Rewrites throughout

By Kritika Lamba

March 28 (Reuters) - Wolfspeed's WOLF.N shares lost half their value on Friday, hitting their lowest level since 1998, as funding through a Joe Biden-era legislation that promised subsidies for chip making in the United States remains uncertain.

Wolfspeed is waiting on about $750 million in federal funding under the U.S. CHIPS Act, the 2022 bipartisan law which promised $52.7 billion in subsidies for domestic semiconductor chips manufacturing and production.

But earlier this month, President Donald Trump said U.S. lawmakers should get rid of the law and use the proceeds to pay debt.

"Wolfspeed's CHIPS Act grant ended up being the highest-dollar CHIPS grant to not be officially awarded before Biden's exit, leaving it particularly vulnerable to being pulled under the new administration," said Brooks Idlet, senior analyst at CFRA Research.

Without the grant, Wolfspeed would face devastating consequences requiring major restructuring to preserve cash, Idlet said.

Wolfspeed hopes to accelerate the manufacturing of silicon carbide chips used in electric vehicles and renewable energy industries with the federal funding.

The company said on Friday it is maintaining "constructive" communication with the White House and the U.S. Commerce Department to secure the funding.

Shares of Wolfspeed were last trading at $2.72. Including the session's losses so far, the stock has lost more than 59% of its value this year.

The company on Thursday named chip industry veteran Robert Feurle as its chief executive effective May 1, after it ousted top boss Gregg Lowe without cause in November.

The chipmaker said on Friday that it accrued $865 million in tax credits, using which it intends to strengthen its capital structure.

According to estimates by Ortex, about 32.5% of Wolfspeed's free float was in short position as of March 27, indicating that the market expects a drop in the stock price.

(Reporting by Kritika Lamba in Bengaluru, additional reporting by Medha Singh in Bengaluru; Editing by Sahal Muhammed)

((Kritika.Lamba@thomsonreuters.com))