Wolfspeed's fate: How divestitures impact semiconductor sourcing

On June 30, 2025, Wolfspeed, a key player in the silicon carbide (SiC) sector, filed for Chapter 11 bankruptcy protection. The decision came as a strategic attempt to restructure $4.6 billion in debt amid a sharp decline in demand from the electric vehicle (EV) and industrial markets. While the company has emphasized that the move is part of a long-term growth strategy, Wolfspeed’s bankruptcy filing has sent ripple effects through the semiconductor supply chain.  

This isn’t an isolated case. Industry bankruptcies, mergers, acquisitions, and divestures are increasing thanks to challenging market conditions. When they happen, they reshape chip sourcing practices and are often the spark that starts a cascade of component obsolescence and acute supply disruptions.  

Procurement teams must be ready to adapt to changes brought on by these events, often with little or no notice. This article outlines five key risks such corporate distress events pose—and strategies sourcing leaders can implement to stay ahead.  

The ripple effects of corporate distress

Each time a semiconductor manufacturer files bankruptcy or is absorbed by a larger competitor, procurement teams and product designers must reevaluate their sourcing plans. These events often profoundly alter component availability, pricing dynamics, and product design roadmaps.  

Wolfspeed’s recent bankruptcy is merely the latest instance. The past few years have seen similar corporate shifts occurring more frequently and becoming an omnipresent source of disruption in the industry. Combined, five forces resulting from corporate restructurings can derail product development roadmaps, inflate costs, and pose long-term reliability challenges.

1. Instant obsolescence

Bankruptcy or divestures, and acquisitions to a similar degree, often lead to abrupt product discontinuations. As new leadership restructures a company’s operations, they may act quickly to eliminate unprofitable, overlapping, or non-essential product lines in a matter of days. For engineers relying on these parts, this means redesigns, qualification cycles, and near-certain production delays.  

2. Market concentration

As larger firms acquire or outlast struggling competitors, the supplier ecosystem becomes increasingly concentrated. Reduced supplier diversity can weaken negotiating power and inflate component pricing due to lower competition. For end-users, this typically translates to higher costs as well as fewer options during component selection.  

3. Shifting priorities and EOL acceleration

As mentioned, post-acquisition transitions often bring new corporate priorities. While product line discontinuations tend to steal the spotlight because of their immediate impact, they aren’t the only change to worry about.  

Even when a product isn’t cut immediately, it may be placed on an accelerated end-of-life (EOL) path under the new leadership’s visions for the future. This gives procurement teams a valuable, but narrow, window of opportunity for last-time-buys (LTBs). Though this is better than being cut off from supply without warning, racing to secure components before they disappear can place extreme pressure on inventory planning and cash flow.  

4. Component unavailability

Divested business units, especially those producing niche or low-volume components, may struggle to maintain supply continuity. Without sufficient demand, these products become harder to source. When a company goes bankrupt or decides to stop producing them, they may disappear from the market entirely.  

5. Supply chain disruptions

Corporate restructuring is a common cause of operational delays and complications across the supply chain. These transitions often create short-term backlog spikes and volatile lead times, undermining production schedules and service-level agreements until the dust settles.

Wolfspeed’s lasting impact isn’t new for the chip industry

Although Wolfspeed’s bankruptcy filing may have startled some observers, it isn’t unheard of in the industry. In reality, the semiconductor sector is no stranger to mergers and financial turbulence. The recent Wolfspeed example, and its ensuing consequences, echo familiar patterns.

When AMD acquired Xilinx for $49 billion in the largest deal in chip history at the time, the move led to widespread FPGA and CPU roadmap consolidations. While it enabled product line integration and streamlined some builds, it also left certain legacy Xilinx parts orphaned. The resulting sourcing headache plagued embedded systems engineers for years.  

Renesas sold its RF unit to CG Power in 2024, shifting critical niche transceiver components to a smaller supplier with limited global reach at the same time. In turn, procurement teams now face greater uncertainty in sourcing those products. The EDA segment also experienced major consolidation in 2024 when Synopsys acquired Ansys for roughly $35 billion and Renesas acquired Altium for around $5.9 billion.  

Of course, these are just a few recent examples highlighting a wider industry trend of mergers and acquisitions. In 2024, 44 such transactions were documented, marking a significant rise from 33 the year before. Such deals often result in product line overlaps and restructuring, opening the door for significant EOL risk.  

In this environment, the importance of real-time visibility into corporate developments can’t be understated. A single deal can upend component availability, particularly among niche products, and affect compliance statuses or technical support. Given the ramifications, procurement teams must closely monitor events like bankruptcies and acquisitions to anticipate EOL or re-prioritization initiatives that will affect their operations.  

Procurement teams can combat challenges through adaptability

Corporate distress and divestitures aren’t anything new to the industry, but their fallout can be far-reaching and long-lasting if not properly prepared for. Proactive action, rather than reacting to moves by other industry players, can help companies combat the worst of these issues.  

One effective approach is leveraging franchise partnerships. By working with authorized distributors to secure authentic alternatives from different sources, procurement teams can secure their supply lines and gain upstream visibility into forthcoming changes. Such partnerships often yield early warnings about parts approaching EOL and can suggest suitable form-fit-function replacements.  

Another powerful strategy is engaging with a global sourcing team. When divestures or re-prioritizations lead to component shortages, a well-connected global team can locate hard-to-find niche or legacy components across secondary markets or inventory reserves, filling procurement gaps that might otherwise result in production delays.  

Equally important is the use of market intelligence tools that identify potential risks before they escalate. By flagging parts linked to financially distressed suppliers or those within highly concentrated markets, procurement teams can make more informed decisions about alternative sourcing before a corporate shakeup derails supply.  

Finally, embedding digital case management into procurement systems allows teams to track events like acquisitions and bankruptcy in real-time. These logs can trigger automated workflows for lifecycle checks, supplier engagement, or proactive buy-ahead strategies to reduce surprises and ensure operational continuity when the unexpected occurs.  

Combating Wolfspeed’s disruption with smart sourcing

Wolfspeed’s Chapter 11 filing adds to the growing list of corporate events capable of disrupting semiconductor sourcing. However, the right strategy can mitigate these challenges, turning disruption into a competitive advantage.  

Sourceability supports procurement teams through a multi-pronged approach. We lean on our impactful franchise partnerships and experienced global sourcing team to help you find vetted alternative suppliers or the scarce EOL parts you need from our network of trusted sellers.  

Datalynq, our market intelligence tool, helps buyers monitor concentration and financial risk across thousands of components, enabling you to find sourcing solutions earlier. Users can upload a BOM into Datalynq to identify which components are prone to risk. For ongoing updates on events affecting the semiconductor industry, subscribe to our weekly newsletter.  

Are you currently navigating a vendor bankruptcy or merger? Contact a Sourceability expert for a personalized risk assessment.