, could suffer or we could incur liability resulting from the violation of laws or contracts to which we are a party or civil claims.

In addition, we use AI licensed from third parties, and our ability to continue to use such third-party AI at the scale we need may be dependent on access to specific third-party software and infrastructure.

We cannot control the availability or pricing of such third-party AI, especially in a highly competitive environment, and we may be unable to negotiate favorable economic terms with the applicable providers.

If any such third-party AI becomes incompatible with our technology and programs or unavailable for use, or if the providers of such models unfavorably change the terms on which their AI are offered or terminate their relationship with us, our business may be harmed.

Further, to the extent any third-party AI is used as a hosted service, any disruption, outage, or loss of information through such hosted services could disrupt our operations or solutions, damage our reputation, cause a loss of confidence in us, or result in legal claims or proceedings, for which we may be unable to recover damages from the affected provider.

While we restrict the use of third-party and open source AI tools, such as ChatGPT, the internal governance of the adoption of these technologies can be challenging, and our employees, consultants and partners may use these tools on an unauthorized basis, which poses additional risks relating to the protection of data, including the potential exposure of our proprietary confidential information to unauthorized recipients and the misuse of our or third-party intellectual property.

Use of AI tools may result in allegations or claims against us related to violation of third-party intellectual property rights, unauthorized access to or use of proprietary information and failure to comply with open source software requirements.

AI tools may also produce inaccurate responses that could lead to errors in our decision-making, product development or other business activities, which could have a negative impact on our business, operating results and financial condition.

Our ability to mitigate these risks will depend on our continued effective maintaining, training, monitoring and enforcement of appropriate policies and procedures governing the use of AI tools, and the results of any such use, by us or our partners.

Moreover, the regulatory framework for AI is rapidly evolving as many federal, state, and foreign government bodies and agencies have introduced or are currently considering additional laws and regulations.

Additionally, existing laws and regulations may be interpreted in ways that would affect the operation of our AI.

As a result, implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, and we cannot yet determine the impact future laws, regulations, standards, or market perception of their requirements may have on our business and may not always be able to anticipate how to respond to these laws or regulations.

Already, certain existing legal regimes, such as various U.S.

governmental and regulatory agencies relating to data privacy, regulate certain aspects of AI, and various U.S.

states and other foreign jurisdictions are applying, or are considering applying, their platform moderation, cybersecurity, and data protection laws to AI or are considering general legal frameworks for the regulation of AI.

In the United States, the Trump administration has rescinded an executive order relating to the safe and secure development of AI that was previously implemented by the Biden administration.

The Trump administration then issued a new executive order that, among other things, requires certain agencies to develop and submit to the President action plans to “sustain and enhance America’s global AI dominance,” and to specifically review rulemaking taken pursuant to the rescinded Biden executive order and, if possible, rescind any such rulemaking to the extent it is consistent with, or presents a barrier to, the Trump administration’s new executive order.

Thus, the Trump administration may continue to rescind other existing federal orders and/or administrative policies relating to AI, or may implement new executive orders and/or other rule making relating to AI in the future.

Any such changes at the federal level could require us to expend significant resources to modify our products, services, or operations to ensure compliance or remain competitive.

Legislation related to AI has also been introduced at the federal level and is advancing at the state level.

For example, the California Privacy Protection Agency recently approved final regulations under the California Consumer Privacy Act, as amended by the California Privacy Rights Acct (collectively, the CCPA) regarding the use of automated decision-making, which is currently pending final review by the Office of

Administrative Law.

California also enacted several new laws in 2024 that further regulate use of AI and provide consumers with additional protections around companies’ use of AI, such as requiring companies to disclose certain uses of generative AI.

Other states have also passed AI-focused legislation, such as Colorado’s Artificial Intelligence Act, which will require developers and deployers of “high risk” AI systems to implement certain safeguards against algorithmic discrimination, and Utah’s Artificial Intelligence Policy Act, which establishes disclosure requirements and accountability measures for the use of generative AI in certain consumer interactions.

Such additional regulations may impact our ability to develop and use AI in the future.

It is possible that further new laws and regulations will be adopted in the United States and in other non-U.S.

jurisdictions, or that existing laws and regulations, including competition and antitrust as well as scope of practice laws, may be interpreted in ways that would limit our ability to use AI for our business, or require us to change the way we use AI in a manner that negatively affects our performance and business and the way in which we use AI.

We may not be able to anticipate how to respond to these rapidly evolving frameworks, and we may need to expend resources to adjust our offerings in certain jurisdictions if the laws, regulations, or decisions are not consistent across jurisdictions.

Further, because AI itself is highly complex and rapidly developing, it is not possible to predict all of the legal, operational or technological risks that may arise relating to the use of AI.

The cost to comply with such laws, regulations, or decisions and/or guidance interpreting existing laws, could be significant and would increase our operating expenses (such as by imposing additional reporting obligations regarding our use of AI or limiting our use of AI to support our care team).

Such an increase in operating expenses, as well as any actual or perceived failure to comply with such laws and regulations, could harm our business, results of operations, and financial condition.

Our amended and restated bylaws provide that, unless we consent in writing to the selection of an alternative forum, the state courts of North Carolina will be the sole and exclusive forum for substantially all disputes between us and our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees or agents.

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Our amended and restated bylaws also provide that, notwithstanding the foregoing, (x) the provisions described above will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction, and (y) unless we consent in writing to the selection of an alternative forum, the federal district courts shall, to the fullest extent permitted by law, be the exclusive forum for the resolution of any complaint asserting a cause of action against Wolfspeed or any director, officer, employee, or agent of Wolfspeed and arising under the Securities Act.

If a court were to find the choice of forum provision contained in our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition.

If and when we effect the Reincorporation, our Delaware certificate of incorporation will have similar provisions regarding forum for adjudication of disputes except that where our current bylaws specify the state courts of North Carolina, our Delaware certificate of incorporation following the consummation of the Reincorporation will specify the Court of Chancery of the State of Delaware.

If a court were to find the choice of forum provision contained in our amended and restated bylaws (prior to the consummation of the Reincorporation) or our certificate of incorporation (on and after the consummation of the Reincorporation) to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition.

Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management and other employees.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors