Wolfspeed Sues Navitas Over AI Datacenter Chip Patents
Wolfspeed's patent lawsuit against Navitas Semiconductor threatens to disrupt AI datacenter supply chains, injecting legal risk into a $20 billion market as both financially strained chipmakers vie for survival.
Wolfspeed filed suit in the U.S. District Court for the District of Delaware, accusing Navitas of infringing five foundational wide-bandgap patents. The complaint targets Navitas's GaNFast, GaNSlim, and GaNSafe gallium nitride families, alongside its GeneSiC silicon carbide MOSFETs and SiCPAK modules. Wolfspeed is demanding a permanent U.S. sales and import injunction, substantial damages, and retroactive licensing fees.
The litigation intersects directly with the surging power demands of generative AI. Navitas recently secured a commercial contract to supply GaNFast and GeneSiC chips for 800V AI datacenter architectures, where advanced materials are required to manage extreme thermal outputs. By targeting Navitas at this commercial inflection point, Wolfspeed is maximizing its leverage in a wide-bandgap market projected to exceed $20 billion by 2030.
For Wolfspeed, the lawsuit serves as a potential financial lifeline. The company reported fiscal Q3 2026 revenue of $150 million, down 19% year over year, with GAAP gross margins plunging to negative 27%. Burdened by more than $1.7 billion in debt, negative operating cash flow, and a short interest representing 54% of its float, Wolfspeed is attempting to weaponize its patent portfolio to subsidize heavy ongoing cash burn.
Navitas is hardly in a position of strength to absorb a protracted legal battle. The fabless designer saw trailing 12-month revenue fall 45% to $45.92 million, pushing its net margin to negative 330.67%. Funding a multi-jurisdictional defense will accelerate cash burn just as the company attempts to scale its datacenter operations, a challenge compounded by insider distribution that included director Ranbir Singh liquidating over three million shares for roughly $108 million in late May 2026.
The dispute introduces immediate platform risk for tier-one automakers and hyperscale datacenter operators that demand pristine supply chain visibility. Original equipment manufacturers frequently avoid sourcing components entangled in federal IP litigation, potentially forcing them to pivot to alternative suppliers until the legal overhang clears.
Shares of Navitas initially dropped 7% before recovering 5.78% to trade around $14, while Wolfspeed gained 3.54% to trade above $37. While Wolfspeed seeks an outright sales ban, the most probable resolution in semiconductor patent disputes is a licensing settlement, which would allow Navitas to fulfill its 800V contracts while providing Wolfspeed with recurring revenue.
