Replacing ordinary silicon with silicon carbide has never been a bad idea. The carbon-toughened version of the simple material can be used for higher voltage applications like solar inverters and electric vehicles, since it tolerates higher levels of heat. It's also just more power-efficient. That's why no one's criticized Wolfspeed (WOLF 1137.19%) for doubling down on the science by virtue of getting out of the LED light bulb business -- when the company was still called Cree -- back in 2020.

As time has marched on though, Wolfspeed's silicon carbide business hasn't proven any more fruitful. The organization's still got no real revenue to speak of ($758 million for its recently ended fiscal year), and certainly no profits. In June of this year, it officially began long-anticipated Chapter 11 bankruptcy protection proceedings, in fact.

The stock's multiyear sell-off, of course, reflects all of this.

The funny thing is, this could be one of those rare cases where it makes sense to step into a position in a bankrupt company even before the process is complete. The mere news of the reorganization may have already done all the damage to shareholder value that it's going to do, and every interested party is seemingly trying to find a way for Wolfspeed to continue making and marketing its potentially game-changing material.

The question remains, however ... what awaits on the other side of the reorganization effort?

Is Wolfspeed just ahead of its time?

A quick primer for the unfamiliar: Simple silicon still works well enough in all your electronic devices. The decades-old material is overdue for an upgrade, though. Higher-voltage machinery like electric vehicles, EV charging stations, data center power supplies, and renewable energy equipment are forcing it, in fact; every watt, volt, and amp counts these days. Silicon carbide's wider "bandgap" provides a crystalline molecular matrix that provides better heat durability and requires less power to push higher-voltage electrical current all the way through it.

The only problem? The technology is expensive. Like, wildly expensive ... roughly three times as much as ordinary silicon. That's why the industries that would obviously benefit from its use aren't biting just yet despite Wolfspeed's best efforts.

https://www.fool.com/investing/2025/09/28/could-buying-wolfspeed-today-set-you-up-for-life/