Introduction
In a rapidly shifting power semiconductor landscape, one of the most closely-watched supply chain deals in recent years is now facing serious uncertainty. The $2 billion silicon carbide (SiC) wafer agreement between Japan’s Renesas Electronics and U.S.-based Wolfspeed—once considered a strategic masterstroke—could now become a financial and operational liability.
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Key Takeaways:
China’s SiC suppliers, buoyed by state support and cost advantages, are eroding the technological edge and pricing power of Western and Japanese firms.
Japanese semiconductor players must revisit their supply chain strategies, incorporating more diverse sourcing, vertical integration, and domestic capacity building.
Prepayment-based agreements, while previously seen as strategic, may expose companies to large impairment risks when partners falter.
Background: A Strategic Bet on SiC
In 2023, Renesas made headlines by prepaying $2 billion for a 10-year supply of 150mm and 200mm SiC wafers from Wolfspeed.
The agreement was intended to secure the raw materials necessary to scale Renesas’ SiC chip production, especially at its Takasaki factory, which is expected to ramp up manufacturing by 2025.
For Renesas, this was not just a procurement deal—it was a critical pillar of its long-term power semiconductor roadmap, particularly in the electric vehicle (EV) and industrial power segments.
By locking in supply from Wolfspeed, Renesas aimed to hedge against shortages, reduce future pricing risks, and signal its seriousness in the growing SiC market.
But fast forward to 2025, and the ground has shifted beneath them.
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Wolfspeed’s Financial Struggles
Wolfspeed, once seen as the global leader in SiC materials and power devices, has found itself under immense financial strain.
A combination of global EV demand slowdowns, intensifying competition from Chinese players, and falling SiC wafer prices has eroded its profitability and investor confidence.
In May 2025, Wolfspeed admitted doubts about its survival in SEC filings. Rumors of bankruptcy are spreading, drawing market attention.
If Wolfspeed fails, Renesas could face $2 billion in losses. Its SiC supply chain for 2025 would break down.
Renesas might need to renegotiate with suppliers on worse terms amid tight supply.
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Why This Matters
The implications go far beyond a single contract. This crisis exposes the weakness of SiC supply chains and the risks of relying on one supplier.
For Renesas, Wolfspeed’s troubles threaten its edge in SiC chips.
Rohm and Fuji Electric have diversified, but they still face pressure from rising Chinese rivals with cheaper and better technology.
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Conclusion
While Renesas has maintained public silence regarding Wolfspeed’s deteriorating financial condition, industry sources indicate that the Japanese semiconductor giant is proactively addressing the potential fallout.
Renesas is reportedly seeking alternative SiC wafer suppliers, exploring local partnerships to reduce future supply chain dependencies, and is considering a write-down of a portion of its substantial $2 billion prepayment to Wolfspeed as a precautionary measure.
These actions underscore Renesas’s strategic efforts to mitigate risk and secure its long-term SiC supply, ensuring its continued growth in the power semiconductor market despite the challenges faced by its key partner
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