Earnings call: Wolfspeed reports record revenue and growth prospects in Q1 FY2024

Wolfspeed (NYSE:), the world’s only vertically integrated silicon carbide firm, posted record revenue in its first quarter of fiscal year 2024, driven by robust demand, particularly in the automotive sector. The company also announced the sale of its RF business to MACOM as part of its long-term strategy to focus on the growing silicon carbide device market, projected to exceed $20 billion by the end of the decade.

Key takeaways from the call:

• Wolfspeed reported a gross margin of 15.6%, with underutilization costs of $34.4 million.
• The company ended the quarter with over $3.3 billion in cash and liquidity.
• Wolfspeed is ahead of schedule in ramping up its Building 10 crystal growth for 200-millimeter substrates.
• The company secured $2.2 billion in device design-ins, mainly in the automotive sector.
• Wolfspeed expects to achieve 20% utilization at its Mohawk Valley facility by June 2024.
• The company anticipates revenue in the range of $192 million to $222 million in the second quarter of fiscal year 2024.

Wolfspeed’s strong first quarter was fueled by improved materials manufacturing, leading to better-than-expected material costs and yields. The company reported an adjusted loss per share of $0.53, compared to a loss of $0.36 in the previous quarter and $0.24 in the same period last year.

The company is making significant progress with its Mohawk Valley fab, which is expected to reach 20% utilization by June next year. Despite the higher-than-desired downtime and maintenance, the company is confident in its ability to improve tool uptime and meet the growing demand for silicon carbide, particularly in the electric vehicle (EV) market.

The company’s CEO, Gregg Lowe, highlighted the strong demand for silicon carbide and the company’s focus on achieving 20% utilization at Mohawk Valley in the June quarter. He also stated that excluding the RF business, the gross margin for the quarter was around 30%, a 200 basis point improvement compared to the previous year.

Wolfspeed is also preparing for the ramp-up of its JP facility in the first half of 2025, which is expected to have substantial capability from the start. The company is exploring ways to expand capacity beyond 20% to meet the anticipated supply-demand mismatch in the coming years.

The company is well-positioned to capitalize on the growing silicon carbide device market, with $1 billion worth of design-wins, primarily in the automotive sector. Despite discussions around EV plans in Europe, the company’s demand remains strong, particularly in China and Asia.

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