Wolfspeed is considering expansion sites, CEO says on earnings call PlatoBlockchain Data Intelligence. Vertical Search. Ai.

Wolfspeed is considering expansion sites, CEO says on earnings call

DURHAM – Wolfspeed is considering expansion, Gregg Lowe, CEO of the Durham-headquartered Wolfspeed announced during a conference call on Wednesday afternoon.  But details on where were not discussed.

“We’re looking at a new facility,” said Lowe, adding that Wolfspeed is in conversations with a number of states and municipalities, including conversations about economic incentives.  And that facility might be a new materials factory, according to remarks made by Wolfspeed executives during the previously scheduled quarterly and annual earnings conference call held after the close of the stock market on Wednesday.  But don’t expect an announcement right away, though Wolfspeed executives did say during the call that an announcement could come as soon as November.

Wolfspeed beat analyst estimates, and disclosed quarterly revenues of $228.5 million in the fourth quarter of its annual year, surpassing the consensus estimate of $207.58 million reported by Seeking Alpha on Monday.

“This year was a pivotal one for our company,” said Lowe during the company’s fourth quarter and full year 2022 earnings call, held Wednesday afternoon.

Lowe highlighted the opening of the Mohawk Valley, New York wafer fabrication operation and the “expansion of our materials factory in Durham,” noting that both successes translated “into stronger demand than we originally anticipated.”

But he also added, later, in answering a question, that the Mohawk Valley site “won’t be big enough” to meet the demand.  That could be one reason the company is actively searching for additional expansion sites.

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Silicon carbide is the growth opportunity

And, added Lowe, the company will be expanding materials capacity due to strong demand for the company’s silicon carbide semiconductor wafers.  Lowe said that the market has now grown to $35 billion annually, doubling from the prior year.

“A clear path for Wolfspeed to play an even bigger role as the world moves toward green energy sources,” said Lowe, saying there were more than 6,000 projects in the company’s pipeline during the call.

Lowe also noted that there are trends that will benefit the company, including an increased interest and focus on green energy sources and how to utilize such sources more efficiently, as well as the increasing interest and investment in electric vehicles.

“Silicon carbide is the right technology to drive all of these forward,” said Lowe.  “A great opportunity for Wolfspeed.”

“We are also planning further expansion of our materials and device capacity,” said Neill Reynolds, chief financial officer for Wolfspeed, adding that the company is considering a variety of funding sources in order to raise capital for this expansion.  Reynolds later added, in answering a question from a Goldman Sachs analyst, that if the demand continues on its current trajectory, there will need to be additional fab capacity beyond Mohawk Valley and Durham and an additional materials factory or site, even outside of the Durham location, sometime following 2026.

“The growth opportunity is immense,” said Lowe, earlier during the call, noting that he was at the White House during the signing of the US CHIPS Act, before briefly mentioning that the company is in discussions with multiple localities, though did not disclose any specific sites or states.

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Wolfspeed beats street expectations

Wolfspeed reported net income of 26 cents per share, and earnings of $32.4 million in the fourth quarter.  Adjusted, the company’s losses equated to 2 cents per share, while analysts had expected losses of 10 cents per share.

“We delivered an extremely strong quarter to close out the fiscal year and I am very proud of the progress the Wolfspeed team has made in delivering on our goals,” said Gregg Lowe, CEO of Wolfspeed, in a statement.

Lowe’s statement said that the company “made significant strides in growing our top-line, while also improving profitability.”

The company improved GAAP gross margins, as well, with the annual results showing a GAAP gross margin of 33.4% compared to 31.3% in the prior year.  And annual revenues were $746.2 million, compared to $525.6 million, Wolfspeed’s statement noted.

According Lowe’s remarks during the conference call, the company saw annual revenue growth of 42% and had a record quarter for “design-ins” including in the automotive and industrial sectors.

NC looks to lure chip maker, 1,800 jobs, to Chatham County in new budget proposal

Looking ahead at Wolfspeed, changing semiconductor market

Wolfspeed may be considering expansion in Chatham County, Axios reported in June 2022.

That report came on the heels of the allocation of state funds in a state budget as an economic incentive for a semiconductor company to build a fabrication facility in Chatham County, which could bring 1,800 jobs to the region, if it comes to fruition.

Wolfspeed declined to comment to WRAL TechWire on the Axios report in June.

Still, the company may be looking to grow.

“Looking forward, we remain very encouraged about the industry’s prospects for future growth and the activity we are seeing across our end-markets,” said Lowe in the statement.

Lowe added that the company smashed an existing record for revenue from “design-ins” in the fourth quarter, with $2.6 billion, calling it “a phenomenal record,” in the statement.  The company saw two times growth for non-automotive design-ins, said Lowe, but also added that automotive design-ins were some 70-75% of the total.

Further, said Lowe in the statement, the company is observing “further evidence of the upward pressure we are seeing on our 2026 revenue outlook, which we now believe is between 30 to 40 percent higher than the $2.1 billion we forecasted at the end of last year.”

That’s in part due to increased demand in the power market, said Reynolds during the Wolfspeed earnings call.

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Oh, what a year

The company changed its name last October.  A global shortage of semiconductor chips caused disruption in many markets.  And the newly signed CHIPS Act looks to provide economic incentives to semiconductor firms who invest in and build in the United States, with one observer noting that North Carolina is “favored” for a major semiconductor investment.

The company’s stock (NYSE:WOLF) closed at $85.65/share on Wednesday but jumped in aftermarket trading, trading at $100.25/share at 5:01 p.m. when the company began its fourth quarter and full year fiscal 2022 earnings conference call.

Cree name change to Wolfspeed will become official on October 4

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