WOLF - Earnings call transcript Q2 2025

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Operator

Hello, everyone. Thank you for attending today's Wolfspeed, Inc. Q2 Fiscal Year 2025 Earnings Call. My name is Sara, and I will be your moderator for today. [Operator Instructions] I would now like to pass the conference over to our host, Tyler Gronbach, VP, External Affairs.

Tyler Gronbach

good and operator, you, afternoon, everyone. Thank Wolfspeed to Second Quarter Call. Conference XXXX Fiscal Welcome Chairman, Wolfspeed's quarter Werner; will Wolfspeed's Tom Today, Executive and XXXX. the for year report results CFO, the fiscal second of on Reynolds, Neill Also to in Head Devices; that and Rick which and during we Sales believe Cameron, our will our useful of non-GAAP Marketing. Please we of today's financial Head results Power Madormo, Product is attendance Jay investors. our note information be provides presenting call, and GAAP information with not accordance as in prepared not are with provided a companies. Non-GAAP results to in comparable other a not GAAP. information statements should may non-GAAP for and Non-GAAP be considered financial substitute accordance supplement by to be and posted the section to forward-looking along a our our statements during includes Relations the with may in website, call. directly and of about statements other reconciliation discussion summary business key measures metrics. Today's most outlook, other release we of is forward-looking our historical GAAP Investor A press comparable in the our make Such forward-looking risks and are numerous uncertainties. subject statements to

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

Also, note work at operations today during a presented Lastly, basis. will notes all Apollo surrounding initially, to specific least discussion addressing will on [Operator be that place please balance strengthen pursuant numbers or take to our Q&A sheet sheet, our Instructions] any our confidential continuing balance therefore, we questions on any convertible involving nondisclosure not be session. and will agreements, initiatives Renesas, the

I'd call now free additional us have the contact over like call. And turn you please to feel the to If questions, to Tom. after

Thomas Werner

the critically was on a the to an over on profitability. capabilities immediate financial into term have we focus of facilities that assuming of XX that last structure. first run on plan the months. way solid our leverage capitalize early business profitability us Chairman Board and and its executing to it of joining leverage the as I for the you that and to achieve examining Executive and with intensely financial my focusing leader and and employees and multiple member put been our locations growth towards developed important Throughout is I'm our and the will a Chairman ahead. I, November, aggressively perspective, and to Mohawk Board by said, plan the served performance. I operating both ensuring now introduction, accelerate be on allow thank lie every have best-in-class of will believe the a driven as that Board team dedicated market. Since will of targets that path This silicon these the in with continue for stepping to aligned priorities into earnings the have carbide our on efforts technology, and City to in with business, opportunity have in long-term of capital outlined before the execute our assets on the optimize built the the path November management already I and have Siler an the Valley transition the priorities role. of it the and and plan impressed support advantage the operational in the accountable Wolfspeed understanding me today. that my to coming to I've we fresh years aspect in a against reaching of company, are the afternoon, company had This By my a visited the and facilities. With work completion, these Wolfspeed and is phase years, key established focused capabilities we role long-term teams We Good them. opportunities the the have the with improve advanced Fab both is Wolfspeed in times. call current

the performance dramatically company accelerate and cash First, we free flow. of generate our must positive the to path improve financial

will our take to aggressive Second, required steps well raise continue growth to our will balance we continue and we And these cost-effective initiatives sheet. strengthen is to to underway, footprint capital our progress share long-term to improve simplify focus purpose-built toward focusing the efforts on I'd on our and third, performance. thus best-in-class on an financial is our greenfield this some our made XXX-millimeter to facilities, of By operating far. like execution we've opportunity plan. Work

of closure our with and closure facility the the device Farmers We branch are our facility. Durham of XXX-millimeter continuing epi XXX-millimeter

supporting expect point to of breakeven end our to these plans accelerating our profitability. this completed actions all year, calendar lower to and the our be We path by

sharp capability top profitability In rapidly billion. are in $X.X demand to approximately also level a CapEx maintaining of for reduced addition, minimized at outlook the while use a This achieve for to fiscal goals. line CapEx we the supply we previously turn ramp our while maintaining stated XXXX our to should midpoint XXXX of cash remainder allows us the continue for levels to grow materialize, of fiscal

market greenfield expect CapEx to manner, thereby with up spend to the facilities us dynamics. easily in to having X. I We credit CapEx foresight further team build commitments the to allowing a close be down with and flex these modular

supply However, customers. that reiterate service adequate now, from we for have demand to current our we

also further breakeven We that will started additional reduce point. reductions have cost on our work

during start implementing these QX. We expect to fiscal

savings efficiencies, securing and management. lower going will supply focus This cash forward. operational on will stricter restructuring the manufacturing result in contracts, We several costs additional of

work our lower initiative, profitability. requirements, our to to structure cost second helping to accelerate scrutinizing company our path our the We're across and to every continues. investment capital sheet balance strengthen the Regarding

to dynamics. ways We are with for working closely overall the look current capital our market at account to Apollo Renesas to structure in improve

to In addition, notes. convertible also address the begun we've our work

We be these to advance the with near will working very the in term. advisers financial efforts

as possible. quickly as work complete this to is plan Our

frequent, $XXX last disbursement milestone maintain of OMB to remaining the to ATM office, issued direct believe agreement completing government receive certain to with XXXX. first of to Turning U.S. We're a announced the cash recent impact milestones earlier Act-related arrangement. CHIPS and about funding tranche process. We this achieving narrowing million Act CHIPS optimistic agreement, that reach calendar particularly support. the refunds. time constructive an We're in month, CHIPS week important We in do our the line working funding the funding the tax October this definitive after finalize final a memos anticipated dialogue year program our not the CHIPS both

as it We are situation monitoring evolves. actively the

commitments have a our with the cash we support CHIPS direct capacity to of will committed plan part X at agreement program JP construction signed have Valley. have wafer we funding continued we the tighter complete management, As at capital Mohawk and With the the still to ramp existing close office. to until capital,

with funding you we Renesas North these improve capital. undervalued, outlined these Carolina from New we're package. Apollo, the we the government semiconductors, shareholders. That At the the Our to billion York, executing technologies. on group strategically priorities, are we strengthening examine priorities congressional by to the our a to in emphasis to Trump on strengthen agenda for First balance administration's particularly additional encouraged silicon Board point, domestic believe that continue supply has same when shared and led just committed against Wolfspeed championed total champions U.S. on this by execute time, on in generating has to remain all we are continues Wolfspeed, America and access manufacturing ways value and core and together, I've chains, in Wolfspeed in forward of ensure additional funding it the most of the U.S. we to sheet performance, continuing objectives. Putting equally support combine and while our raise management's at said, their focus investor carbide and long is support unwavering its for especially look alignment financial $X.X

Neill, Before both like have to I would over and markets end entire acknowledge we demand. the call in We to our few that competitive past the touch on quarters, faced and turn the over landscape. market the challenges I

we again we making JP, we the a in was of of the progress will grow to occupancy half third year. expect first our quarter, continued with in remain wins. Similarly, million, from at ramp the receive quarter this This Mohawk design and revenue certificate are the track of on previously announced Valley which strong $XX

We our the are on of are performance key a extremely from pleased devices the begin and we with of wafers. commercial substrates. our XXX-millimeter the XXX-millimeter wafer these is advantage as This yields first competitive production to

cost less from impact mature As underutilization will and economics our start-up these improve new financials, on significantly. unit we and see facilities

centers. markets, including pursue we key pressures end broader ramp auto renewables continue demand although EV challenged and aggressively For slower-than-expected have and markets, a stronger macroeconomic AI in and recent data quarters, I&E to our

year, GM balance customers, automotive. Demand and ramping, grow visibility are wins taking will applications but their green our driven largely limited. our revenue EV support by industrial in showing is are the investing shoots, design such, in to some previous the over place like companies and to in transition power the programs long-term Our EV as energy continue of where remains

woods we encouraged seeing remain we While we're yet, not out of what are so the with far.

have ago centers, where at pioneered long-term demand energy, homegrown; will as significantly Our scientists confidence, and by and given quarters, demand renewable generation even data core channel for to the invested dropped storage XX more last billions electricity years Carolina. rapidly. Silicon being Wolfspeed has behind is in Raleigh, inventory the the North carbide see nearly we few which drivers need over AI continue innovation increases American in are its

its lower-grade systems density we're critical full Although at world's that that in of to this reliability for efficiency application potential. Many of at from high risk silicon high-performance into carbide more new technology partner. efficient simply technologies system overall And and MOSFET, industry, new higher innovative in on carbide extreme are performance EV road voltage and with environments. In and failure solutions is products ranging operate perform to better ability tough well we markets customers believe applications, device advanced cost. platform realizing with a depend create consumer the quality device in and is their highly of the a when list maps we of with operating higher to and to longer-lasting continuing long-term to paramount. deliver engineers our niche a top is due defense silicon aerospace silicon stages products. these a early and optimized customers. Last why carbide materials, solution we from environments flexible design the platform selecting rate more require introduced in allows Gen The at to supports increasingly power great e-mobility a week, its market most This too the X to propelled multibillion-dollar to higher greater voltages for ruggedness still

products deliver on in Our Gen scale X XXX-millimeter efficient our platform not will be which seen a via to before. highly enable delivered industry will wafers, this us

landscape. Turning the broader to competitive

participating homegrown well-paying U.S. has We remain that U.S. U.S. including and stand for engage into and in We safeguard critical interest growth China's programs creates technologies. Silicon track carbide vital government making to anticipate We semiconductors by IP help key investors been XXX security. these to this American economic as investigation stakeholders, our semiconductors. these for level carbide measures developments, the significant recent front at their in fuels ready American the efforts American to government's continue the investments and is advanced center competitive our issues forefront Silicon field they playing our assist in We investigation. government actions as and for we advance and of to jobs. will process, preserving industry the edge trade the recognize Wolfspeed welcome U.S. companies advanced representatives' are is policies. carbide silicon to that security. national

turn Neill in like our to to I'd over to quarterly and detail. call Now financials the guidance discuss more

Neill Reynolds

everyone. Tom, and good Thanks, afternoon,

levels, to grow ongoing saw the revenue XX% and expect at sequentially, we guidance X% Despite financial million and driven and midpoint Mohawk device increased look our energy largely slightly as of million in Mohawk the Valley to revenue recognized year-over-year, into EVs Valley between of was we out our X% $XXX reach half X% in the down million, to the by see in the Looking sequentially, recognized materials third of industrial We outlook. power we revenue by revenue $XX inventories driven the revenue $XX million, XXXX. Revenue to sequentially. generated expect $XX up for revenue $XX contribution down million, their current We revenue down above fiscal adjusting quarter, down XQ $XX fiscal results, the million weakness of we for we quarter-over-quarter, from demand back EV lower customers account end quarter. of markets. and

improve. to with line in trend demand market to end revenue QX materials expect until We begins

our we the related and outstanding than an XX% first quarter from with output successfully lower start-up or margins. we simplification million half Valley. above a to impacted offering. production last November costs, was maintenance Moving communicated and was equity of primarily down the increase $XX of the million This costs our operations our shares production restructuring or now $X of part executed the Operating million OpEx of Operating and of in reduce midpoint better Non-GAAP costs in of of down increase $X.XX lower quarter materials Durham $XX but million, guidance. This to are of these our on a reduce lowered efforts. Start-up Mohawk expectations. our basis and midpoint maintenance demand expenses we the factory shares to in were with during an of with tax X,XXX XQ. in shutdown the our, a as points fiscal $XXX margins credit expect midpoint average to issued and XXX costs during were continue wafer to margin ATM points in the with EPS partially Gross second Durham line JP materials by was versus offset gross fiscal costs guidance the quarter-over-quarter below as our million included included our prior negative rates guidance. continue XXXX, outlook. X.X%, the basis previously $XX line impact second X.X excluding costs factory outlook. The quarter, depreciation for and line $XX fab expenses, and of financial lower guidance shutdown down This was the related by resulting XXD weighted lower were associated favorable primarily basis year. Adjusted quarter to underutilization as facility million of the in our also and half million quarter-over-quarter factory

our equity just would our offering, the Excluding negative $X.XX, been the of of midpoint have EPS ahead outlook.

ended quarter the million during $XX $X.X cash in starting ATM balance sheet, million that flow quarter, completed billion. Free capital working the profitability efforts. expenditures. million, after the billion with the offset This of cash prior reduction equity of interest our and timing flow of liquidity Including $XXX balance we versus driven cash $XXX comprised quarter restructuring negative cash closed, year. $X.X million cash was and quarter offering approximately impacted the million $XXX in our by flow in hand. of cash of of approximately negative cost higher total partially was Operating was January, $XXX quarterly charges and operating by Regarding quarter, on cash higher to million net capital the was by $XXX included January raised improved this the our of shipments costs due

anticipate our profitability $XXX will in of significant as in stricter we efforts comprised of we revenue result capital cash performance. CapEx We cost-out and management reduction materials half our operating as second during see XXXX cash the fiscal expect improve into XQ investments JP inventory facilities facility. improved linearity, working and primarily into million was move the fiscal improvement to flow measures,

$X.X forecast be billion, CapEx wind we second expenditures we half we off down the lower of As in to with and expect fiscal XXXX, approximately phase, construction fiscal in fiscal XXXX sharply expenditures the in capital XXXX. dramatically to capital fall

order line a provide revenue announcement these $X funding quarter, private in loan billion million grant operational $X.X grant, to achieve a financing outlined of the are mentioned, financing $XXX first achieved grant, additional other terms, of the XXD credits. In reaching plans levels and receive terms. financial with liquidity by Tom secured million included some executing to portion tranche, receive we million to conjunction based As with approximately offering. CHIPS deliver capital we we our of memorandum non-debt $XXX and runway required absent in the This and tax billion million which in the our us raise and that Last $XXX term to equity we required funding growth. to sustained ATM package a of funding adequate From preliminary milestone tranches of $XXX are the the financial on accommodation, perspective, of preliminary milestones. both

address to will will primary debt, addition, convertible to need achieve. our In we achieve on operational focus. need which our which next we to will remain we be Also, milestones, track

$XXX and it relates of credits, government. of fiscal already accrued As XQ, for the $XXX submitted we to refunds returns we XXD the tax from as have million cash already million have federal

this the goes XXXX expect Also in to cash to JP company's XXXX. to expect performance, the restructuring tax year, into efforts. which more our in calendar improving on calendar program tied XXD service to and simplification significantly financial continue execute refunds under we receive when We request we

$XXX the of workforce The the contribute of to fiscal a conjunction million being Farmers along as of XX% of Branch the in sales. The second sale. with calendar XXX-millimeter contributing reductions close of to remains well to and at to various XXX-millimeter nonfactory end with XQ. the the was employment, is remains driving those with of factory Durham prepared million savings as expect on annual December company initiatives status at total epitaxy XXXX. reduction track, plans. facility of already to closures, half the We cash reductions in for following $XXX The completed most closed of track related fab wafer approximately closure in the a The noncore asset on liquidity end

CHIPS line cash clear tax from Lastly, assets, $XXX to calendar we liquidity our of approximately of have time, noncore and in additional we in million in forward, call. Restructuring included At XXD the asset our see $XXX our this a be comprised the approximately in charges costs, opportunity and tranche range in related attachment million of the press with to committed recorded consistent refunds proceeds earnings continue generate table Tom you which $XXX of cash to severance we accelerated of of XXXX. us charges outlined company's expect sight million with ample impairment charges first QX. of to divestiture billion to the communications. the X Branch write-offs work Apollo, if which noncore we asset disposition fiscal top and our are of on total, including of led our this by proposed funding on depreciation, non-GAAP priorities to up combine work asset costs, previous going XXXX, at the $X.XX grant related group lender In sales. the giving liquidity were by expected This have facility, expenses. simplification in a includes XQ million million release, Saarland adjustment. The the to this charges $XXX to $XXX Please and efforts our restructuring the fiscal facility Farmers the for to costs other in fiscal related and previously the

to restructuring to and annualized measures cash to basis. of million start substantial our under savings billion annualized economics, $XXX We the in these reducing and unit continue of breakeven in allow improve revenue cash $X us expect activities neutral our cash generating XXXX generation non-GAAP XXXX. Collectively, fiscal amount annualized deliver point an a enhanced be savings to cash on significant fiscal capabilities, EBITDA

to turning QX Finally, guidance. XXXX our

We expect and between revenue million. to QX $XXX XXXX $XXX be million

minus QX X%. gross XXXX expect X% of margin non-GAAP We to

of $XXX million million. non-GAAP XXXX expect $XX QX OpEx to We

impact accounts QX ATM EPS the $X.XX for issuing XX.X our million to expect stock which of under approximately common loss program. also XXXX We $X.XX, shares of non-GAAP of

million turn exit call forward, shares I be over will outstanding expect Tom closing average to now to and we fiscal remarks. weighted you, our approximately XQ. Thank Going for the back XXX as we

Thomas Werner

positive identifying the the and Those on activities key remainder and reiterate dramatically my balance and of Thank next accelerating to slate want CEO a of Chairman, continues management our I Board priorities work required cost-effective flow they to improving aligned growth that Wolfspeed performance the on with of are all chapter to you, strengthen current earlier. raise second, are Executive our Throughout the cash I the the third, executing against path capital our I, team, aggressively candidates. to plan. Also, are tenure pursue as to to our Neill. long-term generate growth, outlined financial from its sheet; lead operations; of in support the and pleased Board company

our silicon now towards path to the Q&A. collective place strategic We reflect and are the opportunity to a the will capture valuation on move focus therefore in and and multi-decade of more company. Thank that and confident long-term will Wolfspeed growth you, carbide, closely growth profitability we

Operator

[Operator comes question Instructions] Goldman today Our Sachs. from Lee Brian with first

Brian Lee

a Welcome good time, you. hear back to It's but long been in the saddle. from

and was EV lot around I A maybe all long-term one demand demand folks of just had on of First forecast. narratives kind worried environment. slowing about the the

as curious, Mohawk as I the Mohawk a medium- expected to up but near to then have you level right What what's fill that be So you been running will longer-term beyond been? with you customers, spending slower guys confidence ramping. now? bit commentary even Tom, Maybe And demand time there gives it's you've fuller you're have where than a be capacity term, follow-up. a

Thomas Werner

Brian, you, with working good and again. to thank be back So you it's

demand, EV first, talk then about and I&E. me on let talk So I'll about

EV, of of we growth. terms slowing as it In think

as projected. and had So it's not we growing, still but as fast growing others

and thought the OEMs forecasted, have other there and we of ramp growth specific think say in of the about that is we specific think few ahead about and that words are that are The the plan slower. And we we've models models, way Neill the about that models and can this other number we're the a seen. we ramping are or that models or percentage

there seeing So models or we though, where certain we're certain demand accounts, -- are are increase. where

AI, specifically In other terms centers, prepared of that. as mentioned markets some are the green like I&E, seeing I and data energy we remarks, shoots, in

market. few gives the and tailwind stages. because lowered We're the that us that quarters, in so particularly our last also a over inventory we're we've benefiting in early So channel strong

you do we Now anything? us. want having I&E, said improvement that, to growth we see see don't for but do add steady Neill, a in V-shaped

Neill Reynolds

prepared We EV in add growth quarter couple to the Tom. that to XX% an XQ from over going models of XQ. XX% expand also production that of year-over-year. would into a be in fiscal geographies. a we grew back, the step comments broad just EV a a in of last just into quarter perspective growth you should there, number mentioned XX% if We across remarks expect Let year-over-year. have XX% That number take going me

So as and what's said, is is essentially a Tom level expected, that does of adoption kind weaker as the we of give certain growth base rate broad diversity. is diverse. customer that's our significant lower us and And kind year-on-year driving than of backdrop. What that a

number the of when does again. shipping we can broad So the models we've and come customers start adoption market ship market we're advantage with up that a into, EV to rates into back, of got of as that the pick set take nice

Brian Lee

alluded hear increase. you continue prepared points anything competition maybe to know guys there I data I to out like I your to XXX-millimeter feel didn't China. follow-up. SiC directly during One related capacity remarks. wafer of

out point? sell in Just impact to So out at the helpful. then Siler thoughts, again that with peers thoughts be XXX-millimeter, your what respect there what's Are this your be to and happening kind of ability sort of of behind any hear competitive City. would merchant there curious capacity you China on given environment, does to

Thomas Werner

we're space developments competitors, So also the with of what's in and competitive in acutely we're of China. acutely on aware aware going

thousands it's shipping of and Mohawk of the the wafers exceptional. performance and know are In we Valley XXX-millimeter, we're only of producer to the our specifically them and wafers, we of Fabs, terms volume XXX-millimeter

we credibility have wafers lead, So of we of per week. the shipping thousands technology a and have

In with, with a would addition partners expect the customers, partners. to to we of number started be and who sample the us you we LTA fully to that, and engaged engaged have are volume

at think we're at XXX. the So place right time on right I the

Operator

Jed Our question from Blair. comes next Dorsheimer William from

Jonathan Dorsheimer

-- his on -- Senate to Howard CFIUS update ruled terms looking been I perspective busy story, key phase part if like of first the at any know on you XXXX. was progressing? respect of liquidity then that and guess around might the if carbides caught follow-up. us CHIPS the a in to sure that's context the a It confirmation. was Act back share Tom, the you operational could not silicon have you're today, wondering And Lutnick a how of that but just security. And maybe have grilled in lot sounds I'm getting side, and I obviously, question commentary is I'm from transition transition any I national with is have because been of

Thomas Werner

right. the All Thank question. you, for Jed,

As I it's that frequently issue we the sign with constructively program working office, said note prepared a is in when usually are which something this. the we're list, remarks, good to engaged the narrowing important and CHIPS you're on like

national terms -- testimony work started of -- Lutnick's listen closely manufacturing, billions did have Never administration. And it to new and mind Howard invested, AI. mind like work jobs, thousands Mars. closely and security. In we was Never about today. everything we of note, the And to the of to with important American things is. American technology, important to importance American he talked going Wolfspeed

be for more ever of a to CHIPS, there's fit America, a it. may if CHIPS So expand you we're prototype which of overstated, ] [ want if there's would in cover

gives with aligned. we confidence think that engage new the So us as we're administration. completely We

Jonathan Dorsheimer

that of my falls follow-up, done as just you've spending Then second. the throttle Neill, sticking just Great. back. and of kind job for liquidity with a good off, theme Looks to here a like

might whether in an Are additional of As that? or of the that. I'm changed? discussions what things around or or you -- just in curious, still hear potential of the talk a purposely if not I agreement just missed is cash, didn't update about the did -- for Maybe some have part XXX-millimeter agreement supply negotiating you sources was potential that expectations be.

Thomas Werner

answer few majority comments So Jed, the and question. of I'll say the then Neill let a we'll

just that commitments are partners, long-term long inventory volume So the terms time. managing will XXX over and of correction a fulfilled of we our we expect be with an in period agreement

about think in XXX, And wafers partner. volume, producing working with the others. only we partners we're As and the logical that's as of company we're XXX-millimeter course, those same

are And together. -- so the they X come

to bear this nothing done calendar now, you there's work can we year. but timing, maybe terms announce In there's believe, will of Neill, being fruit, in comment that further. constructive

Neill Reynolds

Yes.

of Jed, terms of our further in Just and terms go driving liquidity in made -- of one a it, that's bit of hit I little but element there just kind think towards first goals. the comment you on

as laid first, that of better performance one restructuring place. second I OpEx result things the from the of And results it think execution the the you half and as think we into cash financial Tom of stricter out Tom into look nice prepared the a program come the results. the the the initiatives driving call. I We've operating in and laid on and put of and some here. And out kind can see performance simplification in year, you see capital flow cash remarks, generating down. working is we'll First seen That's the step that already

So consistent that on focus and performance. financial that's operating kind of step execution one,

of things. in Now laid to other couple a addition that, we out

for, they're correspondence first clear been already credits, federal have in $XXX visibility those. returns completed with XXD is between one we've processed. we've tax The that our of Those being the we conversations and the on and have been received to and liquidity million which roughly government

million of making In progress on addition, $XXX asset we're the sales.

$XXX would financing another in we a CHIPS CHIPS loan plus million with the $XXX grant on the $XXX that, office term to solid the and million. portion top or grant working that And or the So portion for related of to big more result the along closely, another work with plus element. that than CHIPS, of of million there's continue grant,

more visibility So billion of $X.XX liquidity. in terms than of

liquidity then on. step one, that drive got step focused and let's the operational we've we're So plans performance, X,

Operator

This Gianarikas Canaccord. with George question comes from

George Gianarikas

revenue ask breakeven. about like So I'd your to just

you $X said think I under billion.

you you those think that's you current us understand just And of think targets achievable? could in environment? realistic sort how the exactly help If when revenue are

Thomas Werner

George, part, the I'll first words Neill say take and or probably add few something. I'll will a

breakeven. So program than out That lower plan. and us cost ahead million reduction of gets company $XXX first of the of of the $X improvement cash to is takes billion

a power business. what like We some in saying, two we beginning despite the sort we look scratch. want demand cost sequential add And of we we're would and over taking that are have to despite materials program as is the is the our see that if although that. And the efficiencies, second up? want the a look -- we're build our base looking because the we'll the from at in growth at the you that to -- look our at be we're expenses cautious we're fact off cautious progressive to from or initiated or and time, company. businesses, that belief going but is. that's about maybe, yield started to power phases that, business And we This And likely fresh That revenue company of of what year, we throughout business Neill, another take something? ground and

Neill Reynolds

No, I right. that's exactly think

around the to focus stricter our business, XXX-millimeter, and our execute driving the cash simplifying our first and the initiatives driving on think I device is and simplification operational primary business the initiatives of management. cost-out to business

grow are terms we energy, in from grow then with terms fiscal in limited, visibility revenue And continues the a periods. that to of is device seeing power that though, better breakeven time. seeing into we'll as And we materials, points us along to and the cash into see of are in one. out operating step that initiatives, will half flow those the a kind in industrial give perspective, of back that's somewhat these to of year, continue sight operational but revenue grow. Agree think growth I revenue

George Gianarikas

design-ins. wins a And And state financials follow-up, of trending? traditionally interest? been have design those customer your How and has you've maybe as impacted current the discussed

Thomas Werner

wins the It's slides the numbers I on got quarter. design one design-ins. but our two numbers, give for can set We of website. you of published So those first, a and

customers, they path see release forward to in our for are completely we've about they parts company. And the million the of communicating paying our million supply for of for then $XX.X billion see design-ins $X.XXX that that things how definition, Arrow, customers and talking your constantly do design in are recently, I business? want off Gen wins. And just our out, for X we're aligned we $XXX and is OEM design And are wins, do critical point business. with R&D. their how in customers XX% on And key like we and to is And revenue -- completely we we are of like we cumulatively. first who second transparent, our key year So question, some terms the cumulatively, which announced it's the increase cases, investments made and

then CapEx our important to call, it's And note, largely as listen that I implemented. to is this

made exact that close X customers' can the demand. capital can we satisfy increase meaningful commitments and we to our demand satisfy which the new -- said commitments, existing means So capital

partners. company the we So and forward, customer as and substantially with it look aligned is going the transparent different our profile completely at are we of

Neill Reynolds

Yes. this Tom of And the and have $X.X have roughly $XXX just and design-ins gone about to of cumulative design there. almost that in quarter, we clarify, numbers talked million wins that's billion about

those shipments to So design and goes we our a see design-ins. real of transitioning the think stable large before, stable -- right about transitioning I of a now those we've But and orders see talked out large into wins. like of execution back our We factories. focus into operational

Operator

Next with Chatterjee from Samik question JPMorgan. comes

Samik Chatterjee

days of terms Maybe Durham, than did we XX is, or implying, the sort of that end from some transition the the are Durham time won't And you have you you on. convert, if operational down chipset which guess about two to need is operational those in are, question the but higher of really had is that you milestones that muted to revenue to and a what the achieve really how is more widening those to some you start time then slower what expect than is higher to more the increase. Is can about for quarter, were the from towards you what work talk change ramp to ago? I relative really through around of you you reason power the Mohawk any sort milestones? year? And feeds you milestones have you my sort and to operational the the us track -- -- with, did towards the give down, One guidance revenue seeing the expected for relative achieve of around track us frame line in sense some the follow-up, sort you're question contribution provided mentioned -- Durham maybe to to product the Yes. on of seems funding, which which the things side last

Thomas Werner

Okay.

on kick of The the So our are this things previous off second first. North answer guidance, year. yes, Carolina half is let is fab per close track to which me we

the course, that forecast or we've than good higher the forecasted Second we news manner. forecasted. The for positive that that of the we're is, job, we're part flow a and seeing we efficiencies efficiencies. fab, is of a demand set demand we, is seen demand demand. actual seeing The team as And satisfy aside we can and cash is that doing fantastic what in

So on track and going well.

from the conversions term, to and we've design to our Mohawk to accelerate. of and our our being Valley that they'll economics conversions Valley Valley Fab, long for Because Mohawk objective work benefit Fab, terms Mohawk implemented corporate actually the plans we want customers got of are In these accelerate are Fab. with design significantly a to better to

them. questions your make cover got Neill not, will there. If sure I've think I we

Neill important of Act, expect it's we year. to the detail. cover we complete more Siler happen occupancy is important by CHIPS Siler capital that this an the But commitments, milestone will to despite in On that for note new And close to which certificate middle City, City. of will X

that. emphasize Neill? double to wanted I So

Neill Reynolds

Yes.

North levels ship There Valley. going Mohawk just in So that of there wouldn't our are just read transition, Carolina and fab. are of now, transitioning of that to lots I North parts between are the certain Durham the are the that are Valley clarify, revenue Carolina, Mohawk inventory Durham into to on so co-qualified

the mix variation see factories. a could you So little X between bit a of

of coming of though, a a ramp the that's Mohawk ramp which you amount XX% that that we the in the seeing heavy on, gave, we're think on from focus come go will the EV EV. guidance think or volume quarter-over-quarter, midpoint as Valley. lot to kind that on Valley of revenue of XQ, out of XX% to Mohawk thing there quarter-over-quarter XQ I the we're and seeing and I increase is underpins And

and on the in mentioned operational progress calendar milestones. and Tom that to CHIPS over to process continued terms transitioning an of confidence qualifying operational reach Valley. the parts And XXXX. very high early milestones From So in agree perspective, Mohawk

Operator

Research. with comes Jack next question Our Charter Egan Equity from

Jack Egan

Great.

on that puts XXXX. automotive and you So call, mentioned past the few your quarters, this will few quite a mix takes grow through on there over have And revenue been industrial. automotive between and

also by how a over could footprint just of now, wondering us fab time just you maybe down then market was change your right And then as Mohawk revenue I set if Valley. consolidating that over on your a So device how follow-up. I breaks result into level and go had end might

Thomas Werner

and Jack, with the words questions, Neill. other consistent turn to say I'll over a few it then

fact, So right. you're in

Over percentage auto the inverse. from last gone and a almost year or X, to smaller of has the all the mix I&E

see we'll that go we think little bit a I&E. stabilize forward I as as

it we a shoots. As we're some little let dimension I'll bit. seeing Neill said, green

Neill Reynolds

Yes, I think that's exactly right.

seeing down coming in we're automotive. the shipments fab. I their in We're that EV the fab, Most or coming fab. think out drivetrain of our North EV heavy the some winding shipments applications Carolina still of now, to the of shipping final out parts we've time. from outside there the I&E other of seen drivetrain, out have Right heavy our point shift Carolina had North at alternative mix this are presence of

of winding and kind transitioning You down there those to half and see portfolio start well. as first should also of the see but more you'll the EV I&E in Valley, calendar Mohawk out of XXXX, more we're

transition the that Mohawk split start over these we'll I&E of to, revenue balance and we EV start I&E Valley to back see over products start time. over up, come see time, to to and XX-XX a and some applications market back picks as to to So

Thomas Werner

second about load I decades. talked intelligence Jack, that big question. in that in your Energy And it's the mentioned. And then from I market Neill been for we're I&E previous that's increasing my did I I when previously, mix driver. want the energy is in, is forgot, is driving artificial to growth a result storage that in demand the because will battery market ready mention. general, I&E, was highest the center that data another and

Jack Egan

Great.

a helpful. thickness. hoping could you longer-term I guess was a about of I wafer one That's here Okay. talk bit a bit then.

that has last potentially product towards competitors some thickness. will believe X-inch And year maybe in that typical and qualification wafers thick XXX their announced the Wolfspeed microns I thinner be So end the wafers, versus development, the too. of XXX-micron

wafers are So you wondering I'm was the it customers the that relates materials in there to as about progressing development to the materials as to external that. And in Mohawk is both were I you well at as the that how selling just Valley the of business. or curious thinking then Wolfspeed qualification internally as using

Thomas Werner

our on comments. of lot convert Yes, brief, we we to keep don't a I'll you're that operation. internal this can we want are sample because -- XXX we we yes, XXX. what over it. I'd developing time But have limit may to in And our will say about. say comment asking and to And yes, to some I yes,

We have not converted yet.

Operator

with Irwin Craig Our question next Partners. from comes Capital ROTH

Craig Irwin

your years the power first business. carbide nice Board, to XX So on silicon decade the I Tom, history of it's have Wolfspeed. the guess were you with

general U.S. grant. last of changed customers the additional is growing of given in reason obviously really So I across any these for areas appetite a from the this did the the you a support business guess company but nobody level to economy? support, and interesting the impact interest that the early government about. funding there from was I the that guess see business cared even into there very U.S. we all I 'XXs, of cared, year for the mean has that was a there Do from shrinking, think think from the year? So or from line that over business. Is the item last power government, form

Thomas Werner

do there's pointed well. And voltage, ago, and power, out, market. of mentioned, and from how that founded meaningfully because we today, get higher a and history I how out government what we we we so. growing, know and to course, a benefit long -- technology The which know are we the State. as U.S. to things higher practically has you're years frequencies, with done. exactly Carolina this higher -- founded works, to right. And that XX working how of continues were company we as switching And to and North invented and shift We the you know are partner We we of how government, are

So defense if think they you want clearly an agencies American and about want, they supplier. the what

technology So to we've the and shift credibility need the got X of silicon in carbide. history that applications decades, the

strengthening definitive a So or broadening.

Craig Irwin

My about second question is competitive dynamic.

think So another other their so guidance, seen and you can given out for actually Normally, sheet? OEMs, through quarter, uncertainty OEMs, switch other be period at repositioning has has underappreciated. Could substantial revenue, but maybe I very it's makes in your product have we've drop see of your you that of balance at are supplier, revenue held public. a suppliers, companies give that well, some that's this there what would actually chips on the far assertion sticky this surprised work Wolfspeed requalifying consistent in there suppliers. been is other pretty with with oversimplified I as color And are me challenges during semiconductor the think, an the and the made quality fairly as as for challenges special, available the changing and us in challenges what companies why business

Thomas Werner

few tied of unbelievably are material probably things. is device potentially, least want one do to is follow-up clear, at the so a together. and will that Neill say they a this to inextricably importance So performance on or I'll quality The

that quality XX% as the as wafer that of delta device you yield. a much in have the of make So characteristics can and will the a determine out of device

and you time can correlate we risky suppliers as materials we parameters, a as better. impact big better can material impact has only business, -- it yields. on a and And we over the because switching work customers, partner only big We isolate get partner on of So can your you business to we together. course, have material is customers with quality that with -- as we device make

are to, longer In our cases, have constructively in the together market. may higher in the almost those as customers. but all we working that's course, time, so -- time. And over of they spread alluded partners. becomes of you we're switching And then that some -- as primarily XXX-millimeter with And happening cost out long-term be agreements what's

Neill Reynolds

Yes. with parts we the these when their years either you to at if parts Craig, performance or integration we're working several get I'd just of in on design-ins, in for add customers modules that, And that these our devices, look and of systems. those

having the is good breadth seeing about tougher control things cycle, our that of to integration good talked engagements supply part with over just the on got a that substrates in at we of are capability were Tom -- those look over and you chain and we having term, for terms across we've customers what the and as of the through that good So portfolio. growth about, integrated that having access quality long the supply based substrates, talking

And of backdrop So through tougher in from a think customers. shines breadth working we're that of that does kind of I create perspective. some a customers demand stickiness with our even the the and those with things maybe breadth the

Operator

Our final Sandler. question will come with Harsh Kumar from Piper

Harsh Kumar

I just questions. simple X just had clarification. wanted I a

quick next CapEx then quite one. to cost? that $XXX outside then that for a or wanted. I your million include close That's it. and for your $X it Does billion you possible you think a had mentioned I call X be revenues year that might CapEx of a quarter billion, CapEx? have $X Is said one, breakeven that number, fall clarification or And little fall will under also underutilization will another that does I to Neill dramatically. maintenance a start-up Tom, And

Neill Reynolds

Yes.

it's full So the thanks, Harsh, for Yes, P&L. inclusive of fully the question.

that's think, I way So at year look operating when target million to about. I perspective, talking of million a From we at flow, CapEx talk and about gave as year the EBITDA is out, a cash $XXX 'XX. you about fiscal think point, the the that next one we're to $XXX what

amount gross and or at we're a end to on said, low the the flexibility based significant that coming think us to Tom perspective. available we'll out to perspective, from a from ramp of I because behind ability to utilization lower of the of portfolio the and that Valley what a substrate Mohawk device have have have and still range that take we continue down, significantly

So we'll down. see come be able that to

credits about to the essentially returns when thing online short payment near half as for the an already we'll year, term million government would invoice JP the will of next the year, federal to we go credits. of the XXXX. for essentially into tax is in for in to a the of term, We I add lot send XXD XXD longer what back comes we've or you the of The the and term. north first sent in it this in talked expect return second $XXX that In IRS look put our from

talk we offset come when amount of numbers, there's those XXD So those. gross from can to about that even funding significant in a

to go X or lower. yes, is perspective, you after even So -- down from gross a and from incentives, we that then down, perspective down net a drive can the answer can get can that federal

Harsh Kumar

Okay. in Got if question costs. start-up company on revenues, underutilization it's number time looking a a Or the at combined? then that And that At And a to of and of you JP would these the away? Mohawk time? Valley we as function it. in is Is revenues? totality, what point expect what charges are a function for a and go of function

Neill Reynolds

Yes.

how time, on both. fall costs we'll ramp the company, underutilization the start and depends see start you ramp start-up So to as away. it's the on we It of fast a revenue function over to

underutilization them fall of fading start point You get XX% we just of utilization. of to which can and target to a utilization think in all levels kind we'll to of kind of start the kind about away, those all being think we see linearly start-up as off of -- kind

Thomas Werner

the the you next to So that it and Thank I the We call. you on end the for joining focused performance and here. updating of end quarter financial you company, the much. us appreciate and improving a in repeat over we company, economic forward our look I'll investment very sheet we're with want balance to the intensely improving call.

Operator

call. participation. you That all will Thank conclude conference your for today's

now disconnect lines. your may You

Wolfspeed (WOLF) 29 Jan 252025 Q2 Earnings call transcript