SACRAMENTO, United States, May 21 (Xinhua) -- Wolfspeed, once a flagship of U.S. semiconductor innovation, teetered on bankruptcy after its stock plummeted 70 percent Wednesday, erasing nearly 1.5 billion U.S. dollars in market value.

According to the Wall Street Journal Pro on Wednesday, the Durham-based company, which opened a high-profile factory in New York's Mohawk Valley three years ago, faced Chapter 11 restructuring amid 6.5 billion in debt and fading federal support.

The collapse followed months of financial strain exacerbated by Trump administration policies, including so-called reciprocal tariffs, and delayed CHIPS Act funding.

The company lost 750 million dollars in anticipated federal grants after the White House scaled back semiconductor subsidies. It also lost key customers Tesla and Volkswagen, resulting in a devastating 15 percent revenue decline, according to the Electronics Weekly.

"Policy uncertainty made long-term planning impossible," said Preston Caldwell, senior U.S. economist at Morningstar, in an analysis. Wolfspeed's U.S.-centric production strategy left it vulnerable to geopolitical tensions.

Wolfspeed aimed to file a prepackaged Chapter 11 bankruptcy with majority creditor support. Creditors, led by Apollo Global Management, now push for liquidation.

The company's silicon carbide technology powers electric vehicles and renewable energy systems, making its potential collapse significant for America's clean energy transition and semiconductor independence goals.