The American silicon carbide wafer leader, Wolfspeed, is reportedly preparing to file for bankruptcy soon, with its stock plummeting by 60% in after-hours trading. According to the Wall Street Journal, Wolfspeed is facing an unsustainable debt burden and plans to seek Chapter 11 bankruptcy protection. The company’s operations have been adversely affected by weak industrial and automotive market demands, along with concerns stemming from Trump-era tariffs.

Hsieh Jinhwa, the chairman of Caixin Media, believes Wolfspeed's situation exemplifies a fierce competition in the Chinese market. He questions what will happen to NVIDIA's stock price if China develops large language models using cheap chips and Huawei manufactures its own AI chips.

Reflecting on the future of third-generation semiconductors, Hsieh recalls that around 2020, market enthusiasm surged for silicon carbide (SiC) and gallium nitride (GaN), which many believed would replace silicon in the semiconductor industry, prompting many Taiwanese firms to invest heavily. However, as China has harnessed state support to rapidly develop this sector, competition has intensified, leading to Wolfspeed's current predicament, which once commanded a market share of over 60% under its previous name, Cree.