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Item 7. Management’s Discussion and Analysis

2025-08-26 compared with 2024-08-22 · 271 added, 179 removed, 275 unchanged (62% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s discussion and analysis of financial condition and results of operations ("MD&A") should be read in conjunction with the financial statements and the related notes that appear elsewhere in this document.

This section of this Form 10-K generally discusses fiscal 2025 and 2024 items and year-to-year comparisons between fiscal 2025 and 2024.

Discussions of 2023 items and year-to-year comparisons between fiscal 2024 and 2023 that are not included in this Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended June 30, 2024 as filed with the SEC on August 22, 2024.

Executive Summary

The following discussion is designed to provide a better understanding of our audited consolidated financial statements and notes thereto, including a brief discussion of our business and products, key factors that impacted our performance and a summary of our operating results.

The following discussion should be read in conjunction with our consolidated financial statements included in Item 8 of this Annual Report.

The following discussion should be read in conjunction with our consolidated financial statements included in Part II, Item 8 of this Annual Report.

Historical results and percentage relationships among any amounts in the financial statements are not necessarily indicative of trends in operating results for any future periods.

Unless otherwise noted, the following information and discussion relates to our continuing operations.

Recent Events

Restructuring Support Agreement

On June 22, 2025, the Debtors entered into the Restructuring Support Agreement with (i) the Consenting Senior Secured Noteholders;

(ii) the Consenting Convertible Noteholders;

and (iii) Renesas.

We intend to substantially de-lever our capital structure on the terms set forth in the Restructuring Support Agreement through the Plan filed by the Debtors in the Chapter 11 Cases.

The specific terms underlying the Restructuring Support Agreement are further detailed in the Plan.

The following is a summary of the material terms of the transactions contemplated by the Restructuring Support Agreement and the Plan:

• Senior Secured Notes.

Holders of Senior Secured Notes are expected to receive their pro rata share of (i) New Senior Secured Notes, which will have substantially similar terms to the existing Senior Secured Notes with certain modifications to reduce go-forward cash interest and minimum liquidity requirements, (ii) a payment from the redemption of $250 million in principal amount of existing Senior Secured Notes at a redemption price of 109.875% of the principal amount being redeemed (to be paid with the proceeds of the Rights Offering described below), and (iii) certain commitment fees, subject to certain conditions.

• Convertible Notes.

Holders of Convertible Notes are expected to receive their pro rata share of (i) rights to participate in the rights offering of New 2L Convertible Notes in the principal amount of $301.13 million, to be fully backstopped by certain holders of Wolfspeed’s existing Convertible Notes, and the issuance of additional New 2L Convertible Notes in the principal amount of $30.25 million pursuant to a premium, as discussed in more detail below under the section titled “Backstop Commitment Agreement,” (ii) the New 2L Takeback Notes in the principal amount of $296 million and (iii) 56.3% of the New Common Stock to be issued on 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.

Wolfspeed is expected to provide certain registration rights with respect to certain shares of the New Common Stock underlying the New 2L Convertible Notes to certain holders of the existing Convertible Notes.

Subject to certain regulatory approvals and conditions set forth in the Plan, Renesas is expected to receive or be entitled to certain economic benefits associated with (i) new second-lien convertible notes in the principal amount of $204 million, (ii) 38.7% (subject to claims reconciliation in the Chapter 11 Cases) of the New Common Stock as of the Plan Effective Date, subject to dilution from certain equity incentive plans expected to be adopted upon emergence from Chapter 11 and certain other equity issuances, including the conversion of the New 2L Convertible Notes, and the convertible notes and warrants provided to Renesas, (iii) warrants to purchase 5% of the New Common Stock as of the Plan Effective Date (assuming conversion of convertible notes issued to Renesas and all New 2L Convertible Notes), and (iv) if certain regulatory approvals have not been obtained prior to the deadline described in the

Restructuring Support Agreement, certain contingent consideration, including the Reserve Cash, $15 million in the Additional New 2L Takeback Notes, 2.0% of the New Common Stock as of the Plan Effective Date, subject to dilution from certain equity incentive plans expected to be adopted upon emergence from Chapter 11 and certain other equity issuances, including the conversion of the New 2L Convertible Notes, and the convertible notes and warrants provided to Renesas, and the right to a one-year extension of the exercise period of the warrants.

If certain regulatory approvals are obtained prior to the deadline described in the Restructuring Support Agreement and set forth in the Plan, Renesas will not be entitled to the Contingent Consideration and $10 million of the Reserve Cash will be remitted to or retained by Wolfspeed, $5 million of the Reserve Cash will be remitted to the holders of the Senior Secured Notes (on account of certain claims for commitment fees), the Additional New 2L Takeback Notes will not be issued, the 2.0% of the New Common Stock as of the Plan Effective Date will be distributed to the holders of existing equity interests (as discussed below), and the term of the warrants granted to Renesas will not be extended.

Similar to the holders of existing Convertible Notes, Renesas will also be entitled to certain registration rights as set forth in the Restructuring Support Agreement.

• Unsecured Creditors.

All other unsecured creditors are expected to be unimpaired and paid on the Plan Effective Date or in the ordinary course of business.

• Existing Equity Holders.

Our existing equity interests will be cancelled, and existing equity holders are expected to receive their pro rata share of 3.0% or 5.0% of the New Common Stock as of the Plan Effective Date (depending on whether Renesas obtains certain regulatory approvals), subject to dilution from certain equity incentive plans expected to be adopted upon emergence from Chapter 11 and certain other equity issuances, including the conversion of the New 2L Convertible Notes, and the convertible notes and warrants provided to Renesas.

Consummation of the transactions contemplated by the Restructuring Support Agreement is subject to, among other things, approval of the Plan by the Bankruptcy Court.

Accordingly, no assurance can be given that the transactions described therein will be consummated.

Renesas’s receipt of regulatory approvals is not a condition precedent to the Plan Effective Date.

Backstop Commitment Agreement

On June 22, 2025, Wolfspeed entered into the Backstop Commitment Agreement with the Backstop Parties and the Holdback Parties.

Pursuant to the Backstop Commitment Agreement (and subject to the terms and conditions therein), Wolfspeed initiated a rights offering on August 14, 2025 as contemplated under the Restructuring Support Agreement through the issuance of the New 2L Convertible Notes in an aggregate principal amount of $301.13 million, which were or are being offered at a purchase price of 91.3242% of the principal amount thereof.

Sixty percent of the Rights Offering is being offered pro rata to all holders of Convertible Notes and the Backstop Parties have committed to purchase any unsubscribed portion of the Non-Holdback Rights Offering.

The remaining 40% of the Rights Offering has been reserved for the Holdback Parties that have committed to purchasing their respective portions set forth in the Backstop Commitment Agreement.

As consideration for the commitments by the Backstop Parties and Holdback Parties, the Backstop Parties and the Holdback Parties will be issued on the Plan Effective Date additional New 2L Convertible Notes in an aggregate principal amount of $30.25 million (the “Backstop Premium"), allocated ratably.

If the Backstop Commitment Agreement is terminated under certain circumstances as set forth therein, the Backstop Commitment Agreement provides for a cash payment of the Backstop Premium to the Backstop Parties and Holdback Parties on the earlier of the four months following the Petition Date or the effective date of an “Alternative Transaction” (as defined in the Backstop Commitment Agreement).

The transactions contemplated by the Backstop Commitment Agreement are conditioned upon the satisfaction or waiver of certain conditions, including, among other things, that (i) the Bankruptcy Court will have entered an order approving the Backstop Commitment Agreement and the Disclosure Statement and confirming the Plan, (ii) the Plan Effective Date will have occurred, and (iii) the Restructuring Support Agreement remains in full force and effect.

Senior Secured Notes Amendment

On June 23, 2025, Wolfspeed, the Subsidiary Guarantors (as defined under the A&R Indenture (as defined below)), the Trustee and the Collateral Agent, entered into the Second Supplemental Indenture to the A&R Indenture, pursuant to which the parties thereto agreed to (i) release Wolfspeed Germany GmbH, a Subsidiary Guarantor, from its obligations under the Notes Documents (as defined under the A&R Indenture) and any related liens and (ii) exclude net proceeds of the sale of “Building 21” from the offer to repurchase requirement under the A&R Indenture.

Voluntary Petition

Subsequent to fiscal 2025 year-end, on the Petition Date, the Debtors filed the Chapter 11 Cases under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court to implement the Plan.

On the Petition Date, the Debtors filed the Plan with the Bankruptcy Court.

The Plan embodies the terms of, and transactions contemplated by, the Restructuring Support Agreement.

On June 27, 2025, prior to commencing the Chapter 11 Cases, the Debtors commenced solicitation for approval of the Plan by eligible claimholders by transmitting its Disclosure Statement and related solicitation materials.

The deadline for eligible claimholders to submit votes on the Plan was August 22, 2025.

On July 1, 2025, the Bankruptcy Court entered an order approving Wolfspeed's request to administer the Chapter 11 Cases jointly for administrative purposes only under the caption In re Wolfspeed, Inc., et al.

Wolfspeed continues to operate its business as a “debtor-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.

The Debtors filed and received approval for customary first day motions with the Bankruptcy Court to ensure their ability to continue operating in the ordinary course of business, including authority to pay employees, vendors, and customers.

The treatment under the Plan and the Bankruptcy Court-approved relief sought and received in Wolfspeed's “first day” motions collectively contemplate that vendors and other unsecured creditors will be paid in full and in the ordinary course of business.

See the section titled “Risk Factors – Risks related to our Chapter 11 Cases” for a discussion of the risks related to the Restructuring Support Agreement, the Plan and the Chapter 11 Cases.

Industry Dynamics and Trends

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These uncertainties make demand difficult to forecast for us and our customers.

Recently, we and other semiconductor companies have been experiencing softening demand for power products in industrial and energy applications.

We continue to experience increased demand for our power products designed for electrical vehicle applications, and we are working closely with our customer base to best match our supply to their demand.

We believe the increased demand for our power products reflects the value that the industry places on a transition to silicon carbide materials and devices while also evidencing the growing global focus on adopting higher efficiency energy solutions, including electric vehicle and related technologies.

We believe these trends could have a significant positive impact on revenues in future periods as we increase capacity to meet this increased demand.

• Supply Constraints.

The semiconductor industry has experienced supply constraints for certain items.

We have successfully managed through challenges relating to obtaining certain necessary production and processing equipment thus far, and we have continued to see supply availabilities and lead times stabilize across many direct materials.

In addition, although we have not experienced significant impacts to date, the ongoing military conflict between Russia and Ukraine and the ongoing conflicts in the Middle East may further exacerbate global supply constraints.

We have taken steps to provide continuity in supply to our customers to the extent possible, including entering into purchase agreements and providing capacity reserve deposits with our suppliers to secure future supply to us.

Recently, we have been experiencing softening demand for our products.

We continue to experience increased mid and long-term demand for our power products designed for electrical vehicle applications, though at a slower pace than initially expected.

We believe that this reflects the value that the industry places on a transition to silicon carbide materials and devices while also evidencing a global focus on adopting higher efficiency energy solutions, including electric vehicle and related technologies.

We believe these trends could have a significant positive impact on revenues in future periods.

• Intense and Constantly Evolving Competitive Environment.

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Our potential for growth, as with most multi-national companies, depends on a balanced and stable trade, political, geopolitical, economic and regulatory environment in the countries where we do business.

Changes in trade policy, such as the imposition or extension of tariffs or export bans to specific customers or countries could reduce or limit demand for, or increase the cost of production of, our products in certain markets.

We continue to monitor the recent changes in global trade policy, including tariffs and related trade actions announced by the United States, China and other countries.

The degree to which such tariffs and other related actions impact our business, financial condition and results of operations will depend on future developments, which are uncertain.

Changes in trade policy, such as the imposition or expansion of tariffs or export bans to specific customers or countries, could reduce or limit demand for, or increase the cost of production of, our products in certain markets.

• Technological Innovation and Advancement.

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The following is a summary of our financial results for the year ended June 29, 2025:

• Our year-over-year revenue increased by $48.7 million to $807.2 million.

• Our year-over-year revenue decreased by $49.6 million to $757.6 million primarily driven by weaker demand for applications serving the industrial and energy end markets, partially offset by continued growth from our automotive products.

• Gross margin decreased to (16.1)% in fiscal 2025 from 9.6% in fiscal 2024.

Gross profit decreased to $(121.6) million in fiscal 2025 from $77.4 million in fiscal 2024.

Gross margin and gross profit for fiscal 2024 include the impacts of $124.4 million of underutilization costs primarily in connection with the start of production at the Mohawk Valley Fab, which began revenue production in late fiscal 2023.

Costs related to the Mohawk Valley Fab for fiscal year 2023 and fiscal year 2022 were classified as operating expenses within factory start-up costs.

The decrease in gross margin is primarily due to the impact of our 2025 Restructuring Plan and changes in our product mix.

Gross margin and gross profit for fiscal 2025 and 2024 include the impacts of $105.2 million and $124.4 million, respectively, of underutilization costs in connection with the start of production at the Mohawk Valley Fab, which began revenue production in late fiscal 2023.

• Operating loss from continuing operations was $1,329.2 million in fiscal 2025 as compared to $445.3 million in fiscal 2024.

• Diluted loss per share from continuing operations was $4.56 in fiscal 2024 as compared to $2.09 in fiscal 2023.

Operating loss for fiscal 2025 includes approximately $402.2 million of restructuring and related costs, $359.2 million of goodwill impairment charges, and $55.8 million of pre-petition charges relating to the Chapter 11 Cases.

• Combined cash, cash equivalents and short-term investments decreased to $955.4 million at June 29, 2025 from $2,174.6 million at June 30, 2024.

• Long-term debt, net, including convertible notes, was $6,161.1 million at June 30, 2024 and $4,175.1 million at June 25, 2023.

◦ Net cash used in operating activities of continuing operations was $711.7 million in fiscal 2025 as compared to $671.3 million in fiscal 2024.

The primary drivers of the increase in cash outflows during fiscal 2025 include cash costs related to the implementation of the 2025 Restructuring Plan and higher professional services spending related to our Chapter 11 Cases.

◦ Purchases of property and equipment, net were $1,031.0 million (net of $240.4 million in reimbursements) in fiscal 2025 as compared to $2,095.5 million (net of $178.5 million in reimbursements) in fiscal 2024.

• Design-ins were $9.1 billion in fiscal 2024 as compared to $7.9 billion in fiscal 2023.

• Design-wins were $5.8 billion in fiscal 2024 as compared to $1.8 billion in fiscal 2023.

◦ Debt, net, including convertible notes, was $6,538.0 million at June 29, 2025 and $6,161.1 million at June 30, 2024.

The increase was due to the additional borrowings in the form of Senior Secured Notes and additions from paid-in-kind interest accrued to the principal balance during the fiscal year.

• Design-wins and design-ins decreased for fiscal 2025 compared to fiscal 2024.

Design-wins for fiscal 2025 and the fourth quarter of fiscal 2025 were the second highest design-wins for a fiscal year and fiscal fourth quarter in company history, respectively.

Business Outlook

We believe we are uniquely positioned as an innovator in the global semiconductor industry.

The strength of our balance sheet provides us the ability to invest in our business and increase production capacity, as indicated by the Mohawk Valley Fab, where we started revenue production in late fiscal 2023.

In addition, 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 our plan to construct a new silicon carbide device fabrication facility in Saarland, Germany are all expected to increase our production capacity.

We are primarily focused on investing in our business to expand the scale of production, further develop the technologies, and accelerate the growth opportunities of silicon carbide materials, silicon carbide power devices and modules.

We are prioritizing the identification of opportunities to reduce operating costs and to optimize our capital structure in support of these investments in our business.

We believe these efforts will support our goals of delivering higher revenue and shareholder returns over time.

In addition, we are focused on improving the number of usable items in a production cycle (yield) as our manufacturing technologies become more complex.

Despite increased complexities in our manufacturing processes, we have improved yields significantly and expect that we will continue to improve yield levels to support our future growth, particularly as we transition more production to the Mohawk Valley Fab.

We are also assessing the closure timeline of our existing device fabrication operations in Durham, North Carolina as part of this transition.

We believe we have the ability to navigate the current environment while maintaining our capital expenditure plans to support future growth to meet long-term demand, although demand in the mid-term appears to be ahead of the industry's supply capabilities.

For fiscal 2025, we target approximately $1.2 billion to $1.4 billion of net capital investment.

We are currently focused on three key priorities designed to put us on a path toward long-term growth and profitability:

• strengthening our balance sheet by optimizing our capital structure for sustainable growth

• improving the financial performance of the company

• deploying cost-efficient capital to support our growth plan and accelerate product innovation.

We believe these efforts will support our goals of delivering long-term growth and profitability, while enabling us to continue to invest in our business to further develop the technologies and accelerate the growth opportunities of silicon carbide materials and silicon carbide power devices and modules.

Strengthening Our Balance Sheet

Under the terms and transactions contemplated by the Restructuring Support Agreement and the Plan, upon successful emergence from Chapter 11, we expect to reduce our overall funded debt by approximately 70%, representing a debt reduction of approximately $4.6 billion and a reduction of its annual total cash interest payments by approximately 60%.

Improving Financial Performance

During the first quarter of fiscal 2025, we initiated a headcount reduction that upon its anticipated completion in fiscal 2026, is expected to result in a cumulative total headcount reduction of approximately 25%, and a facility consolidation plan, which is ultimately expected to result in the closure of our 150mm device fabrication facility in Durham, North Carolina as well as a realignment of related activities across the geographic regions in which we operate.

We intend to optimize our cost structure as we focus on the acceleration of our transition from 150mm to 200mm silicon carbide devices.

We have made targeted adjustments to the 2025 Restructuring Plan as we identify additional opportunities to optimize our cost structure while continuing to support future growth and meet long-term demand.

Refer to Note 16, "Restructuring," to our consolidated financial statements in Part II, Item 8 of this Annual Report for additional discussion of the financial impact of these activities.

In addition, we are focused on continuous improvement in the number of usable items in a production cycle (yield) as our manufacturing technologies become more complex.

We have significantly improved yields and expect to continue to improve yields as we transition additional device production to the Mohawk Valley Fab, where we continued to realize ongoing yield improvements during fiscal 2025.

Deploying Cost-Efficient Capital

We incurred approximately $1 billion of net capital investment for the fiscal year ended June 29, 2025.

Our net capital investment during fiscal 2025 includes approximately $0.2 billion of government incentives received for eligible expenditures, primarily under the AMIC refundable tax credits, as further discussed in Note 2, "Basis of Presentation and Summary of Significant Accounting Policies" to our consolidated financial statements in Item 8 of this Annual Report.

The buildings and critical infrastructure at our major expansion projects at the Mohawk Valley Fab and Siler City, North Carolina facility were substantially completed as of the end of fiscal 2025.

We believe our installed capacity at our production facilities is able to support our current demand and we intend to scale our capacity at these new facilities with future demand for 200mm offerings.

Consequently, we expect gross capital investment to decrease significantly to approximately $0.2 billion in fiscal 2026.

We also expect to receive an additional $0.7 billion of incentives primarily related to the AMIC refundable tax credits during fiscal 2026.

Results of Operations

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Cost of revenue, net 879.2 116.1 % 729.8 90.4 % 515.6 68.0 %

Gross profit 77.4 9.6 % 242.9 32.0 % 208.1 36.4 %

Gross (loss) profit (121.6) (16.1) % 77.4 9.6 % 242.9 32.0 %

Research and development 175.1 23.1 % 201.9 25.0 % 165.7 21.8 %

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Factory start-up costs 85.2 11.2 % 53.8 6.7 % 160.2 21.1 %

Amortization of acquisition-related intangibles 1.1 0.1 % 1.7 0.2 % 2.2 0.4 %

Loss (gain) on disposal or impairment of other assets 1.2 0.1 % 2.0 0.3 % (0.3) (0.1) %

Other operating expense 18.3 2.3 % 10.8 1.4 % 13.7 2.4 %

Gain on disposal of property and equipment (20.0) -2.6 % — — % — — %

Goodwill impairment 359.2 47.4 % — — % — — %

Restructuring and other expenses 417.6 55.1 % 20.6 2.6 % 14.5 1.9 %

Operating loss (1,329.2) (175.4) % (445.3) (55.2) % (311.8) (41.1) %

Non-operating expense (income), net 127.2 15.8 % (52.0) (6.9) % 38.8 6.8 %

Interest expense, net of capitalized interest 315.2 41.6 % 246.3 30.5 % 42.6 5.6 %

Non-operating income, net (25.5) (3.4) % (119.1) (14.8) % (94.6) (12.5) %

Loss before income taxes (1,618.9) (213.7) % (572.5) (70.9) % (259.8) (34.3) %

Income tax expense 1.1 0.1 % 0.7 0.1 % 8.2 1.4 %

Income tax (benefit) expense (9.7) (1.3) % 1.1 0.1 % 0.7 0.1 %

Net loss from continuing operations (1,609.2) (212.4) % (573.6) (71.1) % (260.5) (34.3) %

Net (loss) income from discontinued operations (290.6) (36.0) % (69.4) (9.1) % 49.2 8.6 %

Net loss from discontinued operations — — % (290.6) (36.0) % (69.4) (9.1) %

Net loss ($1,609.2) (212.4) % ($864.2) (107.1) % ($329.9) (43.5) %

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Revenue $757.6 $807.2 $758.5 ($49.6) (6) % $48.7 6 %

The increase in revenue for fiscal 2024 as compared to fiscal 2023 was primarily due to increased demand and production capacity in our materials product line.

Additionally, our power product line revenue increased primarily in connection with the addition of revenue from automotive applications produced in our Mohawk Valley Fab in fiscal 2024.

This increase has been partially offset by the impact of softening demand in industrial applications, which has been largely fulfilled from our North Carolina fab.

The increase in revenue for fiscal 2023 as compared to fiscal 2022 was primarily due to growth in our power product line, where we increased production capacity to meet strong demand.

Increased production capacity for our materials product line also contributed to increased revenues.

Net sales for fiscal 2025 as compared to fiscal 2024 were down 6% primarily driven by the following:

• Net sales of our Power Product offerings were primarily impacted by ongoing weakness in the industrial and energy end markets.

This decrease has been partially offset by growth in demand for automotive applications, though we are continuing to experience slower growth for automotive applications than we previously expected.

• Net sales of our Materials Product offerings were primarily impacted by weaker end market demand, which has resulted in some of our customers adjusting the timing and size of their orders.

The slower than expected growth for electric vehicle applications and increase in global production capacity, particularly in China, has resulted in a supply imbalance and challenging competitive landscape for silicon carbide wafers and devices, particularly for 150mm offerings.

Gross Profit and Gross Margin

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Dollars) June 29, 2025 June 30, 2024 June 25, 2023 2024 to 2025 2023 to 2024

Gross profit $77.4 $242.9 $208.1 ($165.5) (68) % $34.8 17 %

Gross (loss) profit ($121.6) $77.4 $242.9 ($199.0) (257) % ($165.5) (68) %

Gross margin (16) % 10 % 32 %

The primary drivers of the decrease in gross profit and gross margin for fiscal 2025 compared to fiscal 2024 included :

• $97.1 million of costs incurred in connection with the 2025 Restructuring Plan, as discussed further in Note 16, "Restructuring" to our consolidated financial statements in Part II, Item 8 of this Annual Report, including $33.6M of accelerated depreciation on 150mm tooling and improvements and $63.5 million of manufacturing transition charges primarily related to planned excess capacity while we wind down operations at the Durham fab.

• Unfavorable changes in product mix driven by (1) a decrease in the percent of total net sales attributable to our higher-margin Materials Products offerings and (2) an increase in the percent of Power Product net sales attributable to lower margin automotive applications due to ongoing weakness in the industrial and energy end market.

Production capacity in the Durham fab has shifted from industrial and energy products to automotive products, which have a higher production cost in that fab.

• $8.4 million of additional stock-based compensation charges primarily due to acceleration of unvested awards related to our 2025 Restructuring Plan and awarded grants during fiscal 2025.

The gross margin impact of the above items was partially offset by lower underutilization costs due to the timing of the Mohawk Valley Fab ramp.

We incurred $105.2 million of underutilization costs at our Mohawk Valley Fab during fiscal 2025, compared to $124.4 million of underutilization costs during fiscal 2024.

As explained further below in Factory Start-up Costs, the operating costs of each of our new facilities will largely be reflected in cost of revenue, net once such facility reaches revenue generating production.

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We expect that these costs will continue to be substantial as we ramp up the facility to the expected or normal utilization level.

The costs incurred to operate the facility in excess of the costs absorbed into inventory are referred to as underutilization costs and are expensed as incurred to cost of revenue, net.

We expect gross profit and gross margin to be significantly impacted in future periods from these underutilization costs in connection with our new facility construction and expansion projects, the costs of which were expensed as factory start-up costs prior to fiscal 2024.

The decrease in gross profit and gross margin in fiscal 2024 as compared to the prior years was primarily due to underutilization costs incurred within cost of revenue in connection with the start of production at our Mohawk Valley Fab, which began revenue production in late fiscal 2023.

Underutilization costs were $124.4 million for fiscal 2024.

Costs relating to the Mohawk Valley Fab for fiscal 2023 and fiscal 2022 were expensed within factory start-up costs.

In addition, gross profit and gross margin for fiscal 2024 were impacted by a less favorable product mix, due in part to the shift of production capacity in the North Carolina fab from industrial and energy products to automotive products, which have a higher production cost in this fab.

The increase in gross profit for fiscal 2023 as compared to fiscal 2022 was primarily due to increased revenues in both product lines.

This increase was offset partially by increased production costs, unfavorable product mix and higher stock-based compensation costs, which also impacted gross margin during this period.

The decrease in gross margin for fiscal 2023 as compared to fiscal 2022 was primarily due to increased production costs and unfavorable product mix.

These impacts were partially offset by a gross margin improvement in fiscal 2023 from realizing the full impact of our early fiscal 2022 change in estimate to increase our expected useful lives of certain machinery and equipment assets to more closely reflect the estimated economic lives of those assets.

The costs incurred to operate the new facilities in excess of the costs absorbed into inventory are referred to as underutilization costs and are expensed as incurred to cost of revenue, net.

Research and Development

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Percent of revenue 23 % 25 % 22 %

The increases in research and development expenses were primarily due to our continued investment in our silicon carbide technologies, including the development of existing silicon carbide materials and fabrication technology for next generation platforms and expansion of our power product portfolio.

Sales, General and Administrative

The decreases in research and development expenses in fiscal 2025 compared to fiscal 2024 were primarily due to (i) lower people costs due to a planned decrease in salary and benefits costs related to lower headcount and (ii) lower material costs from a planned decrease in research and development wafer starts associated with product transfers and technology qualifications related to the Mohawk Valley Fab ramp.

Sales, General & Administrative

Sales, general and administrative ("SG&A") expenses are comprised of costs primarily associated with our sales and marketing personnel and our executive and administrative personnel (for example, finance, human resources, information technology and legal) and substantially consist of salaries and related compensation costs;

consulting and other professional services (such as litigation and other outside legal counsel fees, audit and other compliance costs);

consulting and other professional services (such as litigation and other outside legal counsel fees, pre-petition legal fees, audit and other compliance costs);

marketing and advertising expenses;

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Dollars) June 29, 2025 June 30, 2024 June 25, 2023 2024 to 2025 2023 to 2024

Sales, general and administrative $246.4 $214.3 $183.0 $32.1 15 % $31.3 17 %

Sales, general & administrative $190.5 $246.4 $214.3 ($55.9) (23) % $32.1 15 %

Percent of revenue 25 % 31 % 28 %

The increase in SG&A expenses in all periods was primarily due to increased salaries and benefits from increased headcount, including incentive based stock-based compensation, as well as increases in professional services and sponsorship costs.

The decrease in SG&A expenses during fiscal 2025 compared to the prior fiscal year was primarily driven by:

• $19.7 million reduction in salaries and other people costs related to planned reductions in headcount associated with our 2025 Restructuring Plan;

• $20.2 million reduction in stock-based compensation expense due to forfeitures and a decrease in fair value per share for new grants;

• $8.9 million reduction related to travel and outside services expenditures (excluding pre-petition charges presented separately).

Factory Start-up Costs

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When a new facility begins revenue generating production, the operating costs of that facility previously expensed as start-up costs will instead be primarily expensed as part of the cost of the production within the cost of revenue, net line item in our statement of operations.

Factory start-up costs in fiscal 2024 primarily related to costs incurred in connection with the construction of our new materials manufacturing facility in Siler City, North Carolina and materials expansion activities at our Durham, North Carolina location.

The decrease in factory start-up costs as compared to the prior year periods is due to the start of revenue generating production at our Mohawk Valley Fab in the fourth quarter of fiscal 2023 and the associated transition of factory operating expenses to cost of production.

The majority of start-up costs for fiscal 2022 and fiscal 2023 related to the construction of this facility.

Amortization or Impairment of Acquisition-Related Intangibles

As a result of our acquisitions, we have recognized various amortizable intangible assets, including customer relationships, developed technology and non-compete agreements.

Amortization of intangible assets related to our acquisitions was as follows:

Factory startup costs in fiscal 2025 increased as compared to fiscal 2024 due to increased costs incurred in connection with the construction of our materials manufacturing facility in Siler City, North Carolina.

Gain on Disposal of Property and Equipment

Disposal gains on property and equipment were as follows:

Fiscal Years Ended Year-Over-Year Change

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Dollars) June 29, 2025 June 30, 2024 June 25, 2023 2024 to 2025 2023 to 2024

Developed technology $ 1.1 $ 1.7 $ 2.2 $ (0.6) (35) % $ (0.5) (23) %

Amortization of acquisition-related intangible assets decreased in all periods presented due to certain intangible assets reaching the end of their useful lives.

No other significant acquisition-related intangible activity or impairments occurred between the periods.

Loss (gain) on Disposal or Impairment of Other Assets

We dispose of a certain level of our equipment in the normal course of business as our production processes change due to production improvement initiatives or product mix changes.

Due to the risk of technological obsolescence or changes in our production process, we regularly review our long-lived assets and capitalized patent costs for possible impairment.

Loss (gain) on disposal or impairment of other assets were as follows:

Gain on disposal of property and equipment ($20.0) $— $— ($20.0) (100) % $— 0 %

Gain on disposal of property and equipment is primarily due to the sale of our Farmer's Branch and Research Triangle Park locations.

Goodwill Impairment

Fiscal Years Ended Year-Over-Year Change

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Dollars) June 29, 2025 June 30, 2024 June 25, 2023 2024 to 2025 2023 to 2024

Loss (gain) on disposal or impairment of other assets $1.2 $2.0 ($0.3) ($0.8) (40) % $2.3 (767) %

Loss (gain) on disposal or impairment of other assets primarily relate to proceeds from asset sales offset by write-offs of fixed asset projects, as well as the write-offs of impaired or abandoned patents.

Additionally, the gain on disposal or impairment of other assets for the fiscal year ended June 26, 2022 includes a $0.7 million net gain related to consideration received from the early payment of the unsecured promissory note (the Purchase Price Note) issued by SGH at the closing of the LED Business Divestiture (as defined below), as discussed in Note 3, "Discontinued Operations," in our consolidated financial statements included in Item 8 of this Annual Report.

Other Operating Expense

Other operating expense was comprised of the following:

Goodwill impairment $359.2 $— $— $359.2 100 % $— 0 %

The increase in goodwill impairment during fiscal 2025 compared to fiscal 2024 is due to the determination that our goodwill was impaired due to a triggering event during the fourth quarter of fiscal 2025.

Refer to Note 2, "Basis of Presentation and Summary of Significant Accounting Policies" in Part II, Item 8 of this Annual Report for more information on our goodwill impairment.

Restructuring and Other Expenses

Restructuring and other expenses consisted of the following amounts:

Fiscal Years Ended Year-Over-Year Change

1 unchanged sentence

Dollars) June 29, 2025 June 30, 2024 June 25, 2023 2024 to 2025 2023 to 2024

Impairment losses on abandoned property and equipment $ 176.5 $ 1.2 $ 2.0 $ 175.3 14,608 % $ (0.8) (40) %

Restructuring and other exit costs 134.9 — — 134.9 100 % — — %

Pre-petition charges 55.8 — — 55.8 100 % — — %

Project, transformation and transaction costs 29.5 18.3 7.4 11.2 61 % 10.9 147 %

Factory optimization restructuring costs — — 6.1 — — % (6.1) (100) %

Severance costs — 3.4 1.2 (3.4) (100) % 2.2 183 %

Other operating expense $18.3 $10.8 $13.7 $7.5 69 % ($2.9) (21) %

Project, transformation and transaction costs primarily relate to professional services fees associated with completed and potential acquisitions and divestitures, as well as internal transformation programs focused on optimizing our administrative processes.

Factory optimization restructuring costs relate to our multi-year factory optimization restructuring plan, which was implemented in connection with our expansion activities between fiscal 2019 and fiscal 2022.

As part of the factory optimization restructuring plan, we incurred restructuring charges associated with the movement of equipment as well as disposals on certain long-lived assets.

The factory optimization restructuring plan concluded in fiscal 2022.

Non-Operating Expense (Income), net

Non-operating expense (income), net was comprised of the following:

Legal settlements 17.0 — — 17.0 100 % — — %

Executive severance costs 1.4 — 3.4 1.4 100 % (3.4) (100) %

Other 2.5 1.1 1.7 1.4 127 % (0.6) (35) %

Restructuring and other expenses $417.6 $20.6 $14.5 $397.0 1,927 % $6.1 42 %

The increase in Restructuring and other expenses during fiscal 2025 compared to fiscal 2024 was primarily driven by costs related to the 2025 Restructuring Plan, including associated losses on impairment of other assets and the pre-petition charges incurred prior to the filing of the Chapter 11 Cases.

Additionally, during the third quarter of fiscal 2025, we agreed to settle several ongoing legal matters and recognized the associated financial statement impact of those settlements in other operating expense.

Refer to Note 16, "Restructuring," in Part II, Item 8 of this Annual Report for more information on Restructuring and Other Exit Costs.

Refer to Note 14, "Commitments and Contingencies," in Part II, Item 8 of this Annual Report for more information on our accounting for contingent losses.

Interest Expense, net of Capitalized Interest

Fiscal Years Ended Year-Over-Year Change

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Dollars) June 29, 2025 June 30, 2024 June 25, 2023 2024 to 2025 2023 to 2024

Interest income ($135.0) ($58.2) ($11.3) ($76.8) (132) % ($46.9) (415) %

Interest expense, net of capitalized interest $315.2 $246.3 $42.6 $68.9 28 % $203.7 478 %

Loss (gain) on legal proceedings 7.7 (50.3) — 58.0 115 % (50.3) (100) %

Loss on debt extinguishment — — 24.8 — — % (24.8) (100) %

Gain on equity investment (18.5) — — (18.5) (100) % — — %

Interest expense, net of capitalized interest.

The increase in interest expense in fiscal 2025 as compared to fiscal 2024 was primarily due to higher average debt outstanding and higher average borrowing rate, partially offset, by a corresponding increase in capitalized interest during fiscal 2025, due to our significant expansion projects under construction.

As we near substantial completion of the initial phase of these initiatives, we expect the amount of interest expense eligible for capitalization to decrease in future periods.

Non-Operating Income, net

Non-operating income, net was comprised of the following:

Fiscal Years Ended Year-Over-Year Change

(in millions of U.S.

Dollars) June 29, 2025 June 30, 2024 June 25, 2023 2024 to 2025 2023 to 2024

Interest income ($67.6) ($135.0) ($58.2) $67.4 50 % ($76.8) (132) %

Gain on legal proceedings — — (50.3) — — % 50.3 100 %

Loss on customs matter — 7.7 — (7.7) (100) % 7.7 100 %

Unrealized gain on equity investment (22.6) (18.5) — (4.1) (22) % (18.5) (100) %

Loss on Wafer Supply Agreement 9.2 25.3 13.6 (16.1) (64) % 11.7 86 %

Write-off of deferred financing costs 54.7 — — 54.7 100 % — — %

Other expense, net 0.8 1.4 0.3 (0.6) (43) % 1.1 367 %

Non-operating expense (income), net $127.2 ($52.0) $38.8 $179.2 345 % ($90.8) (234) %

Non-operating income, net ($25.5) ($119.1) ($94.6) $93.6 79 % ($24.5) (26) %

Interest income.

The increase in interest income in fiscal 2024 and fiscal 2023 was primarily driven by increased average short-term investment balances throughout fiscal 2024.

Our average short-term investment balances increased significantly from the net proceeds we received from the sale of our 2030 Senior Notes in the fourth quarter of fiscal 2023, as well as from the receipt of deposits under the CRD Agreement with Renesas America, pursuant to which we received an initial deposit of $1 billion in the first quarter of fiscal 2024 and additional deposits of $500 million each in the third and fourth quarters of fiscal 2024.

The increase in interest income in fiscal 2022 was primarily due to interest income received on our previously held note receivable from SGH in connection with the LED Business Divestiture (as defined below), partially offset by decreased investment returns from our short-term investment securities.

Interest expense, net of capitalized interest.

The increase in interest expense in fiscal 2024 as compared to fiscal 2023 was primarily due to interest on deposits under the CRD Agreement, which were not outstanding as of June 25, 2023, and interest from the 2030 Senior Notes which were issued at the end of fiscal 2023.

The increase in fiscal 2023 as compared to fiscal 2022 was primarily due to interest from our 2029 Notes and 2030 Senior Notes, which were not outstanding as of June 26, 2022.

This increase was partially offset by a decrease in interest expense from our 2028 Notes, primarily due to the adoption of ASU 2020-06, which eliminated interest expense relating to the accretion on discount in the current period.

In addition, an increase in interest expense from the 2026 Notes, the interest of which was fully capitalized in fiscal 2022 but was almost fully expensed in fiscal 2023, was offset by a decrease in interest expense from our 0.875% convertible senior notes due September 1, 2023 (the 2023 Notes), which were extinguished in the second quarter of fiscal 2022.

Loss (gain) on legal proceedings .

In fiscal 2024, we recognized approximately $7.7 million of customs duties for alleged undervaluation of duties related to transactions by our former Lighting Products business unit from 2012 to 2017.

In fiscal 2023, we received an arbitration award in relation to a former customer failing to fulfill contractual obligations to purchase a certain amount of product over a period of time.

The gain recognized is net of legal fees incurred.

Loss on debt extinguishment .

In the second quarter of fiscal 2022, all of our then-outstanding 2023 Notes were converted into shares of our common stock, which resulted in a loss on extinguishment of $24.8 million.

Gain on equity investment .

The gain on equity investment for fiscal 2024 relates to changes in fair value of the MACOM Shares.

The decrease in interest income in fiscal 2025 compared to fiscal 2024 was primarily due to the lower short-term investment balances and a lower interest rate environment.

Write-off of Deferred Financing Costs.

We recognized charges of $54.7 million related to commitment fee assets and liabilities on undrawn tranches of our Senior Secured Notes and the portion of debt issuance costs allocated to those tranches.

Due to the Restructuring Support Agreement and Chapter 11 Cases, the undrawn borrowing capacity under the Senior Secured Notes is no longer available.

Unrealized gain on equity investment .

The loss (gain) on equity investment for fiscal 2025 and 2024, respectively, relates to changes in fair value of the shares of MACOM's common stock received as partial consideration for the sale of the RF Business (the "MACOM Shares").

Loss on Wafer Supply Agreement .

In connection with the completed sale of our former LED Business to SGH and its wholly owned subsidiary CreeLED, Inc.

(CreeLED and collectively with SGH, SMART) in fiscal 2021, we entered into a Wafer Supply and Fabrication Services Agreement (the Wafer Supply Agreement), pursuant to which we supply CreeLED with certain silicon carbide materials and fabrication services for up to four years.

("CreeLED" and collectively with SGH, "SMART") in fiscal 2021, we entered into a Wafer Supply and Fabrication Services Agreement (the "Wafer Supply Agreement"), pursuant to which we supplied CreeLED with certain silicon carbide materials and fabrication services for up to four years.

We recognized a supply agreement liability in connection with this agreement, which reached full amortization in the second quarter of fiscal 2023.

We expect losses from this agreement to continue through September 2024.

We terminated the Wafer Supply Agreement effective as of September 30, 2024.

Income Tax Expense

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Effective tax rate 1 % — % — %

The change in the effective tax rate from (3)% in fiscal 2022 to 0% in fiscal 2023 and fiscal 2024 was primarily due to $7.3 million of income tax expense recognized in the second quarter of fiscal 2022 related to the restructuring of our Luxembourg holding company.

The change in the effective tax rate for fiscal 2025 compared to fiscal 2024 was primarily driven by the reversal of the deferred tax liability associated with our goodwill upon the impairment recognized during fiscal 2025.

In general, the variation between our effective income tax rate and the current United States statutory rate of 21.0% is primarily due to:

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Dollars) June 29, 2025 June 30, 2024 June 25, 2023 2024 to 2025 2023 to 2024

Net (loss) income from discontinued operations ($290.6) ($69.4) $ 49.2 ($221.2) (319) % ($118.6) (241) %

Net loss from discontinued operations $— ($290.6) $ (69.4) $290.6 100 % ($221.2) (319) %

Net loss from discontinued operations in fiscal 2024 included a $204.0 million loss on sale of our former RF Business.

Net income from discontinued operations in fiscal 2022 included the receipt of an unsecured promissory note from CreeLED as additional consideration to satisfy the earnout obligations pursuant to the LED Purchase Agreement.

The additional consideration was based upon the revenue and gross profit performance of our former LED Business in the first four full fiscal quarters following the closing.

Liquidity and Capital Resources

We require cash to fund our operating expenses, debt service costs, working capital requirements and capital expenditures, including the purchase of goods and services in the ordinary course of business such as raw materials, supplies and capital equipment, as well as outlays for research and development, strategic acquisitions and investments.

Our principal sources of liquidity are cash on hand and marketable securities.

Based on past performance and current expectations, we believe our current working capital will be adequate to meet our cash needs for at least the next 12 months.

With the strength of our working capital position, we believe that we have the ability to continue to invest in the near-term expansion of our production capacity, further develop our product portfolio and, when necessary or appropriate, make selective acquisitions or other strategic investments to strengthen our product portfolio or secure key intellectual properties.

However, even with our strong working capital position, we expect to need additional funding to fully complete all of our intended capacity expansions.

Sources of Liquidity

Chapter 11 Cases and 2025 Restructuring Plan

As a result of our financial condition and the risks and uncertainties surrounding the Chapter 11 Cases, substantial doubt exists that we will be able to continue as a going concern for one year from the date of this Annual Report.

The consolidated financial statements in Part II, Item 8 of this Annual Report were prepared on a going concern basis of accounting, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

However, as a result of the Chapter 11 Cases, the realization of assets and the satisfaction of liabilities are subject to uncertainty.

Our liquidity requirements, and the availability to us of adequate capital resources are difficult to predict at this time.

In addition, we have incurred, and continue to incur, material reorganization and administrative expenses in connection with the Chapter 11 Cases and the 2025 Restructuring Plan.

Notwithstanding the protections available to us under the Bankruptcy Code, if our future sources of liquidity are insufficient, we will face substantial liquidity constraints and will likely be required to significantly reduce, delay or eliminate capital expenditures, implement further cost reductions, seek other financing alternatives or cease operations as a going concern and liquidate.

While operating as debtors-in-possession during the Chapter 11 Cases, we may sell or otherwise dispose of or liquidate assets or settle liabilities, subject to the approval of the Bankruptcy Court or as otherwise permitted in the ordinary course of business, for amounts other than those reflected in these consolidated financial statements.

Our ability to continue as a going concern is contingent upon our ability to receive approval of the Plan from the Bankruptcy Court, successfully implement the Plan, and successfully emerge from Chapter 11 and generate sufficient liquidity to meet our obligations and operating needs, among other factors.

The accompanying consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern or as a consequence of the Chapter 11 Cases.

Further, any plan of reorganization could materially change the amounts of assets and liabilities reported in the accompanying consolidated financial statements.

There are substantial risks and uncertainties related to (i) our ability to successfully emerge from the Chapter 11 Cases, and (ii) the effects of disruption from the Chapter 11 Cases making it more difficult to maintain business, financing and operational relationships.

See the section titled “Risk Factors – Risks related to our Chapter 11 Cases” for a discussion of the risk and uncertainties related to the Chapter 11 Cases.

For a detailed discussion about the Chapter 11 Cases, refer to “Note 2— Basis of Presentation and Summary of Significant Accounting Policies” to our consolidated financial statements in Part II, Item 8 of this Annual Report for additional information.

The following table sets forth our cash, cash equivalents and short-term investments:

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Total cash, cash equivalents and short-term investments $955.4 $2,174.6 ($1,219.2)

The significant components of our working capital are liquid assets such as cash and cash equivalents, short-term investments, accounts receivable and inventories, partially reduced by accounts payable and accrued expenses.

In the first quarter of fiscal 2024, we entered into the CRD Agreement with Renesas America, pursuant to which Renesas America agreed to provide us up to $2 billion in unsecured deposits, subject to certain conditions.

We received an initial deposit of $1 billion in the first quarter of fiscal 2024, a second deposit of $500 million in the third quarter of fiscal 2024 and the third and final deposit of $500 million in the fourth quarter of fiscal 2024.

In the second quarter of fiscal 2024, we completed the sale of the RF Business and received approximately $75 million in cash.

In the third quarter of fiscal 2024, we received a $57.5 million Land Acquisition Business Investment Grant from the North Carolina Department of Commerce.

In fiscal 2023, we issued and sold a total of $1,750.0 million aggregate principal amount of 2029 Notes and $1,250.0 million aggregate principal amount of 2030 Senior Notes, as discussed in Note 10, "Long-term Debt," to our consolidated financial statements in Item 8 of this Annual Report.

The total net proceeds from the sale of the 2029 Notes were $1,718.6 million, of which we used $273.9 million to fund the cost of entering into capped call transactions.

The total net proceeds from the sale of the 2030 Senior Notes were approximately $1,149.3 million.

In connection with the sale of our 2030 Senior Notes, we terminated the $125.0 million secured revolving line of credit prior to its scheduled maturity date of January 9, 2026.

In fiscal 2022, all outstanding 2023 Notes were surrendered for conversion following our issuance on December 8, 2021 of a notice to holders of the 2023 Notes calling for the redemption of the remaining outstanding 2023 Notes, resulting in the settlement of the outstanding $424.8 million aggregate principal amount of 2023 Notes in approximately 7.1 million shares of our common stock.

Also in fiscal 2022, we issued and sold a total of $750.0 million aggregate principal amount of 2028 Notes, as discussed in Note 10, "Long-term Debt," to our consolidated financial statements in Item 8 of this Annual Report.

The total net proceeds of the 2028 Notes were $732.3 million, of which we used $108.2 million to fund the cost of entering into capped call transactions.

In addition, we received early payments on two unsecured promissory notes issued to us in connection with the sale of certain assets and subsidiaries comprising the LED Business to SMART on March 1, 2021 (the LED Business Divestiture).

In the third quarter of fiscal 2022, we received an early payment in the amount of $125.0 million, along with outstanding accrued and unpaid interest as of the payment date, relating to the Purchase Price Note.

In the first quarter of fiscal 2023, we received an early payment in the amount of $101.8 million in connection with the unsecured promissory note issued in the fourth quarter of fiscal 2022 as an earn-out payment.

As of June 30, 2024, we had unrealized losses on our short-term investments of $9.3 million.

All of our short-term investments had investment grade ratings, and any such investments that were in an unrealized loss position at June 30, 2024 were in such position due to interest rate changes, sector credit rating changes or company-specific rating changes.

We evaluate our short-term investments for expected credit losses.

We believe we are able to and we intend to hold each of the investments held with an unrealized loss as of June 30, 2024 until the investments fully recover in market value.

No allowance for credit losses was recorded as of June 30, 2024.

From time to time, we evaluate strategic opportunities, including potential acquisitions, joint ventures, divestitures, spin-offs or investments in complementary businesses, and we have continued to make such evaluations.

We may also access capital markets through the issuance of debt or equity, which we may use in connection with the acquisition of complementary businesses or other significant assets or for other strategic opportunities or general corporate purposes.

Expected Uses of Liquidity

We opened the Mohawk Valley Fab in the fourth quarter of fiscal 2022 to expand capacity for production of our silicon carbide devices and started revenue generating production at the facility in the fourth quarter of fiscal 2023.

We expect to invest approximately $2.0 billion in total construction, equipment and other related costs for the new facility, of which approximately $500 million is expected to be reimbursed over time by the State of New York Urban Development Corporation (doing business as Empire State Development) under a Grant Disbursement Agreement (the GDA).

As of June 30, 2024, we have spent approximately $1.2 billion and received $425.4 million in reimbursements.

Additionally, we recently started construction on a new materials manufacturing facility in Siler City, North Carolina.

We expect to invest approximately $2.3 billion in total construction, equipment and other related costs for the facility through fiscal 2025.

As of June 30, 2024, we have spent approximately $1.3 billion.

In February 2023, we announced the intention to build a highly automated, cutting-edge wafer fabrication facility in Saarland, Germany.

We are continuing to work with the European Union, German and Saarland governments on the incentive package for this facility.

The timing and amount of these incentives are uncertain and could happen, if at all, in fiscal 2026 or beyond.

We will not commence construction of this facility until we have finalized these incentives, and we expect the vast majority of the investment to occur after fiscal 2025.

For fiscal 2025, we target approximately $1.2 billion to $1.4 billion of capital investment, which is primarily related to capacity and infrastructure projects to support longer-term growth and strategic priorities.

This target is highly dependent on the timing and overall progress on the Mohawk Valley Fab and the construction of our new materials manufacturing facility in Siler City, North Carolina.

Compared to fiscal 2024, our capital investment related to these new facilities during the next 12 months will be significantly less and will continue to decrease substantially as we complete the majority of construction related to this phase of our expansion efforts.

As such, our ability to modulate capital investment up or down in response to expected production capacity requirements will continue to increase.

We have take-or-pay supplier agreements that require a minimum of $235.2 million of purchases over the next four years and a commitment to provide quarterly capacity reservation deposits with a remaining total of $21.6 million over the next 18 months, as outlined further in Note 15, "Commitments and Contingencies," to our consolidated financial statements in Item 8 of this Annual Report.

Given our current cash and investments position, we believe we will be able to fund daily operating expenses, debt service, working capital and capital requirements for at least the next 12 months but we expect to need additional funding to fully complete all of our previously announced planned expansion initiatives described above.

We may seek to obtain funding through, among other avenues, government funding in both the United States and Europe, public or private equity offerings and debt financings (which may involve refinancing, modifying or retiring some of our existing debt).

In addition, we may also apply for and potentially sell tax credits as part of the IRA to further fund our expansion initiatives.

In addition to ordinary operating expenses, our estimated future obligations consist of leases, debt, and interest on long-term debt.

For a description of contractual obligations, including lease and debt obligations, see Note 5, "Leases," Note 10, "Long-term Debt," and Note 15, "Commitments and Contingencies," in our consolidated financial statements included in Item 8 of this Annual Report.

In summary, our cash flows were as follows (in millions of U.S.

The following table summarizes our cash flows for the periods presented:

Fiscal Years Ended Year-Over-Year Change

June 30, 2024 June 25, 2023 June 26, 2022 2023 to 2024 2022 to 2023

(in millions of U.S.

Dollars) June 29, 2025 June 30, 2024 June 25, 2023 2024 to 2025 2023 to 2024

Cash used in operating activities of continuing operations ($711.7) ($671.3) ($102.2) ($40.4) ($569.1)

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Net increase (decrease) in cash and cash equivalents ($578.7) ($711.1) $1,307.5 $132.4 ($2,018.6)

Our principal sources of liquidity in fiscal 2025 included:

• cash on hand from prior period debt financing, including the CRD Agreement;

• receipts from customers and other operating activities;

• proceeds from the sale of our Farmer's Branch and RTP facilities;

• reimbursements received under the AMIC refundable tax credit and other government incentives;

• proceeds from debt issuances under our Senior Secured Notes and cash interest savings from paid-in-kind interest under our Senior Secured Notes and the CRD Agreement;

• proceeds from our at-the-market offering program.

Cash on hand during the fiscal 2025 was primarily used for the following:

• capital expenditures related to our significant expansion projects;

• normal recurring operating expenses;

• professional service fees associated with our debt restructuring initiatives including preparing for the Chapter 11 Cases;

• implementation of the 2025 Restructuring Plan.

Our currently anticipated cash flow needs, both in the short-term and long-term, may include the following:

• normal recurring operating expenses;

• planned and discretionary capital expenditures;

• professional service fees associated with our Chapter 11 Cases;

• repayments of debt and interest.

We expect that our current operating forecast over the next 12 months will allow us to maintain operations and meet our obligations to customers, vendors and employees in the ordinary course of business.

However, due to the inherent uncertainty of our ongoing Chapter 11 Cases and the events of default on all outstanding debt triggered by the filing of the Chapter 11 Cases, management has concluded that there is substantial doubt about our ability to continue as a going concern as of the issuance date of the consolidated financial statements included in this Annual Report, in accordance with the requirements of Accounting Standards Codification ("ASC") 205-40, “Presentation of Financial Statements – Going Concern.”

Expected Liquidity after Chapter 11 Cases

Under the terms contemplated by the Restructuring Support Agreement and the Plan, upon successful emergence from the Chapter 11 Cases, the Company expects to have reduced its overall funded debt by approximately 70%, representing a reduction of approximately $4.6 billion and a reduction of its annual total cash interest payments by approximately 60%.

Key terms of the Restructuring Support Agreement are as follows:

• Pursuant to the transactions contemplated by the Restructuring Support Agreement, the Company expects to receive an aggregate of $301 million of new financing in the form of the New 2L Convertible Notes, fully backstopped by certain holders of our existing Convertible Notes.

• The Restructuring Support Agreement contemplates a paydown of $250 million in principal amount of existing Senior Secured Notes at a redemption price of 109.875% of the principal amount being redeemed, with certain modifications to reduce go-forward cash interest and minimum liquidity requirements.

• The Restructuring Support Agreement also contemplates an exchange of $5.2 billion in principal amount of existing Convertible Notes and Renesas’ existing loan for new notes with a principal amount of $500 million and 95% of the New Common Stock, subject to dilution from other equity issuances, with Renesas' loan claims entitled to additional incremental consideration to the extent certain regulatory approvals are not obtained by an agreed upon deadline.

• Pursuant to the transactions, existing equity interests in Wolfspeed will be cancelled and existing equity holders will receive their pro rata share of 3.0% or 5.0% of the New Common Stock (depending on whether Renesas receives certain regulatory approvals), subject to dilution from other equity issuances and potential reduction from certain events.

• All other unsecured creditors are expected to be unimpaired and paid on the Plan Effective Date or in the ordinary course of business.

The Plan is expected to become effective by the end of the third quarter of calendar year 2025.

The Chapter 11 Cases will likely limit our ability to utilize our net operating loss carryforwards (and/or certain other tax attributes, excluding certain refundable tax credits such as the AMIC) that are generated before the Plan Effective Date.

There are substantial risks and uncertainties related to our ability to successfully emerge from Chapter 11 and the effects of disruption from the Chapter 11 Cases which may make it more difficult to maintain business, financing and operational relationships.

Refer to Part I, Item 1A "Risk Factors - Risks related to our Chapter 11 Cases" of this Annual Report.

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.

In addition to ordinary operating expenses, our estimated future obligations consist of leases, debt, and interest on long-term debt.

For a description of contractual obligations, including lease and debt obligations, see Note 5, "Leases," Note 9, "Debt," and Note 14, "Commitments and Contingencies," in our consolidated financial statements included in Part II, Item 8 of this Annual Report.

We will continue to have take-or-pay inventory supplier agreements that require a minimum of $202.1 million of purchases over the next four years and a commitment to provide quarterly capacity reservation deposits with a remaining total of $3.5 million over the next 3 months, as outlined further in Note 14, "Commitments and Contingencies," to our consolidated financial statements in Part II, Item 8 of this Annual Report.

We will also be required to purchase electricity for our facility in Siler City, North Carolina and Durham, North Carolina under a long-term electricity supply agreement with minimum volume and spend requirements of approximately $62.4 million over the next 5 years and approximately $25.7 million over the next 8 years, respectively.

We also expect to receive an additional $0.7 billion of incentives primarily related to the AMIC refundable tax credits during fiscal 2026.

We also continue to actively pursue opportunities for federal funding, including but not limited to awards that may be made available through the CHIPS Act or other programs, including the recently established United States Investment Accelerator Office ("federal funding opportunities").

On July 4, 2025, the U.S.

government enacted the One Big Beautiful Bill Act (“OBBBA”).

The OBBBA includes changes to U.S.

tax law including increasing the AMIC to 35 percent from 25 percent for property placed in service after December 31, 2025 and providing for the immediate expensing of U.S.

research expenditures and eligible capital expenditures.

The effects of the OBBBA become effective to the Company beginning in fiscal 2026.

We are currently evaluating the effect of the legislation on our financial statements.

Liquidity Prior to and During Chapter 11 Cases

In the first quarter of fiscal 2025, we initiated the 2025 Restructuring Plan, which includes a headcount reduction that is currently on-going and facility closure and consolidation plan intended to optimize our cost structure as we focus on the acceleration of our transition from 150mm to 200mm silicon carbide devices.

We expect to realize approximately $250 million of annualized cost savings upon completion of these initiatives.

Please refer to Part II, Item 8, Note 16 - "Restructuring" for additional information.

In the second quarter of fiscal 2025, we issued an additional $250.0 million aggregate principal amount of Senior Secured Notes.

The 2030 Senior Notes Indenture permitted us to issue additional tranches up to $500.0 million subject to certain conditions.

Pursuant to the terms of the Restructuring Support Agreement and the subsequent filing of the Chapter 11 Cases, we are no longer able to borrow the $500 million undrawn commitment under the Senior Secured Notes.

In the second quarter of fiscal 2025, we filed a shelf registration statement on Form S-3 to register for possible future sale shares of our common stock.

The registration statement became automatically effective upon filing with the SEC on December 9, 2024.

Under this shelf registration statement, we implemented an at-the-market offering program (the “ATM Program”) as described in the prospectus supplement filed with the SEC on December 9, 2024.

As discussed further in Note 10, “Shareholders” Equity” to our consolidated financial statements in Part II, Item 8 of this Annual Report, the ATM Program was conducted pursuant to an equity distribution agreement with J.P.

Morgan Securities LLC and Wells Fargo Securities, LLC (the “Managers”).

The ATM Program concluded on January 14, 2025, and we completed the sale of approximately 27.8 million additional shares of common stock for total gross proceeds of approximately $200.0 million and net proceeds of approximately $195.2 million, after $4 million in commissions to the Managers and $0.8 million in other offering costs.

In the first quarter of fiscal 2024, we entered into the CRD Agreement with Renesas, pursuant to which Renesas agreed to provide us up to $2.0 billion in unsecured deposits, which we received during fiscal 2024.

As discussed in Note 9, "Debt," to our consolidated financial statements in Part II, Item 8 of this Annual Report, we entered into an amendment to the CRD Agreement in October 2024 to permit us to pay the accrued interest on the outstanding loans payable on the last business day of each of December 2024 and June 2025 by adding those amounts to the outstanding principal amount of the loans rather than in cash, reducing our expected cash interest payments in fiscal 2025 by approximately $120.0 million.

However, due to the inherent uncertainty of our ongoing Chapter 11 Cases and the events of default on all outstanding debt triggered by the filing of the Chapter 11 Cases, management has concluded that there is substantial doubt about our ability to continue as a going concern as of the issuance date of the consolidated financial statements included in this Annual Report, in accordance with the requirements of ASC 205-40, “Presentation of Financial Statements – Going Concern.”

Capital Expenditures

We believe that upon the successful implementation of our debt restructuring contemplated by the terms of the Restructuring Support Agreement and our ongoing Chapter 11 Cases , we will have the ability to navigate the current environment while maintaining our capital expenditure plans to support future growth to meet long-term demand.

The initial phases of our major expansion projects at the Mohawk Valley Fab and Siler City, North Carolina facility was substantially completed as of late fiscal 2025.

Consequently, we expect gross capital investment to decrease significantly, to approximately $0.2 billion in fiscal 2026.

We also believe our ability to modulate capital investment up or down in response to expected production capacity demand requirements will continue to increase.

Refer to the "Overview" section for a summary of our cash flows for the periods presented.

A narrative discussion of the drivers for the changes in our cash flows between fiscal 2024 and fiscal 2025 is included below.

Cash Flows from Operating Activities

Net cash used in operating activities increased in fiscal 2024 as compared to fiscal 2023 primarily due to an increased net loss and decreased working capital as a result of inventory growth, interest payments on long-term debt and increased payments for supplier deposits.

Net cash used in operating activities decreased in fiscal 2023 as compared to fiscal 2022 primarily due to a decrease in working capital in fiscal 2023, which was primarily driven by increased customer reserve deposits received and a smaller increase in accounts receivable, net, both of which offset increased inventory growth.

This was partially offset by an increase in net loss during the period.

Net cash used in operating activities increased in fiscal 2025 as compared to fiscal 2024 primarily due to severance and other cash charges related to the 2025 Restructuring Plan, lower revenues, and higher interest payments, partially offset by benefits realized from our restructuring and cost savings initiatives.

Cash Flows from Investing Activities

Our investing activities primarily relate to short-term investment transactions, purchases of property and equipment, and property and equipment related reimbursements.

The increase in net cash used in investing activities in fiscal 2024 as compared to fiscal 2023 was primarily due to an increase in net property and equipment purchases of $1,301.4 million, partially offset by an increase in net proceeds from maturities and sales of short-term investments.

The increase in net cash used in investing activities in fiscal 2023 as compared to fiscal 2022 was primarily due to a $296.3 million increase in net property and equipment, and a $436.2 million increase in net purchases of short-term investments.

The decrease in net cash used in investing activities in fiscal 2025 as compared to fiscal 2024 was primarily due to a decrease in net property and equipment purchases of $1,064.5 million, a decrease in purchases of short term investments and a decrease in net proceeds from maturities and sales of short-term investments.

Cash Flows from Financing Activities

Net cash provided by financing activities in fiscal 2024 primarily consisted of $2.0 billion in net proceeds from the receipt of deposits under the CRD Agreement.

Net cash provided by financing activities in fiscal 2023 primarily consisted of $2.9 billion in net proceeds from issuing the 2029 Notes and the 2030 Senior Notes, partially offset by $273.9 million in cash paid for the capped call transactions in connection with issuing the 2029 Notes.

Net cash provided by financing activities in fiscal 2025 primarily consisted of $0.2 billion in net proceeds from the issuance of additional long term debt borrowings and $0.2 billion proceeds from our ATM Program.

Financial and Market Risks

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We utilize significant amounts of precious metals, gases and other commodities in our manufacturing processes.

General economic conditions, market specific changes or other factors outside of our control may affect the pricing of these commodities.

General economic conditions, market specific or trade policy changes or other factors outside of our control may affect the pricing of these commodities.

We do not use financial instruments to hedge commodity prices.

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Revenue Recognition

For the year ended June 30, 2024, approximately a quarter of our revenue was from sales to distributors.

For the year ended June 29, 2025, approximately a third of our revenue was from sales to distributors.

Distributors stock inventory and sell our products to their own customer base, which may include value added resellers, manufacturers who incorporate our products into their own manufactured goods, or ultimate end users of our products.

We recognize revenue upon shipment of our products to our distributors.

This arrangement is often referred to as a “sell-in” or “point-of-purchase” model as opposed to a “sell-through” or “point-of-sale” model, where revenue is deferred and not recognized until the distributor sells the product through to their customer.

Our distributors may be provided limited rights that allow them to return or scrap a portion of inventory (product exchange rights or stock rotation rights) and receive credits for changes in selling prices (price protection rights) or customer pricing arrangements under our “ship and debit” program or other targeted sales incentives.

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Inventories are stated at the lower of cost or net realizable value.

We write-down our inventories for estimated obsolescence equal to the difference between the cost of the inventory and its estimated market value based upon an aging analysis of the inventory on hand, specifically known inventory-related risks (such as technological obsolescence), and assumptions about future demand.

We write-down our inventories for estimated obsolescence equal to the difference between the cost of the inventory and its net realizable value based upon an aging analysis of the inventory on hand utilizing specific reserve percentages, specifically known inventory-related risks (such as technological obsolescence), and assumptions about future demand.

We also analyze sales levels by product type, including historical and estimated future customer demand for those products to determine if any additional reserves are appropriate.

For example, we adjust for items that are considered obsolete based upon changes in customer demand, manufacturing process changes or new product introductions that may eliminate demand for the product.

For example, we

adjust for items that are considered obsolete based upon changes in customer demand, manufacturing process changes or new product introductions that may eliminate demand for the product.

In addition, our international sales and purchases are subject to numerous United States and foreign laws and regulations which may limit or restrict our sales and shipments to foreign customers.

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Deferred Tax Asset Valuation Allowances

In accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 740, “Income Taxes” (ASC 740), we evaluate all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a deferred tax asset is more likely than not to be realized.

In accordance with Financial Accounting Standards Board ("FASB") ASC 740, “Income Taxes” ("ASC 740"), we evaluate all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a deferred tax asset is more likely than not to be realized.

In assessing the adequacy of a recognized valuation allowance, we consider all available positive and negative evidence to estimate if sufficient future taxable income of the right character will be generated to utilize the existing deferred tax assets by jurisdiction.

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We compare the fair value of the reporting unit to its carrying value, including goodwill.

We derive a reporting unit ’ s fair value through a combination of the market approach (a guideline transaction method) and the income approach (a discounted cash flow analysis).

The market and income approaches require significant judgment, including (i) the estimation of future revenues, gross margins, and operating expenses, all of which are dependent on internal forecasts, current and anticipated economic conditions and trends, (ii) the selection of market multiples through an assessment of the reporting unit’s performance relative to peer competitors, (iii) the estimation of the long-term revenue growth rate and discount rate from the capital asset pricing model and (iv) the determination of our weighted average cost of capital.

Changes in these estimates and assumptions could materially affect the fair value of the goodwill reporting unit, potentially resulting in a non-cash impairment charge.

The fair values are reconciled back to our consolidated market capitalization.

If the fair value of a reporting unit exceeds its carrying value, then we conclude that no goodwill impairment has occurred.

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Once an impairment loss is recognized, the adjusted carrying value of the goodwill becomes the new accounting basis of the goodwill for the reporting unit.

Historically, we derived a reporting unit’s fair value through a combination of the market approach and the income approach (a discounted cash flow analysis).

During the fourth quarter of fiscal 2025, we identified the existence of potential indicators of impairment, performed an interim goodwill impairment assessment, and determined the $359.2 million goodwill balance was fully impaired.

As part of the interim assessment completed in the fourth quarter of fiscal 2025, the Company determined a market approach based on overall business enterprise value (determined by the fair value of equity plus the fair value of debt) was a more appropriate method of estimating the reporting unit's fair value, given the sustained decrease in the Company's market capitalization and observable market prices of the Company's long-term debt obligations, where available.

Under the market approach, the fair value of the reporting unit was calculated based on the implied equity value of the reporting unit (market capitalization, including consideration of how a reasonable range of control premiums, would impact the measurement of any goodwill impairment loss, if applicable) plus the implied fair value of the interest-bearing debt (based on market prices for its debt, if available, and/or observable inputs for certain debt instruments where market prices were not available).

The indicated carrying value of the reporting unit, represented by the negative equity of the reporting unit adjusted for the book value of interest-bearing debt was compared to the calculated fair value of the reporting unit.

The goodwill of the reporting unit was determined to be fully impaired.

Quantitative and Qualitative Disclosures About Market Risk

See the section entitled “Financial and Market Risks” included in Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" of this Annual Report.

See the section entitled “Financial and Market Risks” included in Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" of this Annual Report.

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 7. Management’s Discussion and Analysis