WOLF - Earnings call 1 2024

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Operator

Hello, everyone, and welcome to the Wolfspeed First Quarter Fiscal 2024 Conference Call. My name is Nadia, and I'll be coordinating the call today. [Operator Instructions] I will now hand over to your host, Tyler Gronbach, Vice President, External Affairs to begin. Tyler, please go ahead.

Tyler Gronbach

Thank you, operator, and good afternoon, everyone. Quarter Conference First Wolfspeed's to Fiscal Call. XXXX Welcome and Neill for Reynolds, Wolfspeed first CEO, report CFO, Lowe; Gregg XXXX. year results Today, will Wolfspeed on of fiscal quarter the the we presenting that note results call, innovation we our be believe Please non-GAAP useful provides will during financial today's investors. to which accordance GAAP provided companies. by may are be not results Non-GAAP with comparable not other in and to information non-GAAP be in a should information GAAP. substitute accordance given prepared financial statements to not Non-GAAP a and for with supplement directly GAAP our Investor summary measures most with our the release and the key in historical to in press Relations reconciliation A metrics. comparable of other a website, is posted of section along forward-looking other we statements includes business our may discussion forward-looking outlook, the make during and Today's statements about call.

risks numerous Such and uncertainties. forward-looking statements subject are to

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

like Lastly, be discussions intent business our to RF our I to will the operations the call. RF today would will announced Instructions] any have The our And you also quarter, operations. we All to as after feel of basis. I'd contact discontinuing business questions, MACOMV. that continuing to please during results now like be classified If additional free over the [Operator call to on Gregg. a us turn now

Gregg Lowe

and Tyler, time good Thanks, afternoon, Wolfspeed. everyone. exciting It an at is

RF the the now are sale world's vertically-integrated we pending company. business, silicon pure-play, the carbide of With only

industry drive positioned the uniquely are silicon the and to from perspective. materials carbide to device We both transition silicon a from

for that, operations, around very and share continue our challenges scale our X along fair confident our we overcome remain have reasons. to As long-term trajectory we I of

of the in ahead of our with XXXX, internal our consistently Mohawk quarter. the high-quality, co-founders of customers achieve Mohawk produce demonstrated progress notable second, in and high-yielding silicon we've will quarter this of from to XX% XXX-millimeter to we've ensure And capability team Building external wafers of Valley enough experts, carbide Wolfspeed. and partner the tool at X a fab; utilization Valley June First, seen including advisers manufacturers the assembled finally, that to we continue XX needs we've

As $X we design quarterly past highest of device wins billion than quarter third [indiscernible] secured total design-ins at billion and as this $X.X we our well. of

we've addition, record XXX-millimeter substrates. also substrates robust for the that our remains is posted quarter, in an In which for revenue demand high-quality our first indication

margin all Our fiscal of the first pave the rest end quarter came returns demonstrate the way beyond. investments guidance on results year at capacity that the our in the our EPS initial and for non-GAAP non-GAAP gross high and expansion Revenue will range. of

Valley, Turning ramp production. continue to Mohawk to where we

in from the This generated which million revenue compares was delivered quarter, to in $X we million $X the fab, previous quarter. that

with our the the just the firsthand MOSFETs from yields all fab carbide underlying number result, capability of on products we're was the those walking as the than as expect the them efficient we coming Because meeting optimal areas. strong with device in more achieved XX in pass good progress We've fab, to the that our protocols. and team, complex to the we the qualified up the all is of fab to last closely tools. We've now we use days, floor to tool double fab. fab doubled a output we're improvement maximum ramp the our through of even to the bottleneck and the best And and first more in In the of of our uptime, fab. qualification with as which the we closely indication of technicians seeing week, most leadership are production. some I making silicon of with technology, the the a last worked seeing in talk ensure further, vendors collaborating ramp develop operating the continue of quarter, nature

already qualified team. advanced proud speaks to satisfy device effort products demand this XX% silicon we by Finally, have more of those the sufficient It utilization have incredible carbide to I target. our than our technical capability. am especially short-term

have and execution XXX-millimeter. devices quality ensure We produce of and than we teams our focused engineering assembled to high-quality and the automotive that to more are at detailed ready

is Something nobody else in doing. currently the world

end Building XX% mentioned, we will June producing quarter, we ramp plan by our us for crystal of nicely to substrates. ahead on By Valley, I at As for XX% support XX our material XXXX. be of goal utilization of putting enough track the in XXX-millimeter of growth utilization Mohawk are this of

the JP. and schedule. to Construction design continues Turning

expect be we've already producing We more hired work XXX XXXX. of at the facility. And first people training half began that fiscal to that and will material than in

$X.X largest into billion, move to demand On as I on illustrating projects the willingness $X.X recorded billion third customers' of years. that amount over history. the of quarter wins It our volume design-ins, design we've side, few said, any we had of a record our won production the past in

quarter sooner automotive with OEMs expectations. and for strong. from Most Tier these projects of ends represents many demand remain our XXX confident of serve the will than steadily ramping Xs. our We're major win design projects, to and the more design which end are that original the first than design we automotive Our customers record wins market, are converting

a will production, seeing China the for most with a materials siliocn that we're carbide first for XXX-millimeter in [indiscernible] Asia. revenue, signal solid. the energy had we and wafer remains and in technology. to primarily Wolfspeed advanced the industry's softness demand which be strong XXX-millimeter some record volume While [indiscernible], quarter is the mover space,

we're well our we years coming have the our at agreements the supplier to power carbide being next XXX-millimeter role and materials wafer customers will materials the be for not an strong, positioned leader this existing in like with result, Wolfspeed further leading said, company merchant silicon to added and are device market. X the scale being play extended makers. content producing of will and the the of our future. for few advantage leading supplier critical a with leadership to to into the only well As material a competitive position as new agreements Renesas. believe the some Demands undisputed continue with as years we in That remain industry extend

We end the the to to the years tied $XXX to also north years decade and expect about carbide top grow. be in at come. estimated the XXXX, the the of to $X size is silicon continues was X device billion, carbide Five be of for the projected billion is suppliers million. later, market $XX of TAM In and device market silicon

marks always share anticipated. will rewarding at originally we line on of sustaining from the purpose-built of is we've in this a only world's allocating of it time the this that execution in the It to now completing second RF We're that close power decades. business to we ahead conviction in fiscal of Neill? the and market in over long result provide in silicon and Doing devices. become said our turn than the calendar half, we products a of overview a sale strategy, is in who this us doing We've into year particularly here, and part at fab. milestone time prove will right. road why the always carbide that albeit reason announced our believe definitive business Neill, is of we and and areas. which strategy our see research And the The had from investments, to reality, It will extremely the There our XXX-millimeter the focused and carbide gaining and capital longer all exciting horizon. silicon technology significant outlook. scale and end our leadership development the outset an financial is MACOMV, keenly pieces which of coming our firmly results the long-term develop device This team. to the now a growth of by in this year. we're the to is are of these on our and what's and come expect process on invested I'll our of will remainder to Wolfspeed see and

Neill Reynolds

good and everyone. Gregg, Thanks, afternoon,

we and of our all range. the guidance end results first EPS high During quarter, at margin the gross revenue, achieved

growth financial million $X results addition, transition of our gross in outperformance margin expect Valley [indiscernible] quarter, to of $XX we the was during $XX million $X as and we to that grow expansion continued prior revenue revenue between we in expect as underpinned 'XX. million 'XX. the The to In by million Mohawk we XQ XQ into up transition into and from quarter,

XQ device Asia to our in revenue for in 'XX. China expectations, variability substrate some of we a Durham quarter, by While $XXX demand million materials million me by Valley, slower by by record revenue primarily continued performance revenue $XXX was continuing and of let in I'll Materials we above step-up to record Power transition energy that, million revenue X.X% year-over-year. operations as manufacturing was Valley. overview broader results into in detail. and production pace Mohawk more growth operations larger from financial the in we Revenue remain driven a ramp team. achieved first by ramp the XXX-millimeter demand, the at start $XXX expect With review impacted industrial offset Mohawk the the an range quarter for quarter. guidance the and providing market, and partially our of updated our on compared strong

billion and earlier, and devices. our $X.X ] we portfolio for supported revenue new secured As quarter first design design wins [ Gregg growth, power historical mentioned the

is And design existing business. expected by the of have points performance, continuing already costs covered gross the of few representing design-ins rate by basis gross revenue margin. and for X,XXX largely of years we quarter ahead to under improved manufacturing yields. XX.X%, and was on design-in materials expectations. our of the in we've first secured, of the better-than-expected in materials was book XX.X% XXX-millimeter Our quarter Non-GAAP utilization $XX.X next our driven conversion resulting costs or from original margin Outperformance operations based million,

and as Valley. through saw lower last margin operations adjusted lower high we a significantly loss of in share in the loss was from period line. of loss revenue, fiscal we year. last addition, of same quarter higher $X.XX continuing share ramp bottom per the all cost compared per as loss in Adjusted range In to to loss lower-than-expected operating Mohawk first $X.XX generated fell our underutilization expenses the of and gross guidance quarter We a higher the $X.XX

the to sheet. outlook, touch balance moving on Before our I'll

cash operating days hand the quarter cash quarter million plans. days, $X the while million million DSO was was XX on support ] ] ramp and to Free was hand ended in cash of comprised inventory flow We our liquidity capital $XXX and expenditures. $XXX negative with of $XXX flow XXX billion of of over on and [ growth days. [

we Act Regarding the pursuing our have early next from financing are more initiatives, calendar funding cleariness CHIPS and year. should

to number will and remain a our last We opportunistic nimble dilution capital optimize our of private execute in federal vectors, strategy. be funding, sheet capital will constantly the billion in including In to with and have we across for plans customers, ways raised we $X capacity to to and position optimize conjunction capital structure In low we structure, continue are our markets. governments, approximately expansion balance term. evaluating capital good the long financing are capital and our of flexible year, but

quarter second Turning to the outlook.

in we continuing revenue expect We in broader $XX from largely for to of in demand primarily softer Mohawk to the are quarter. driven from come the $XXX in million, Valley by contribution Mohawk Valley anticipate partially will increase This range energy $XXX targeting million incremental QX. by and the We from in Asia now Mohawk offset to Valley roughly million million revenue products, industrial revenue this be markets. $XX and China continued of revenue operations

remains look However, supply demand we where repurpose to will end to the strong.

gross margin as midpoint, $XX Valley XX% revenue a the underutilization of in up of XX% million to we Mohawk XX%. or We range includes non-GAAP midpoint X,XXX At basis points this the of are fab. at the ramp also approximately expecting with negative

of of million of $XXX Carolina. for inclusive JP $XX targeting is fiscal are second materials in expenses facility related to which the million quarter North costs non-GAAP also the primarily operating approximately year We start-up Siler XXXX, of City,

expense nonoperating approximately $XX million. net ] QX expect We [ of

less we I we in to with progresses connection mentioned year our earn have our investments on expense As investment in income facilities continued previously, as our nonoperating the as short-term increase expansions. interest expect

$XX between non-GAAP QX million. to expect $XX We net be loss million and

could Our QX based mix, demand, are that factors targets factory and environment. supply significantly, the including affect dynamics, on product productivity chain competitive several overall

Valley fab, the of uptick significant we ramp back fiscal Gregg the of the year. to expect we in are ever larger and As closer mentioned ramp in earlier, the moving half Mohawk our a

ability by to still are June. extremely fab utilization in the our in achieve XX% confident We

our As the utilization and customers. fab be will last and we of revenue XX% our quarterly between due to to on $XXX indicated a there call, lag shipments between million starts time

Lastly, during the [indiscernible] the MACOM, we quite announced we been on will path have to to that lighting intent When time. path some the sell the have a been since towards finalized, quarter, our sale we is RF pursuing completed optimization XXXX company. business have portfolio a for predominantly we

it We carbide and all Gregg. carbide on we to to businesses. pass business device the back are collective materials Wolfspeed can now and say only our power that silicon happy focus in With marketplace, is the the I'll efforts pure-play that, silicon

Gregg Lowe

seeing XXXX fiscal in are we is pivotal out want results. first our for I a confident long-term remain year that reiterate the and As close promising vision Wolfspeed, quarter, to

some that we programs. as worth customers think a design I past earlier for design-ins, While on record this repeating gave it's ramp had wins color I quarter their

scale attracted close XXX-millimeter. first to has viewpoint fiscal said in our no JP can and certainly our our entrants there market, a and is our And will quality gap at match And the we and widen XXX-millimeter. new I player online position the as only in who at bring as from one single of is earlier, XXXX. This not half checks the

taken entrants front scale this to and difficult market, required can produce to It's to high-quality Secondly, while XX work to technology, significant know others, incredibly materials still years is the been highest there alone in the which firsthand us several them. at master the with, create have we materials let ramp of be new Chinese quality possible. and

an outside or competitor we the [indiscernible]. our industrial to secure their we carbide this do even said, those to their particularly an are Asia. our is business in are long-term successful. China And word markets, agreements always remains of materials will capture will the across larger unlikely with materials of share to at well strong and producers energy that market, positioned highly It be for with regarding and capacity taking opportunity capability create produce I've Demand competitors device both. the device and While additional stated silicon

remains the and path. that with what Overall, automobile. and time largest about silicon time potentially of rings change the the have carbide we again and EV use to the transition in of the said The history bumpy transition winners losers And through. a comes

shown customers' with However, past. of demand there's in but XXXX reverting China XXX-millimeter technology times we XX% pushed we to are EVs about combustion challenges, the products in this pursue no faster Mohawk and higher remains and than our next-generation silicon the internal its close, on come charge year. can those challenges current are range, keenly engine. And first is to Valley further output focused and That needs being carbide. the ramping utilization. To are the levels. softness way excited with competitive the Silicon not Despite Fiscal current without that this extended carbide be Asia, high has prices. was

of opportunity possible for keeps us However, to leader Thank our you, and and for to this moving quickly purposely the be forward operator, and transformative value the we're generate as Q&A. ready now as execute technology stakeholders.

Operator

goes Samik first JPMorgan. to Our Chatterjee question of

Joseph Cardoso

Samik. actually This Joe on is for Cardoso

are XX my tracking in Building for like qualifications well. the ramp it X [ So ] question, sounds

this to are keeping us So earlier reaching on what what the to you the front. your Just as drivers quarter the point hear utilization in that than at walk sidelines is itself. just we ramp? the through think Mohawk you relative thoughts about on key Can June curious XX%

Gregg Lowe

the SPX Thanks for question. Yes.

XX% now. great be quarters that shape in right quarter Valley. [ First off, Mohawk material that will [indiscernible] Building obviously, XX be producing this ] X is utilization. right, to And we XX% in a to after in support We'll you're have utilization get

So that's in We MOSFETs that a qualified bunch in great different really shape. of fab. already

XXX-millimeter we've first is quality that XXX-millimeter, success, as which I actually is silicon the seeing come a for such, the sign half on by ramp operation. All of qualified fab first our fab carbide have through at world's the first time. and X modules the good those And itself really qualified of fab. have for are MOSFET think volume well of are machines a XXX-millimeter as lot back-end in that the The of

working And tool with very ensure vendor our so closely have to we're uptime. better we

X -- than We're particular than we it machine seeing more downtime would is -- should.

a team have We resolving that. focused is completely on that

from confident supremely fab utilization June the process the this and on of as as as and through in They was we I with well resolve mentioned, also are a engineers track are the met team I in the normal vendors to going that you from I As week. will ramp, engineer the there's quarter. our team. we last XX%

Operator

And our to of next Kumar question Harsh Piper Sandler. goes

Harsh Kumar

question. a I timing quick had

Mohawk were then So the the in that packaging, lead $X given in the Valley quarter about cetera, the that $X frame time did time revenues million wafer Valley means March-April of March implies et million. that runs different that Mohawk timing conversion --

really So like into runs looking what my are dollar on a you that Mohawk a for. us I'm wafer could the that be color Valley would is, glimpse basis looking today. question give And

Neill Reynolds

what of question. to the thanks about -- let how fab -- we that here. utilization and me This all, of the start Harsh, we're so for thinking first talking wafer just is starts about and relates

utilizations started. So we a really of is function more

to building the low end XXX-millimeter fab this support XX% of -- we could of North year. of tenant. talked of for potentially XX% out So out at substrate the Carolina, you're [indiscernible] wafers means by That getting by out about innovation running that term

target on get still the end to look utilization. you the XX% we're As out at of year, to

again, is that goal. that, After solid starts utilization. means substrate that -- meet from seeing to that a performance means what is what it we're So perspective

to you've the in means have put run through those is what you the wafers got So that fab. to the fab,

You got that cycle time.

end, send the that have got that the as as packages be it'd to parts it various or either they well. at devices packaged Let's times on back sold cycle

So revenue for that until corresponds we of work get the times to on those to XX% cycle lag to the a bit you see that. utilization

in June year. being perspective from at frame, next quarter that million the translating XXX a revenue $XXX end in revenue from So [ time a about we'd that -- this case, December revenue ]%. to of In anticipate

Gregg Lowe

I would comment just maybe X it. add to

go downtime seeing it be is great the is goes through it now. we're required seeing the maintenance or through these the higher factory, material than As though as we're What tools the results tool. right and should

last get And fab again, engineers there's in tool line side met as the a very side. to utilization relatively fix very that of our that. to I be. to from ability as the both we our to need was week. snap where good on sight XX% transition for what to I we towards And And needs it this do be uptime happens, tool with a to well the low should soon very, as as good as

in mentioned, brand Valley on last the I As focus times more continue X in would XX% Mohawk was in week, fab November, to the of Day to be Thanksgiving including I fab I utilization.

Operator

And of next our Gianarikas Genuity. goes to George question Canaccord

George Gianarikas

business couple the the the didn't or OEMs? about plans talked hearing matter of to robust next are some of may reflect on thoughts you European just in get being your thoughts in for What around discussions of But know in we're X big you that quarters. [indiscernible] to least turbulence say backlog marketplace. I I are at the recent kind And it your that your so there? may not some wanted the own seeing what your what few of

Gregg Lowe

customers. their pretty more executives our and we and and I've me our with such, [indiscernible] would to IT message we Mohawk soon. much CEOs weekly Valley from QXs. been faster like basically, obviously, calls OEMs And back on with consistent major so And remarket as need was Well, and need

ago of IGBT. and that cars X the very, So and that today X the using range I'll then sold seeing -- cooling carbide silicon-based cars expensive being were with not years -- And it that it are siliocn different demand long faster near designed be are today remind less allows and X, -- very that is electric the many sold we're X with term charged battery, things. vehicle the things. is X, use both are were what at just the or are solid. important vehicle folks specs two, being MOSFETs you does the extends silicon level, One less car from to and lots carbide is of car; allows because be the there to term

report silicon, for of was you In over silicon a get ago spend on dollar management $X said fact, few carbide $X.X back. silicon to that every years there incremental a

it's So factor cost. and basically, silicon system It's And prior enabling lower charging, carbide is kind of enabling enabling EVs. range. longer that's faster for

So the And in impact and any our certainly on the of as the that's China Tier both and near today, see demand, no U.S., you term. way, Xs long term noise by that it in OEMs Europe. has in and

Operator

next the goes Brian Lee question Sachs. of And Goldman to

Brian Lee

mentioned, been revenue have is in Neill, sequentially here sort your numbers midpoint, step I that that for I downtime point? guess is to done the of then at Mohawk terms. just Mohawk you Xx issue that And the a up during look I in like by guys think, referencing if of implying in tool that imply prepared that Does you up remarks XQ. stronger kind

XQ expected when absolute So talking you're more you above? about bigger or to be Or that is step-up? are talking in up this at dollars level

Neill Reynolds

Brian, Well, the thanks, I think -- question. for

we're seeing I substrates, supporting XXX-millimeter lot think there's attention a So as that [indiscernible] of this fab the ramp way point. a now Gregg very mentioned, the and at fab, obviously

think we cycle So very but times and more material the the now, [indiscernible] very path. the right We're fab the system, teams fact the on of fab and challenges team starting itself. are to the vendor try that whatnot working on in the with solve. times lot through closely attention and a and with external soluble fab is through But

you as the our the in So is anticipation get uptick that of kind to see revenues year. back of half we would

at Normally, look a a step sorry, pieces, capacity -- just million think got guidance, got. revenue about [ and those $XX a million $XXX you we Durham. for unpack million about back is quarter the of quarter power, when we've million, which bit. we've million million $XX that ] $XX to out rail If a of $XX take maybe $XXX

Valley. step-up would the in So back the from Mohawk be half from revenue

million doubling could million well You again quarter see quarter, $XX a $XX us as that QX. you to have next as into [indiscernible]

So we not will the on play in working uptime fab a just from feel throughput but perspective quick we've and on are ramp. the got it based really the how depend through that past, when out things perspective an and good confidence now right through teams

Operator

goes of Buchalter question next Cowen. Our Joshua to

Joshua Buchalter

on Congrats JP to actually. wanted ] the about progress. I ask the of timeline the [

first indicative revenue. And of mentioned it's fiscal on you And to should ask you JP generate XXXX. like to look X-quarter we when compared expect initial a of do XX ramp in that -- cadence utilization half up? how XXXX. So when the the you is what XX? ramping contribute we is roughly Building starts expect sort of schedule indications much What any Building that the of when to lag could fiscal how that of at reason in that you And I the in get sounds it there's should

Gregg Lowe

is thing. you XX. a facility The kick than off as to it. And Well, obviously, let color to schedule. kind right substantial Building on the want little JP on if It's capability to of of as from Neill, it such, bit larger want me it it keep it this and a pretty we add on at start. we turn turn And on, decent schedule will

So coming I you would amount that's actually of quite as Neill, all timing. to the basically, want ramp that anticipate But will be if think I online capability the pretty substantial. JP that looking we is about be good. up talk will

Neill Reynolds

Yes.

timeline shape timing, year the timeline good So growth which we of out back a our perspective. the think in terms a crystal on calendar 'XX budget for track from right of said I all on the half is are on JP, next expansions now, of and kind of in

good feel right we about So there.

I'd with that, above that to ways We've add some impacts over to operations beyond wafering frame. However, that. invested capacity to that also to current for help expand looking operations we're just in sites our XX%, out retentive satellite time help on back-end

In be think, our there's out of We've good I in really to addition, going and time. seen performance operations manufacturing opportunity, team.

opportunity, So Durham. could and capabilities that or improvements operations capability to throughput productivity XX% yield on the so us that bring

working through extra optimization other opportunities those all bring a that can, where now, outline perspective capacity for we we're more and looking things [indiscernible]. in putting from capacity So productivity yield to

and we get trying take to as next we're on So an give more number year. a it we make that of progress the from angels update as we'll into

Gregg Lowe

the Valley So just to sites to reiterate, Mohawk on than JP to utilization is to JP more fab. And productivity give working Durham existing well. of currently facilities increase we're the support also in as schedule. We're with XX% our us utilizing satellite and operations

of belt JP. to little and trying suspenders we're bit on create So a

Operator

question go to And Jed William of next our Dorsheimer Blair.

Jonathan Dorsheimer

underutilization really for or Mohawk break terms better better what guided $XX what is or it at actually I going million you better million I'll your your part guided -- Valley, than like sounds X $XX yet. are are the than things costs of guess in questions. first rules I million. you X $XX guess of and

is revenue wondering have X was is you then I Or direct if is about of can just maybe So Mohawk X? terms in too. lag terms implications talk And there a for follow-up the scales? a it effect in of a I

Gregg Lowe

we to -- and and a It's doubt, [indiscernible] ramping without Maybe that. I'm Valley than to our at bit we going it currently a well. wanted are, kick talk little the be Mohawk about can Neill then want off customers

We're to intensely trying the satisfied it with and forth. not work So we're situation. so

risk on lot has been successful. made really good very, of I XX a think very we've Obviously, it. Building

to we'll to also get that that in they able in be the be quarter. these to ramp are XX% confident extremely way utilization fab able June tools supposed and are that We to, operate the we'll to

Neill Reynolds

just then level. from on utilization the Jed, yes, benefit just And see Yes. some margin of the a because perspective, lower numbers we did

performance substrate every sites -- XXX-millimeter, the what we're going to mentioned capacity earlier. did on to more Maybe we put going and faster I be satellite than create Although thought online. material as we're I in based [indiscernible] can we even then the on from mention, seeing -- we're

So XXXX. underutilization in that to back number it throughout start see year you could come see as tick the up fiscal down you

really outlook more perspective, to time. from opportunities out capacity we're of given give just And customers it's many a just moving performance to us supply adding the as substrate to related seeing

with capacity As the in more ways Frank a customers automotive the with as out side heavy we we said, particular discussions look net very right time all now, for putting their can satisfy demand demand there. very to

Joshua Buchalter

most that a us just composition you Great. a increase, give materials, saw last raw a that? of Could the color is to the slight Q you look this at been I going inventory. I'm greatest buildup in with saw in I increase bump hasn't assuming follow-up. perspective. filed. process. into inventory And some inventory. on just quarter, don't the And [indiscernible], $XX you because know work I'm And where from think, of million the I think then is wafer up as trying If I in my quarter-over-quarter. the back

Gregg Lowe

to in of for can of to that, that. kind Yes. our work high me of Well, obviously, done in we of them is me job good with We were support through in on level details a really a ramp material carbide. this. ramp. capacity let big formative began XXXX, silicon We doing ready give their have going Thanks, And this working to we've raw the let Neill is Jed. let knew I and getting need this think investing what that May And

not about just upstream, So some place of that this kind capacity of material and you we're all if so getting in will. in place is

Neill Reynolds

And I related primarily think It's WIP Jed, standpoint, then any don't support the raw loss, there's a substrate capacity no materials about issue. so from big and that's raw numbers we Yes. right. material to have raw ramp. to ensuring

indicated. Gregg As

still to much those in that's lot set sides. ship In as a tick Durham to continuing be well. XXX-millimeter we're to capacity of inventory Valley of don't From of we're amount out and substrate up from the Building up customers XX in other on to the wafers addition, supplying goods finished not a over perspective, Mohawk [indiscernible] kind

Operator

go And Colin our question Rusch to Oppenheimer. of next

Colin Rusch

the folks bit terms how for the point up this customers is potential wins design how at the talk you are market. mentioned your discerning impactful around and to that little [indiscernible]. of and a design that end assessing Can you Gregg, exiting in risk about

Gregg Lowe

really you I Could It was to repeat that. you. ask hear hard to

Colin Rusch

Okay. problem. No

is And to the of around You I'm commitments. talked about wondering failing some curious win the being folks your some not ability assess or folks design then risk how market. the and exiting their to your market deliver able of about performance. design that And I'm customers' on in

Gregg Lowe

feed ourselves. Well, supply the would silicon I obviously we in to to the leader say clearly that and all there of are those Yes. folks substrates out nearly carbide device technology,

wrap I So see our in it having that their that belief And faster. from our et ability said, cetera, consistent like strength customers, underpins -- then OEM Tier having on Valley they Mohawk this with Mohawk they They'd need to Valley. that faster. need to and more and us our ramping rent we're peers, technology. and weekly their calls they is message really Like X I'm executives CEOs

X thing see that Mohawk is called But we they something the have Valley.

the it's hardest and growth do to is world's the right. to able getting largest been operating. fab. have thing the MOSFET probably, getting we've that and They've the Building crystal the seen XXX-millimeter and for get That's XX probably carbide substrate wafer solid a We a not is solve challenge XXX-millimeter wafer that --

out XX% Mohawk utilization time the matter think So a I Valley. it's of us demonstrating of for

close pretty on that. we're think I

As a we're got of is now that inventory Mohawk Valley. Neill Mohawk rate XX We've at there. said, utilizing up staged plenty Valley feeding the Building Auto obviously

that have new modules, you of wafer really would that think XXX% first really, think think So up wafer couple see nice of this first I a mentioning pass capability. these the so And pretty Valley. rate MOSFETs not knockout a coming in going fab on worth qualification the again, forth, to I we've of fab. to or finally, in then for bottlenecks, tick diameter normal points and couple last all and new Mohawk we're as had It we of I the [indiscernible] it's that a on fundamental it fact MOSFETs the again, the capability out pass mentioning fundamental is success

Operator

to of Our Arya Vivek next question Bank of America. goes

Vivek Arya

same have quality But the the of not or a coming X exactly XXX significant about it's the fact structure. next X is understand There I capacity there even online? to Gregg, I just more XXX-millimeter perspective might maybe as just cost on yours whether and same lot your the matter of wanted is, is get the amount to capacity. not maybe years. of it's concern a

Are assumptions years? years? for undersupplied industry or that? X you What next the the do to next X supplied? So you it that market about look X assuming stays X your capacity how are for just rightly the Is at

Gregg Lowe

be certainly repeat prepared this quarter, next I think years the revenue. longer to demand there more recorded This in will supply there is of I supply-demand remarks. record a a our and from said that. than materials something than will my over we lot would be probably couple mismatch. going Quarter, There viewpoint, past I that be

alone history possibly feedback, in China as the getting of is is our about lot demand reservation ready And strong. we're lot the automotive we that. many And with silicon just for with they're But very, are for books getting them customers, The obviously, communication So expansions of looking then well. They're where materials not XXX, constant there's our deal reported -- largest extensions noise also material let investing a like things we're capacity from but from the very a with XXX. at that online, that our that doing giving of Renesas. and carbide. silicon folks and semiconductors feedback to is the in and coming obviously, of

the don't years really for really next I future, supply and couple next anticipate time being a in So half any sure probably demand for below of [indiscernible]. the the

Operator

Susquehanna. question next goes to Rolland of Christopher Our

Christopher Rolland

today, guess fungible just for you is have them, Do and is experience backlog in my cetera? for sick transferable I that may guess be you problems a someone customers And else? into 'XX. and any would you XXXX it, fairly you with your through those competitor them. all they are I have to et pushouts a looking [ or but talked large about if covering -- would pushouts, Gregg, for question addressed downtick ]

Gregg Lowe

Yes.

and start softness China detail. more over it kick I'll Neill and to primarily that energy Asia. we then little industrial of is with answer for bit heads strong. an area me pretty a and The is see basic Let only Everything else

wanted In to numbers. we fact, of the of just some kind when give

Neill Reynolds

Yes.

half outlook perspective, very, if an from into said, second the look So the Gregg heavy fact, year, very auto at as demand. go we the as revenue in of you

I U.S., Europe, that's that's that's think across in Asia. in

the we're heavy So seeing there. demand

And that's function of a can really capacity. a board how ramp we lot fast

Right space. industrial there. revenue, automotive I in timing, areas, We energy and just growth are and heavy seeing inventory in that's again, our represents from demand China really some as customers very softness Asia. in about customers, think now still total China XX% with conversations of from particularly and in kind China still industrial I'm well. energy But seeing we're of primarily

revenue just look we're if So side. out you industrial inventory timing the really working -- the through the sorry, into

well. demand mentioned, side, to on wafers piece we're very right still XXX material third that is for as as [indiscernible] -- seeing the strong And

substrates, supply and to there we're in think, So we're industrial of XXX-millimeter demand up bit a now. energy just demand But devices perspective. in heavy automotive slipping little heavy seeing, in match softness demand right I

looking really in in outlook. -- and to the where supply, take demand that the So pockets that's of we there was still what at energy terms are it where match can we're up industrial remains right now strong

Operator

question next of Jefferies. go to The Natalia Winkler

Natalia Sukhotina Winkler

color to be ask seen. broadly, just of And Could automotive? helpful. wins would them increase guys to there design possibly maybe kind of quarter an that way industrial about wanted where really new you Is about in help are. a activity you have most kind this think the I of or any additional

Gregg Lowe

Okay.

ends, customer And the business. call transitions a a a awards when then And perspective, customer So that's just that's say clarification design when us [indiscernible] from production. into we and win. we

us to in XX% that the year of the volume they purchase Specifically, first have as during give date. they for declared design orders anticipated

worth they anticipated. us customers an than number, billion means That's which we $X wins, incredible it's had beginning we were the to production. to way, program they're So awarded into faster to that of transitioning happening ramp design by from

those [indiscernible] was different sprinkled opportunities. that I quite projects believe around Many majority industrial of were the those were projects. But the of I say and robust. automotive would others

Operator

next question Prisco Evercore. of Matthew goes The to

Matthew Prisco

of commentary XX% figure How given the be on at from potentially this risk gross margin the set the right exiting year? should to about be path either higher, range underutilization would still here the what or point, the kind mid low driver we particularly downside? upside And thinking primary is

Neill Reynolds

look little unpack should Let here. me the a I just we margin as maybe gross -- bit

and So a range. driven just of obviously, just It's good high quarter end very, at from perspective, XXX-millimeter really the by both in the good XXX-millimeter, margin team from substrates. XQ, performance very we cost, had have guidance some materials a a on strong yield operations outoperformance gross

excluding So margin we approximately and of divested points that -- of ERS to was back improvement, ] picked when reported XQ solid. And we basis XX%. gross of go And [ XXX if you RF, business. 'XX up

XXX So you that the when of baseline number in back quarter-over-quarter both points of in we about basis XQ exclude was saw about XX%. utilization. improvement just margin And

might on capacity. quarter you a more overall, say towards And bit up I earlier, of good as with bit from tick from we as see little underutilization, perspective. of more a gross lower end a I'd although impact margin a year. So the said bring that, that

up target to you with again continued get end the underutilization XQ. the towards we'll as continue get demand. the So out end to $XX to of gross gross by year. XX% We out see that still ops look you support the offset get business that, the beyond we that being a sense. will we of we in so an for into midpoint, as the about million margin But of as of margin tick little the out makes as talked solid the see or that, performance, end uptick at might kind year, come see bit We into year some

as well. the to case market see think perspective, and Valley go all in the I Mohawk come We times with there. many to that from a I I volume think really Valley. rose you Mohawk that's that can said going to drive be

think as into I the think So half year. that's move good to you a still about of target the back

Operator

Equity Research. next Snyder The Edward to goes Charter question of

Edward Snyder

a looks it. you quarter, you giving out RF around business I'm charges. XX% out [indiscernible] last year you get then around sorry, running check, if business margin margin. Maybe utilization you gross give it out quarter, the gross back And you've that like forma getting The was that of gotten obviously, -- housekeeping first I'm Neill. your and just to the if RF -- pro XX% all last because

then that. on had check to And want the I Just materials. a about question

Neill Reynolds

Yes.

XXX ], And margin. business we recorded a The about 'XX gross drag. RF so point in [ was basis XX% XQ

the ex-RF can think number XX%. about remaining about you So

about it's fair. points of XXX basis So

for utilization, we went If the you saw to points pickup basis other you XXX about exclude [indiscernible].

XX.X% XX.X% So with you're that quarter. to under utilization of in the

a As bit of of we'll you some as we uptick related [indiscernible]. that an little see that in underutilization and into to move QX, capacity the

Edward Snyder

higher and be assessment? of competitors you there's the any see you're going Isn't basis, -- of And some most vendor needs these to done vendors module, up even -- right? Mohawk to way seemed some supply. we exceeds up, now for early in some the the Great. conference shipping still then new too. begin everything far And is once revert a But survey you're preferred did pretty in anywhere, feedback Valley die deals, of that that of Mohawk of your talking of on So to to is [indiscernible] Feedback of Italy. kind has deals ramps where got all demand vast seems that get of because die back be Could to some by the they deals to demand is in these that just kind a they die to work the the cutting Wolfspeed ground are get the consistent be -- because detailed from kind China capacity fair going and to of supply is there. the be that the can that the we to you competitors look of as in with. It your and of majority some

Gregg Lowe

for are and diet own a building some think Valley of business will own largely good as We've ramp their our customers I basically their the be modules. of module won But story the inverters well. many Mohawk near term.

So a term. certainly mostly on things, of be I the is the that say, side ramp near diet for would to going

Operator

now have we will today. time to that the hand for questions call the back Gregg I call -- over closing for all Lowe, CEO, the hand That's comments.

Gregg Lowe

June you remains Just very One, XX% forward I in Mohawk the ramp and strong joining and two, for to silicon [indiscernible], demand we to quarter. Valley end personally us look call. carbide; before a the the on am in utilization updating lot our laser-focused next today Thanks results. for quarter's

Operator

now all joining. Thank call. you concludes for you. Thank today's This

now may your You lines. disconnect

Wolfspeed (WOLF) 30 Oct 232024 Q1 Earnings call transcript