Wolfspeed forecasts weak first-quarter revenue on manufacturing issues

(Reuters) – Wolfspeed (NYSE:) forecast first-quarter revenue below estimates on Wednesday, anticipating manufacturing issues that could affect its production capacity amid slowing EV sales.

Shares of the chipmaker, however, surged around 6% in extended trading, as CEO Gregg Lowe said the company continues to see strong growth from its Mohawk Valley, New York-based chip fabrication facility.

In June, Wolfspeed had said it faced issues with equipment at its Durham-based 150-mm chip fabrication plant and which could potentially impact its first-quarter revenue by about $20 million.

Meanwhile, Wolfspeed’s Mohawk Valley chip fabrication plant is targeted to reach 25% of its operating capacity in the first quarter, ahead of schedule.

“Our 200mm device fab is currently producing solid results … This improved profitability gives us the confidence to accelerate the shift of our device fabrication to Mohawk Valley,” Lowe said in a statement.

Shares started to recover as the market acknowledged the cost benefits of the new 200-mm Mohawk Valley fabrication unit, compared to the old 150-mm one, said Michael Ashley Schulman, chief investment officer, Running Point Capital.

The company counts General Motors (NYSE:) and Mercedes-Benz (OTC:) among its customers and makes chips using silicon carbide, which is more energy-efficient material than standard silicon, for tasks such as transmitting power from an electric car’s batteries to its motors.

Wolfspeed expects first-quarter revenue to be between $185 million and $215 million, the mid-point of which is below analysts’ average estimate of $211.7 million, according to LSEG data.

It expects adjusted loss per share to be between $1.09 and $0.90, compared with estimate of loss of 84 cents per share.

Revenue for the fourth-quarter came in at $200.1 million, compared with average estimate of $201.2 million.

Wolfspeed’s net loss per share was $1.39 per share, compared with loss of $0.73 per share a year earlier.