May 8 (Reuters) - Chipmaker Wolfspeed forecast 2026 revenue below Wall Street estimates and reported a 7% decline in third-quarter revenue on Thursday, sending its shares down 20% in extended trading.

The company, which manufactures chips using silicon carbide, a more energy-efficient material than traditional silicon, has been affected by slower-than-expected EV adoption, compounded by higher auto part prices driven by new tariffs.

These factors have led customers to delay product launches, weakening demand for Wolfspeed's products.

Broader macroeconomic challenges, including high interest rates and rising capital costs, have also delayed investment cycles in the industrial and energy sectors, which could further pressure order activity.

The company expects revenue of $850 million in 2026, below analysts' estimate of $958.7 million.

The company's revenue for the third quarter came in at $185.4 million, compared with an average estimate of $185.9 million, according to data compiled by LSEG.

Wolfspeed, which counts General Motors and Mercedes-Benz among its customers, was set to receive $750 million in federal funding for its silicon carbide wafer plant in North Carolina. The company had planned to use the funding to accelerate U.S.-based chip manufacturing tied to EVs and renewable energy.

However, the future of the Biden-era legislation that promised subsidies for domestic chip manufacturing remains uncertain after the Trump administration called on lawmakers to repeal the federal funding under the CHIPS Act. This made Wolfspeed's shares lose half of their value in March, when they hit a 27-year low.

Wolfspeed reported a net loss per share of 72 cents for the third quarter, compared with estimates of a loss of 82 cents a share.