On this Wednesday, shares of Wolfspeed (WOLF) are surging, with a 23.6% increase as of 3:02 p.m. Eastern Time. This rise coincides with the S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) experiencing growth of 0.6% and 0.5%, respectively.
Today, the struggling semiconductor company saw its shares soaring, partially due to a U.S.-Japan trade agreement. This nation is particularly relevant to Wolfspeed because of their strong connections.
U.S. strikes trade deal with Japan
Yesterday, President Trump unveiled a significant trade agreement with Japan that includes a lowering of tariffs on Japanese items imported into the U.S. The new rate for these goods is 15%. A notable aspect of this deal involves a reduction in auto tariffs from 25% to 15%. Additionally, Japan has pledged to invest approximately $550 billion in the U.S., and they will broaden their markets to accommodate American goods such as cars, trucks, and agricultural products.
Wolfspeed maintains substantial business dealings with a Japanese chip producer directly. Reducing trade restrictions could solidify this relationship further. Moreover, boosting automotive trade is advantageous for the faltering electric vehicle (EV) sector, which serves as the primary revenue source for Wolfspeed.
It’s a critical time for Wolfspeed
Towards the end of last month, Wolfspeed sought protection under Chapter 11 bankruptcy. However, they plan to keep running while they reorganize their finances and alter their operations. Upon exiting bankruptcy, Wolfspeed anticipates a reduction in debt by about 70% and a decrease in interest payments by roughly 60%, providing the company with some financial relief.
This investment opportunity might appeal to those with a higher risk appetite due to its potential as a turnaround project. However, for the majority, I’d advise steering clear of this troubled company’s shares.
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2025-07-23 23:09