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Wolfspeed Inc (NYSE:WOLF) has reportedly postponed plans to build a $3 billion plant in Germany, underlining the European Union’s ongoing challenges to boost semiconductor production and lessen dependency on Asian chips.
The proposed facility in Saarland, intended to manufacture chips for electric vehicles, is still in the planning stages and seeking funding, Reuters reported, citing a company spokesperson.
Wolfspeed has reduced capital spending due to weak EV markets in Europe and the U.S. and is now concentrating on ramping up production in New York.
Construction in Germany is delayed until mid-2025, two years later than planned.
The company faces pressure from an activist investor to improve shareholder value after its stock fell around 50% over the past year. Other companies, including Intel Corp (NASDAQ:INTC) and Taiwan Semiconductor Manufacturing Co (NYSE:TSM), have announced plans for new European plants following the EU’s 2022 Chips Act aimed at raising €43 billion ($47 billion) to strengthen the semiconductor industry.
However, two years later, only some projects were underway, and even fewer had yet to receive European Commission approval for state aid.
Analysts lowered their price targets on Wolfspeed due to disappointing third-quarter revenue results. Although the company reported a slightly smaller adjusted loss than expected, its revenue of $200.7 million fell short of estimates. The price target adjustments reflect concerns over Wolfspeed’s ability to meet revenue expectations despite operational progress.
Previously, analysts had flagged pricing and margin challenges due to intense rivalry and lackluster EV demand.
Wolfspeed stock lost 50% in value in the last 12 months. Investors can gain exposure to the stock via iShares Core S&P Mid-Cap ETF (NYSE:IJH) and iShares Semiconductor ETF (NASDAQ:SOXX).
Price Action: WOLF shares traded higher by 0.04% at $26.01 premarket at last check Thursday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
