Wolfspeed sued Navitas over five patents covering its main chip lines. Shares fell 8.6%. Analysts see a licensing settlement as likely. An injunction would be a bigger risk.
Navitas Semiconductor (NVTS) faces a legal fight that could hit its most important products. Wolfspeed (WOLF) sued the company on July 7, alleging five patents cover the technology in nearly every major Navitas chip line.
The lawsuit targets Navitas' GaNFast, GaNSlim, and GaNSafe transistors, along with its GeneSiC MOSFETs and SiCPAK power modules, according to a press release. Those five families make up most of what Navitas sells. Wolfspeed wants a permanent U.S. sales and import ban on the accused products, plus damages and licensing fees, TrendForce reported.
Navitas shares fell as much as 8.59% over the five trading sessions after the filing, closing at $13.47 on Friday. The company called the lawsuit baseless and said it will fight.
The legal threat comes at a fragile moment for Navitas. The company has been shifting away from mobile chargers and into high-power chips for AI data centers. First-quarter revenue came in at $8.6 million, up 18% from the prior quarter. It was down from $14 million a year earlier, an SEC filing shows. High-power markets grew about 35% year over year. Overall revenue over the past year fell about 45% to $45.92 million, and margins stayed deeply negative, MarketBeat reported.
Insiders sold roughly $116 million in Navitas shares in late May, weeks before the suit landed.
Wolfspeed is not in a strong position either. The company posted a 19% revenue decline last quarter and carries more than $1.7 billion in debt, according to Yahoo Finance. Wolfspeed's weak financials are one reason analysts quoted by TheStreet expect a licensing settlement rather than a long court fight.
The biggest near-term risk for Navitas is whether a judge grants Wolfspeed's request for a preliminary sales injunction. An injunction would matter more than the damages claim itself. Navitas' second-quarter results are due July 27, and any update on legal costs or customer commitments will be closely watched.
Another factor: whether Navitas can redesign its chips to route around the five disputed patents. The company's manufacturing model allows that option. It would take time and money.
The average analyst price target on Navitas sits at $16.93, above Friday's close. It is far below where the stock traded as recently as May.
How the court handles Wolfspeed's injunction request, expected in the coming weeks, will say more about Navitas' near-term risk than any earnings report.
Drafted by a large language model from the source reporting linked above, then screened by automated publishing checks. It is not read by a journalist before publication. Some articles cite our Alpha Score. Verify prices and figures against the original source. Educational coverage, not personalized advice.