Earnings call transcript Q3 2023

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Operator

Good evening, and thank you for standing by, and welcome to the Wolfspeed, Inc.

Third Quarter Fiscal Year 2023 Earnings Call. [Operator Instructions] Please note, today's call is being recorded.

I would now like to hand the conference over to your first speaker today, Tyler Gronbach, Vice President of External Affairs. Sir, please go ahead.

Tyler Gronbach

good and operator, you, afternoon, everyone. Thank Wolfspeed's to Third Quarter Call. Conference XXXX Fiscal Welcome Gregg CFO, of and report Wolfspeed's Lowe; Today, CEO, Wolfspeed results the XXXX. on for Neill third year quarter fiscal the will Reynolds,

a information to note other with and call, prepared a is be results GAAP the metrics. not key today's should for internally. and in historical we section results measures release measures substitute accordance comparable are Relations our to Investor companies. results comparable press is of how directly which be non-GAAP a may consistent presenting Please supplement summary reconciliation financial non-GAAP and that website, not not of to by the during with financial Non-GAAP management Non-GAAP posted in our with other with statements information provided GAAP. Wolfspeed's most will in considered GAAP in be accordance A along

statements other numerous and uncertainties. forward-looking subject outlook, to about risks business during includes forward-looking are Such statements discussion call. forward-looking Today's statements our make and may we the

in Our noted the to materially. today release mention could and actual SEC differ filings factors results press cause important release that the

now over the to like Gregg. to [Operator turn And Instructions] I'd call

Gregg Lowe

today afternoon, you everyone. Tyler, Thanks, good and our for to joining latest Thank us discuss results. financial

we our at Secretary Governor us Cooper Raimondo, last dive want to of our Biden, President who take headquarters details, joined before into Now I month. express and the to a moment gratitude to Durham those all

administration's and manufacturing. share As an innovation American company, goal of U.S. the driving we

with silicon across rapidly power investments a the complex of various technology we adopted are Wolfspeed, At being long-range testament industries. to carbide in

significant of making with the the across are and Our company's a proud world, governments to aligns efficiency we energy goals be impact. mission

expansion years, field carbide turning production building world's the in the we've device factory. of in that our Upstate carbide New in the and a vertically XXX-millimeter silicon from the then power a York materials fab leader Durham silicon started capacity a integrated to with powerhouse of into devices gone last being semiconductor global several In mud, first

shipped the product from I'm to Valley share in that we third proud fab our quarter. the first Mohawk

relatively we proof a producing XXX-millimeter an now customer, to product shipped important that substrates. point it's charging it's small of an are industrial on While number devices off-board

meaningful to in fab our silicon learnings carbide. expand the We have a we executing new as and silicon from from continue industry better the to start be head strategy, capacity the important will transition ramping support to

QX. a opportunity. EV of Our an demand focus billion on for nonautomotive vertical reflects pump heat secured a designs, new record is quarterly $X.X Wolfspeed design-ins positions This in Customer multi-decade and growth included as application total we integration robust charger. a which off-board for

the totals Our continuing for now market. of lead cumulative design-in billion. we $XX secured expansion XXXX approximately since to carbide and are there, is total silicon the Demand fiscal

is focus our feed primary especially wafer on to My ramping production supply to capacity, Mohawk materials expanding relates as it Valley.

silicon our most of growth was with our For by the wafers. carbide market supplying driven history,

facility it. supported is epi our more Now will ramp by Mohawk the out of and longer-term on our be more fab a we to the and ramp Durham the need we governor short term, Producing -- have silicon materials JP. our carbide of outlook wafers our the in of feed best-in-class Valley

overseeing with myself as ramp Milton of believe Stigall are to the I and the reporting visibility substrates materials Adam operations is will Neill. expansion leaders and Missy efforts. devices realigned to capacity lead well into the will device team our Neill We and production leaning this We've while footprint in now directly expansion. fabs, support our as provide wafer greater directly for the company.

customer We'll journey changed. carbide continue requires expansion to runway. the in industry and long-range moat for increasing decades-long our this and for silicon Wolfspeed facilities strategic with expectations has devices. both across the carbide, to with We in patience. by the validated will this a is deep footprint believe needs The continue lead complex purpose-built expanding silicon and investments and technology, and Wolfspeed vision make have But the in pack. more industry. demand Our materials world capacity not silicon focus investments carbide a persistence

over Now XXXX I'll an turn and fourth overview who XXXX. of an for it of results to will Neill financial fiscal fiscal the outlook Neill? and provide our quarter

Neill Reynolds

Gregg, everyone. you, and afternoon, good Thank

at of fiscal X% sequential guidance the year-over-year with power fab XXXX, a from We and device and single-digit our of revenue low the growth in the our approximately quarter which we the million revenue when greater third During in million fourth revenue end range the expect with increase compared XX% initial generated represents of to quarter second quarter fiscal a our recognized fiscal the XXXX products of $XXX third of of Valley year-over-year. growing more quarter continue than $XXX in millions in high XXXX. XX% ramp to Mohawk

but margin a forward, ways underlying to coming will moments, into go Valley in Mohawk impacts. the its going specifics explore and we show relative more of I'll continue economics to few out

Mohawk dramatically as greater size and XX%. automation cost dynamics will a die wafer will the scale, Valley advantages than change reminder, our by lower its As business of overall the

production more XXX-millimeter costs. the We at and many taller to the solved beyond. from as we rate carbide in a also of return drain, higher-than-expected we fiscal levels onetime on steady revenue substrates in silicon saw state-run merchant QX results strong challenges to levels expect growth revenue inventory albeit had and This holes, our we

capacity Durham Valley from fab. in device top devices line from Additionally, will come perspective, future growth and achieved fab the Mohawk our quarter, I all mentioned almost power power we that directly believe as a wafer now full have last we in

demand within RF we continue products, of estimates. our to weaker see prior but at Looking range

compared impacted year XX.X% margin yields XXX-millimeter a by the income prior quarter to was margin Moving the in and goals. quarter point XX.X% Consistent higher the our representing XX.X% down year-over-year. on statement. our last with outlook, lower taller was gross and decline Non-GAAP in period, gross XXX-basis third costs

was gross of mix by running In Durham wafers customers high-volume impacted the margin on XXX-millimeter heavier smaller a fab. addition, in our automotive

share loss $X.XX a offset as fiscal a the ago $X.XX items, per growth revenue of As in year quarter lower generated in was investments gross and same a quarter $X.XX the result loss to of of of last period and compared OpEx. loss by a higher these adjusted in we margins third

Before flow our approximately our support liquidity discuss DSO sheet quick I of our and balance a overview with balance the cash quarter plans. position. will We billion on to guidance, I ended of provide growth sheet $X.XX our days. of was of and XX days, while million operating cash Free during quarter was negative cash flow million $XX inventory capital hand expenditures. was of million, XXX comprised net $XXX the on negative days $XXX

previously anticipate announced billion to fiscal timing CapEx net now primarily from facility down XXXX We of million, to spend $XXX the expansion. to approximately $X for related the substrate be due XXX-millimeter our

brand, start-up primarily million. Valley we the approximately fab totaling the During to incurred related costs Mohawk quarter, $XX

overall included Moving forward, start-up reconciliation as non-GAAP in and down we a fab. adjustment table we start the costs for underutilization for expect these start-up earnings This our Mohawk ramp to Valley release. winding costs in the

in including investments to we debt capital of instruments government the and terms funding evaluate United funding, additional In avenues our customer or States Europe. upfront multiple continue payments needs, and of

believe any certainty the timing this made comment or we While we on funding, government regard. of have we great cannot in progress

campus calendar financing the billion secure end of our XXXX. JP additional to approximate an be to the between need Durham fab Tyler investment now we believe both ramp capacity as $X we addition, of CapEx substrate in North in The of facility intention billion Valley investment the Mohawk and the at of approximately construction nongovernment fiscal for City support majority of fast and leveraging will possible. year XXX-millimeter and to and In $X as Carolina, with tool this this

XXXX currently incentive amount Saarland a from European while significant don't CapEx for the until of construction-related are expect investing calendar to we modest we await final While authorities. work facility fab, notification we see design German year

have made final calendar progress we this as later this year. notification now, However, on of expect front and, good

timing and We supply other on can facility our investments construction, items. that variable tool be CapEx also depending highly times, you challenges chain remind lead the of

the to forward forecasted trajectory. and of especially we that, has in look been fiscal variability beyond, quarter we our As recently, our growth there compared performance fourth to XXXX recognize financial

of the the related XXX-millimeter help ramp predominantly materials the to recognize of near-term While and of need our production, Valley we the Mohawk timing challenges you expectations. to all assess

our year to result, quarter I take moment giving a in to XXXX. help fourth fiscal addition a outlook, about As will our thinking frame

revenue million. with Starting the of of million the we fourth $XXX range to are XXXX, $XXX quarter targeting in

Mohawk reflects guidance revenue low communicated. revenue from Valley, as single-digit Our previously

from I revenue essentially going we before, the be are from capped Valley. a much will Mohawk will generate power capacity As we in incremental of And mentioned perspective. forward, Durham device

XQ in taller that revenue repeat will we on mentioned, previously in to inventory as output see addition, not we the related XXX-millimeter materials drain onetime lower our improved pools will XQ. In as

XX% range that we is to we non-GAAP gross were XXX-millimeter be QX Our of on automotive and through in shipped work to the slated expected XX% customers initially Mohawk be margin higher-volume fab to as taller our produced continue mix cost to the recovery the pools, to Durham in Valley.

fiscal non-GAAP million be We expenses $XXX to operating fourth $XXX quarter the expect XXXX. for of between and million

between non-GAAP to million. to gain QX loss net $XX million approximately be expect and be $XX nonoperating operating and $X We million

a to $XX and of non-GAAP million management we million tax share. between to of $X.XX loss believe QX or diluted as $XX expect approximately $X a We realize to non-GAAP for $X.XX million and $XX share loss diluted million will result net be per

stock-based amortization, items costs factory excludes in EPS and acquired intangibles release non-GAAP transformation noncash outlined project utilization as start-up today. Our and press compensation, target and our other costs, transaction

QX very factors environment. mix, overall factory our and chain several competitive the product As targets on including based them that dynamics, demand, supply always, productivity are affect greatly,

to fiscal XXXX. Turning

utilization by XXX-millimeter the in XXXX outlook XXX-millimeter by while to we Valley. our current fab, to epi in growth target $X.X on we billion. line between and, quarter we will assumes Mohawk fourth XX% ramping and as achieve how revenue Valley be our efforts Mohawk closer substrate XXXX, This quickly that will focus product materials Given remain levels resources we capacity fiscal ramp our fiscal substrates of capacity turn, $X Mohawk the revenues at governed billion Valley

products future. will our result diameter fab the Additionally, I Mohawk of several trajectory ramp in customer continued the XXX-millimeter mass. foreseeable flatten more quarters as time smaller Durham auto-related which line reaches lines, we margin gross as on customers, time next a for until at Valley the the and focus earlier, support to the critical to for plan run a mentioned

output gross margin for are Mohawk at because reached significantly as That ramps unit favorable to we is expect Valley, trajectory are to higher XX% the economics stages the customer would gross current utilization than levels. improve in said, more ramp it we Durham. our your EV will it Mohawk we levels as these to support critical Valley but keep in of likely margin As early ramps, the important schedules, the

With Gregg me for pass to it that, remarks. his let closing back

Gregg Lowe

Thanks, executing expansion there Neill. on and are We recognize against plans. is that confident said, on our are to That capacity done we be right we path. the vision work strategic

As Mohawk Valley the the Neill for revenue are XXXX forecast we fab. adjusting our fiscal current the to trajectory better of reflect ramp discussed,

to win a We capacity to our And continue that a is solid of and large part investments in business device due quality. at our rate.

to integration as as we to industrial in we energy line carbide continue expand. silicon As and of the automotive continues product capture devices well further for share to to power applications vertical expect our continue our supply capabilities device in as and innovate,

technology have industry the design-ins Tier premier moat we as cost XXX-millimeter we years our Wolfspeed, We our XX-plus of carbide based an and advantages best have advantage and OEMs, Xs attractive opportunity. silicon with automotive an in we ramp expertise unbelievably extremely with customers. At a believe and wide talent industrial decades-long production on

on our and silicon technology hyper-focused in are that on carbide maintain strategy lead leader as know the focused we footprint are executing expanding I and to We our are can.

for like turn have. any to I'd over to might you now it operator the And questions

Operator

[Operator have Dorsheimer from our from first William Instructions] Jed question Blair. We

proceed your question. may You

Jed Dorsheimer

Thanks. Thanks for taking guys. question my

height out wondering, terms issue the first in XXX-millimeter Gregg if of understand wondering more and the of you thickness? us and/or I you bull taller of a maybe capacity, sort better of a some Neill, Can wafer yield little a kind was is so going within X-inch of of So, what's I or on. help now sort furnace issue, the you're was the of give couple you a if calling bulls bit question, sort if flagged could quarters clarify this color ago, limitations. Or this is a of

update of serves, lines part I'm this bull were to thickness, -- on a Siler important CREE, as you function memory then maybe you I of And time the an transition of you seem as running. And if until through of follow-up. then question, up City if I et you went similar a wondering with could when type here because that's that sort height, saw X-inch. think you X-inch and get like cetera, that a would lever have And

Gregg Lowe

a Jed. question, the Jed. Thanks Okay, for lot

frame Let we're Valley. running right Mohawk this the it way, me off, in wafers now, first wafers, XXX-millimeter

mentioned product in first worth and a I our to the As we an million we're going ship dollars’ this quarter. customer, of product couple prepared industrial remarks, shipped to of

substrates cycle above materials our yield, is initial out in all factory is the good. times, throughput, yield our as targeted reliability, well those have that Mohawk in The crystals where as we producing the quality of quality really at at point. Valley, our Our looking our of our of of or in also and substrates this Durham

think feed scaling are And scaling Building that second with some One here. take that expanding our Building basically are we prudent challenge to electrical like the the methodical infrastructure to a is more Mohawk inside to to And here point. things materials the a facility infrastructure so had down, two things capacity, a is we're we speak. for like about Valley. so basically, issues this is I chain talking really been and approach a we're slowing in That's resolved, switchgear there delays point as that now in at things growing supply operation of XX us XX. Durham, and basically, that's What and that expanded

crystal of bulls, in all per infrastructure factory, a ramp. of perspective line, simply height, doing really flowing So, quality stuff wafers bull, material kind basically, more quality delay that the crystals, of just well, a through from of of an number methodical and

Jed Dorsheimer

that of That's to know of to strategic I and now those were you that it it. a moving Could moving the at talking Got versus helpful. But then the you begs question, I go when Durham. -- to means and looked in this you all qualify those eight. qualified obviously, time targeted know cited you're Mohawk different decision second of lines -- for that do to those maybe of now Durham means And it's my benefits over? terms Or made would and you on are in terms port for I that Mohawk elaborate customer any a you differently what you in customers six in able that of what eight certain there that business? on -- or to Thanks. Mohawk capacity Valley, that then for can doubt Valley, kind about becomes terms qualification in customers Valley. think

Gregg Lowe

is very capacity would see approach of amount qualification of increased it Mohawk product of terms Valley. in the leaning clearly. I what Mohawk to Jed, trying Valley. very is a up in They say forward very substantial terms worth out there leaning from of taking Valley of the our from customers The out forward/aggressive hurry of is very, material type Mohawk much

in Valley starts forth. and so up We risk ahead Mohawk for have customers signed qualification have that of

here. a go the if the the case I raising to for a you everyone fab as them kind Mohawk sort lining is get really the into typically, when dragging here to substantially -- you you is customer when try not up Valley typically the transition. high think fast of that wafer so hand of facility. along, and -- new a will, through There's right, because demand to look, product their they're you're That is And bring

So, on that at no change Jed. all,

Jed Dorsheimer

you. Thank

Operator

Goldman comes Lee Brian question Next Sachs. from of

open line is Your Brian.

Brian Lee

follow-up. end guess the in of talking we at and the you're to on on I granularity Mood more then updates just my high about broader you what guys, target this And all 'XX implications afternoon, for that. in Value, good financial in taking thanks on and first But or the questions. in targets with outstanding appreciate the the then are Hi, and -- handle wondering I one had this time? additional targeting fiscal And XX% can about you'd have to of for four by Mohawk kind talk implications utilization 'XX, margin kind back a happy methodical 'XX XX% just ramp pushout to when get be that I with of model, Are the gross by point a the you or XXs? those? business Mohawk, fiscal performance where the utilization do of the across

Neill Reynolds

Neill. Brian, it's

question. yes, I the appreciate So so

with at We and run the just automotive the XQ as exactly kind thought So what of some Valley, some in going we're the we're frame, Mohawk that online, try more just ramps so gross of to forward, you looking But 'XX-time support mentioned of to seeing the we we're staging automotive come kind delays margin earlier, through landed range. of within to as of customers forward, the look of 'XX, of ramps. those we as and kind I move see and kind the higher Durham start always of seeing. that's kind would some volume these of

really we've as up. to fab ramped get we start got the through period support this to customers our So,

But flatten is we out of see what do until Valley the margin to quarters going start going Mohawk couple to start that's ramp to that's to next for up.

Valley closer kind you kind XX% get that of of we'll utilization think the as the benefits start quarters. improvement, cost to Mohawk flattish of And couple get mark. out of structure start margin the to So, as utilization for to next that Valley of you reap to margin, of starts you see the then Mohawk as

both kind for point all Valley, margin. of So, revenue to roads it and I've before, Mohawk said

exactly that's I the think case here.

Brian Lee

think maybe -- just to Okay. your get 'XX for 'XX, thoughts do do just Is picture guess, And 'XX. targets? I the year? chase, 'XX exiting viewpoint in the guess, and you talking margin given XX% year, can when see you your at in to about been end you XX% fiscal back bigger of to we change 'XX? think to the like there you the fiscal at the of prior any gross had some a chance I all just on level margin when the then the I cut

Neill Reynolds

is 'XX, guidance half update north you get as good corner trajectory that Think utilization long-term XX% turn we supply it those So, through will Mohawk a seeing you we -- in out. likelihood to frame. a coming not pretty Mohawk back going get to City of do the things, look There's get the full of we're of Valley. that of model. you start as some get to as you some about get you as think like time Valley at XX% the -- 'XX, beyond pushing as to about targets But of start think to be Siler out you And for is, reason on gets the Mohawk those where Valley. start to from a for to XXX-millimeter able feed we can accelerate

kind we So, I than take plan. necessarily as being previously the total talked wouldn't a of the lower about on 'XX somewhat numbers reflection

as think you to on, really outside start of I some you 'XX, start Siler of out the 'XX-time pick frame, fed rates you and trajectory, utilization of Mohawk 'XX, up. different seeing come materials start Valley just some seeing the get City be particularly a that in see

that of of we'll 'XX. think So, outside 'XX. start acceleration an I I inside don't to see see

Brian Lee

Excellent. take rest Okay. the I'll off-line.

Neill Reynolds

you. Thank

Operator

from question of Mobley Next Fargo. comes Gary Wells

You may proceed.

Gary Mobley

is fiscal to and 'XX revisit I Thanks something Hi, that earlier, to Greg my the addressed question. year for taking revision wanted guys. revenue.

And I from to we've really few revenue. anticipation projection I the Analyst having October of that in was billion fiscal fiscal think, down, Day, and in support year Day, past was the year there October don't for Analyst much Halloween 'XX, $X.X that I quarters. City at that your at contribution think 'XX Siler on think revenue walked back in So

it's reduction revenue where on hard time contingent curious all just forecast. just Durham I'm that we've a and So, Siler XX% you're now seen specifically Is in City? it pure because in ramping a having XXX-millimeter

Neill Reynolds

about so XX. This campus. call timing of the Building Thanks, -- Siler on much the City, about it's think not our what is ramp Gary. And of I it's where we Durham

about back in then. XXX-millimeter So, Durham plan supporting the October on the up campus was we bringing talked

this that facility really bringing about up. So, the timing of is

So, the more of the piece up. the I is think around is, But some about a items One things. it's about of earlier pace. methodical facilities second really bringing up bring really two Gregg kind I think, delay talked

and on So, got of you you with. the very that little methodical will I think I up take then got a will think -- delay curve bringing bit be a

we've Obviously, seen up carbide silicon capacity. bringing challenges in the

material As we we'll in that we've bring in think to talked way to up and we a methodical is bring a it capacity about difficult many in way that with, a on thoughtful, ensure that it's times, reasonable manner. work

Gary Mobley

you does these rate, slower-than-expected substrates related my billion for about this to give And ask Greg, your of us design-in Okay. rate the follow-up, the $X.X has in think you Does been conversion And mentioned Mohawk conversion I Valley, that $XX how reduce and that, cumulative just trending? conversion rate design-ins? for outlook to billion ramp wanted design-ins, the I on can of quarter. XXX-millimeter sense if that maybe general a

Gregg Lowe

conversion very the very, we've is actually rate been Well, positive. --

the this $X.X of over quarters to converted first of So, actually design-ins wins. billion we've design year, three

actually So rate that conversion quite good. is

slows so, that don't it And think down at all. I

ago article that an weeks that suggests XX% From I electric by would And has I -- a in a anticipated the actually or of XXXX, the couple customer's In XX% substantially pulling couple over that's before. be And of vehicles was United in we last demand steepening. they demand and rate is perspective, seen stronger from been we've the fact, the think than seen I've the electric. of vehicle than that product an a think States of reflection substantially conversion anyone and than the years for it's there greater anticipated. said faster out perspective,

design-ins designed ends applications. a $XXX this us record pumps for of had design heat other with on quarter year nonautomotive You and heard into to million actually getting We for just nearly automotive.

be to So, very, rate the strong. I design-in very continues think

year, That year year are and last more happening for is of fiscal record In design-in fact, was all a last three a our this faster. of looking all and first conversion greater obviously than of on the design-ins stress lot puts fiscal of customers quarters for product.

a point customer. Valley. that saw We're And light shipped that going universally, the have right a out million we facility there us running see that worth right wafers see They They at of couple to the revenue of They of product facility of to end a in of now. they now. dollars’ tunnel. to Mohawk out

So, like silicon that product the dollars also invested carbide world's several sooner, while they more note they we've in fab. largest billion

of proverbial So, light there's sort the under the tunnel.

Gary Mobley

Thanks, guys.

Operator

We now Cowen. have Matt TD Ramsay of

Matt Ramsay

Gregg, I of or and at I some wanted you the point. kind Analyst backtrack the 'XX to added And to at model of back had so, X fiscal for risk-adjusted considered Valley XXX-millimeter Mohawk guys think of had 'XX then, trying clock already and the understand the months targets sort imagine guys fiscal Day that guess revised Halloween around I'm the I bull and were output of point, heightening that ramp issue I feed on variables would the XXX-millimeter XXX publicly to was that. and you at the some that known

So us adjusted last X walk was guess, time. the on were to the materials slowly now maybe since months could events those what model of that's allowing variables Durham over XXX-millimeter then and and through, on I the ramp just you more chain Thanks. the last just

Gregg Lowe

in on the get that was between just the part basic beginning infrastructure, longer turned to of electrical on than issues is infrastructure-type in product of lead one time it expansion And times actually that where during frame capability October anticipated. time and is supply very it's switchgear, get it's you. all the chain we lengthened we the and the were things again, in year. straightforward. with for and Thank some we fact, all Building this had the it Number XX. And had

So, turned time and it us we anticipated. in straightforward. was to was those certificate of of pretty equipment actually The infrastructure occupancy give amount on pieces of longer than -- just and get that's it took

to it very as we've methodical a the X the is decision methodical time. then a opposed quick, to real, from second a sort real step technology. ramp more And in product at of is tricky way and just very, This be thing going to a taking that made XX a more

right We have the great growers output in crystal quality now. from terms of

quite The is crystals, a The on facility. Building have growers the it's that of really turned really We good. quality good. in few XX yield we're now that crystal getting

have already XXX, taller that XXX-millimeter bull we've that The in problem problem kind actually, on essentially to respects, was around already referenced that and on of for and XXX. is working designed because team solved challenge good the has XXX some that you at had already

-- -- so, try to And just to it just going it's are to that made a really things and -- good just decision prudent. just too to go probably we've is not amp up quickly

a driving those it's two of combination So, that are things that.

Matt Ramsay

back that it some prioritizing of going I were but have be pulling out if automotive like was Valley the I was were guess capacity is how going to be that and sort automotive device serving full on fab now of going devices to out There of were side? the that question the if happens my before facility customers is, on devices, be backfilled now that depending what to that on -- of non-auto sort whole decisions? capacity, to clear a of out served with what's of and was been Got the the them sort guess ramifications for Mohawk some limitations couple over of my Durham, to be devices. next had of to of What's there? XXX those terms years all as guys like the that it from question, of in sounds tapped Valley full the sounds while the those it. customers follow-up those Durham you XXX-millimeter customers happening it on quickly business Mohawk will very and ramp, the time, presumably, And going for you

Gregg Lowe

lot. a Thanks Yes.

of So essentially, out happening is what's -- we currently fab, just that transition or idea would We shipping that Mohawk Durham of in that to slower -- and it is. the sort are transitioning be the we're pulling were back are our York automotive And is we what Durham. Valley happening to facility. product not New

have Valley a what out And the customer. So, nonautomotive it you. our then of product first isn't shipped back Mohawk or a we've nonautomotive customers, already to to essentially, on pulling

of of them that excuse of have have several and several we them Mohawk We Valley, that's and are that ramping me, -- out are of out that. ramping

last So supply-and-demand basically, working got talking to be going situation a we've the with where that's customers. it's situation meeting Neill personally create with to about going a We're and this. customer I tight. had a night

this again, to of at they're the with giant So, a working working But getting out they of York. we've their coming and prioritize products us They see that in customers. tunnel. we're that with see end got light the fab New fab online

Operator

We JPMorgan. Chatterjee Sam have now from

open line now. Your

Samik Chatterjee

you're at to do our about earlier And go X-month we drive is think I follow-up. we projections Thanks, flow-through ramp? where approach of I as guess can confident of for And slow inflection some I methodical X-month terms of to does on of with to earlier wondering about greater of you about Or this delay questions. think say, sort a up delay years, the that you taking your the had? all to start because into what we in the just future a some more a to just in talking expectations. are having of of pass approach more ramp more delay capacity, there's the sort this have delay? catch you really the point, own is ramp Mohawk, this not a now relative targets Or okay, of more the of I'm sort here Scurve of to I the sort you're methodical does this the point the taking my ramping, sort materials mean

Neill Reynolds

sure. Yes,

much one. think I a it's second very

of now delay seeing mentioned. the think purpose it want this you a just terms to on. exact do bringing I in methodically We for we're

to of we get goes So, confidence when a time both to have materials utilization fab on. the in level perspective, and faster certain it right level volumes, through of a ramp as we'll the from

carbide making places, is can something same fab first this Remember, I of volume the time. this doing we're we thoughtful say onetime factories. wouldn't for to first pushout our is at we're of I time in and everything, the a our all silicon So, capability think but many XXX-millimeter ramping a the sure underpin XXX-millimeter approach

make feel right. to levels adept So we volume, the perspective, crystals and we as good said, get and the that yields and is the we good everything get feel from Gregg a we to about seeing about want of where just now what we're sure once capability that that perspective. And we fab do certain from else

once of frame we we'll think kind time that I belt, be the faster of volume enough to our later of under accelerate So, that kind in outlook. able have

Samik Chatterjee

year, itself for that follow-up, the than next burn go was Got quarters that? up just should burn now cash as into a probably next quarter I OpEx and time guidance Okay. the of last And similar year cash with higher about How frame. of the sort in sort forecast any gross of does it. we couple think being think on margin

Neill Reynolds

Yes.

So we overall, the now, sheet. look, right $X.XX balance have billion on

year. billion in prepared to about we're $X fund got remarks, talked and CapEx next I this looking plan year, As $X the we've another billion

we'll accelerate. see pushes time flow think out just It But probably type versus cash can the maybe I same be substantially So, don't that by operating good of that until moving talked we out I frame needle about. the as capability pretty I in what shape.

a schedule operating the pushed from trying money next being in $X.XX what we're billion perspective. terms now I sheet, of a billion think about But out on think that the year, think a plan it the significant I get the of don't and right we're end a as I And we've I funding CapEx raised cash flow year, on bit. do. then and out So, factor will with between $X balance some see and to building

on just schedule. I us think keeps that

Operator

Charter Edward have Research. of Snyder now Equity We

Edward Snyder

expansion deviations new quarter, warned kind process I fab we a playing surprised delicate of getting But the you're think, what about the having with the us, across material of the all be obviously in and is problem expansion it's JP kind XX, guess, approximately if not by shouldn't putting last big et it do all street will of slight and a changes out very from is which fab. you're running had massive the greater this XXX-millimeter can much across cetera, different and fab? that I that you told existing cause that City, metrics up Building the you're with that said similar it. from see if Siler a But doesn't issues I the this. of of number you street for from why wafers. But terms actually to in Neill, in even with know existing just have we

we And expect shouldn't have Siler follow-up. why So I delays? see to a similar City

Neill Reynolds

little a let's And bit. back up just Ed. Thanks,

seeing what out related really technology That we're building major was all. we this facility to it's the here facility. from electrical again, production going of the and the So, and yields stage the is XXX-millimeter really first crystal related we the not and After said to causing about grow look everything really infrastructure anticipate the that, out quality, what's or That's is but the at methodically, the really else, delay of really that seeing we're like the solid all crystals, on very the bringing thing, that play. forward. first very, technology

to sure, the And to think it. reason to we is over make once XX, also laying out Siler move ramp and is technology, do. of bring in be methodical very I in transport time. think we'll about to want to I in out closely as watching and very, same it we'll same It the think in I with city. tricky So, same here Siler kind designed for team that type right we're you what talking We'll shape mentioned. you approach, we're what City we'll the that good this prove Building the over do fashion a think plan up, we over that that's exact thing the is overseeing we're But I

Edward Snyder

you're limit and still last a a that talked issues plus the I'm bit, both assuming a we question. it if changed. to that's customers. customers the wrong? much -- RTP case or want to ramping Durham, would more that -- fair redesign the minus surer running none and And you're product it's automotive I nonautomotive reading case, $XXX is, to industrial that's if Or you're less time the about am mean be else assume the at that Durham, it shipping automotive lead tail. they is that it then so about necessarily a And million there, able the capacity share Is because revisit for is mean going longer is lot I it the at to length loss? quarter is design I much quarter has and to a sounds have previous of cycle maybe that I valid someplace now and versus And estimate. can go of like

address anymore of head don't to So, I'm Durham occurring have capacity get you my just and power even the customers quarter. Thanks. you last were just dynamics around trying because devices to at the the

Gregg Lowe

Ed. Yes. Thanks,

So, one close very, to is of all our of the staying key doing very things customers. we're obviously

fab when course, had largest keep want the XX% we the I of Mohawk significant XX, fact, utilization fiscal we would believe, all in landscape at XXX-millimeter a We'll more eyes coming will customers of initial get pretty look I they now. 'XX, And turning product at world's Valley out is, what this quarter, last dollars as We're of quarter. coming have couple the capacity, of fab shipped which at is But quarter. to In think, carbide We of in pipe on just industrial output. out that silicon we're of perspective. million of down the of do terms to a out they that speak. taking its to back at end I last terms the where the that what's in look say going

But didn't for a quite think close be anything world doing think frankly, much I what anything alternatives, we're I when and Valley, see think turning have to like look don't So, it they the if on Mohawk would around as scout Mohawk they we as in I Valley. bigger quite issue.

and that customers best a the first year us. to $X.X design-ins is $X.X design testament of delivered two, three the transitioned sticking year, with of transitioned the has that actually -- of has billion win. are we of So, this quarter billion over And to $XXX worth quarters the in million the just -- over

a Ed, say, would I for finally, quarter was record this design-ins. And nonautomotive quarter

because nothing everything So, a online them. they're at time, think factory now -- that, years not show we're for. to a that four we have looking build we very to ago, same we're not we're decision also and proud it's we happy have that not I the, that shipping made But done the we'd coming

Edward Snyder

that's sounds on all way like industry tight So, around. in the pains it's an basically, it very really growing capacity

Gregg Lowe

That's right.

Operator

go ahead. We Please Rusch now have from Colin Oppenheimer.

Colin Rusch

are incremental this supply may about talk some and Just here? you conversations But about is with have given help just scale, Obviously, here talking some the with the can you're customers tightness of that. around mature how are at support dynamic point? success CapEx that had you robust the conversations those how guys

Gregg Lowe

see say, would our a money and us needs, of have and a customers wins where they upfront capital to that. I a quite put help expansion lot of We've robust. lot had the We've had with huge discussions. needs from benefit

continue this They going the think that's future. to probably to pretty I continue it's those something So good And day. for are conversations. foreseeable

Colin Rusch

ramping little guys a to the need just And should doing with as spend about can talk the quarters, to to going over that support that to OpEx, six bit turning to to we spend and here next, you look work call what and it, eight you're customers how think then cash with Okay. you optimize both growing? here facilities you're multiple OpEx about

Neill Reynolds

R&D Yes. -- have you on Valley, et we going on focus on that and Mohawk on I cetera, the expansion especially I'm XXX-millimeter glad on think question. have the on bringing this that. activity Good expanded touched think about cost. our you wafer Because as we

quarter. -- both You can. saw in we We're products fast as really ramping more as that Valley reflected our our Mohawk investing the in in and

on the fabs right couple move going seeing new this kind -- next products. you're the are of pick into from up lot even we to expect quarters. quarter of as now next what charge-outs again of and We're So, see a to

out QX quarter As things, the see you of as step-up we'll and kind we'll kind you and of been our to annual kind again larger of so into you 'XX. get start get increases end then merit into we types to the kind QX, as a of accrete of see as of have go those

start the 'XX. work think to way OpEx that's I into thinking about you and you're So the QX about as both

Operator

of of now Vivek We have Bank Arya America.

Blake Friedman

This is my for Vivek. Thank Blake for question. taking on you

guidance out the new the in down guys sales break drill you 'XX FY long-term target, given a fiscal that have to past, with devices again Curious the more wanted Just if materials. in I your and 'XX target device material between because you breakout can and between into believe and rough

Neill Reynolds

Yes.

-- somewhat that's that. run I about quarter. of a today [indiscernible] is at devices down. the They've been numbers power or as with the more materials to XXX-millimeter wafer. RF the supplied we'll So, think those line Durham come kind it's business We saw what and capped focus be That's of been less muted in we we and see expectations, going the out fab, what are said on

at you kind look of point here. So, this kind starting can of

QX, Valley, all Mohawk $XXX you that in a millions come Valley. add million, couple at growth We guided million Mohawk after quarter from last of from and $XXX will

from we really, the of in represented here So, what those the power through end and is what's trajectory idea an out it's 'XX is get device numbers. kind can of growth of

Blake Friedman

of your for just Great. I roughly plans out you under this kind I still expectations revenue a what as moving from a Day forward, Analyst -- want laid of you're that levels perspective, but CapEx said follow-up the just then in lower know Helpful. I confirm this with in believe at point, just thinking? at you are at And kind it year, to line came

Neill Reynolds

build-out Yes. or change any that of I talked don't total the what versus out to anything about. like cost there's think or build we

slower billion Siler some as that from variable It more I think we're the could that timing. on 'XX. about seeing on facilities particularly I structures of project. But in a CapEx on of the spend CapEx a little the be think and City seeing things. in perspective, of about, I we're We'll of depending bit like prepared $X see said remarks, number a

substrate majority materials bringing of on is Valley. Mohawk that focused capacity support vast the XXX-millimeter on to But

fast perspective, bring where intention an is Valley really online, from focus the that's as from ramping with of possible. investment both and an again, that execution So to our perspective capacity of Mohawk as type

Blake Friedman

Thank you.

Operator

from from question And comes the Street. final on Pierre the line New Ferragu

Pierre Ferragu

taking for my Thanks, question.

be XX% behind about production. about plan. that, was like in meaning. So, started questions delay be is it's roughly things What year, going schedule be last or I now, ramping you'll taking to the you understand just year running three But because may maybe you that. a And XXXX, June months I'm XX% I I'm at numerous wanted about six to the is question. understanding to it I'm in from and the make materials I in think do what it's compared like to at it's your And as level. sure what that ask longer guidance fiscal behind going about so And to a previous to qualified we sorry, again of like really heard the high get end this in being that

are capacity walking behind just about production high just fine. months at three Everything do a like level, we have way going wanted is it? to is the Is to you I this fine. make the to six The run yields it. should way what just sure running that's Things through to understand schedule. all to think right are that So,

Neill Reynolds

XX% now, for right through that. I think at kind work the got baked And of the for to plan and by it, and Yes, I think behind, think get pieces consider to three to the question. because whatever And of what's six The into to fab kind goal XXXX, is months accounts of that that's But moving want any bumpiness. the the that that's Yes. I look relates or we you as it's different model. utilization it a we'll to call that of risk-adjusted have end of lot a I as the Thanks true. that's right the way. to

the roughly of with we year I we're back kind out and we fiscal of June the in we fab, XXXX, had planned in revenue. of quarter think kind would ramp half the initially, all $X million

little further probably it's a that. -- probably than So, bit

of ramp, how of the Another be it a piece to it terms in slope bring going We're more we methodical up. is of right?

it's because about so won't bit accelerate and that's it's if belt. up impact, have beyond you pushes we it and time. the get out overall level really again financial It capability after But think that I dramatic it early about of we'll you first this a time -- under those just type 'XX days maybe more in believe So, really and 'XX, why XX% get building again, capacity you our because more out of to 'XX, bring of further. think that point, we that frame capacity, as the be once this than to becomes utilization can

Pierre Ferragu

ask And that Okay. you that have I to broader hope today. -- right I to Excellent. ask it's for question. a much all

and in carbide, models the been silicon You so talked that it's their community industry not that negative about would make like an architecture March, silicon, know silicon a great it's investment and low-cost a that that's there for in Tesla new XXX% for has carbide. because the and carbide debate not silicon interesting

market. if even by wow, with expands And silicon probably it the like to innovating mixing carbide the creating Tesla make more addressable being, way other you affordable and silicon, a it is

you've sure looking that. I'm been So, at

You've on lot of had a conversation that.

potentially innovation you as or a the scope as by do limiting like like and silicon so, opportunity of hear that see like expanding And addressable I'd the this market matter, the on to your the perspective carbide? Tesla, communicated of risk

Gregg Lowe

cars, understand Thanks pretty penetration of penetration obviously, there has and say be is lower of car they're take going carbide entry-level there's look we power focusing silicon that. at in the an carbide, by When in we would market vehicle certain electric certain the silicon for look question. going situation for we a point. Essentially, as the at historically, to a Yes. silicon into that significantly market. we an a that And no would entry-level the on what market be the assumption electric we vehicles carbide

entry where a they this vehicle. anticipating mentioned $XX,XXX at $XX,XXX it, down being carbide So, because we silicon or type as to this level, a think TAM the expanding level incrementally view I silicon for weren't carbide we it takes

perspective. power their building that going is that more have are lower silicon obviously plus. And are more And way. time It's terms a the all silicon this carbide into a spent customers in cost of carbide is our view ton we to vehicles So, midrange applications. of talking

So, view been an now positive of are change used for This from carbide as But that carbide this no vehicles. sort assumption. and midrange have being a customers our silicon the is positive. in to which of is silicon entry-level we designing our vehicle, incrementally

Operator

I'd like for to it Gregg any remarks. back hand final to

Gregg Lowe

participating for today's you. next call, in a with quarter. chatting you look thanks forward Well, Thank to we everybody, lot, and

Operator

for conclude does you This all Thank today's call. joining.

You may have a now lines, your day. lovely disconnect and

Wolfspeed (WOLF) 26 Apr 232023 Q3 Earnings call transcript