Wolfspeed Inc Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Brian Lee - Goldman Sachs - Analyst : Hey, guys. Good afternoon. Thanks for taking the questions, and welcome back in the saddle. It's been a long-time, but good to hear from you. First one I had was just on maybe the demand environment. A lot of folks worried about all the narratives around EV demand slowing and kind of long-term forecast. So, you guys have Mohawk ramping, maybe it's a bit slower-than-expected near-term, but I'd be curious, Tom, as you've been spending time with customers, what's the commentary been. What gives you confidence that medium- to longer-term demand will be there even as you fill Mohawk up to a fuller capacity level beyond where you're running right now? Then, I have a follow-up.

Question: Brian Lee - Goldman Sachs - Analyst : Got it. One follow-up. I know you guys alluded to competition during the prepared remarks. I didn't hear anything maybe directly related to 200-millimeter SiC wafer capacity out of China. I feel like data points there continue to increase. So, I'd be curious again to hear your thoughts impact on the competitive environment given what's happening out there in China with respect to 200-millimeter. And then, what that does to your ability to sell merchant capacity out of Siler City? Are you kind of sort of behind peers at this point? Just any thoughts there would be helpful. Thank you.

Question: Jed Dorsheimer - William Blair - Analyst : Hi, thanks. Tom, I guess, first question is, I'm not sure if you caught any of the Senate confirmation. Sounds like you might have been busy on the operational side, but Howard Lutnick was getting grilled today and a lot of his commentary was around looking at CHIPS Act with respect to national security. And I know silicon carbide has been ruled that from a CFIUS perspective back in 2016. I'm just wondering if you could update us on, is obviously that's key to the liquidity part of the story, the transition phase and maybe share any context in terms of how that transition is progressing. And then, I have a follow-up.

Question: Jed Dorsheimer - William Blair - Analyst : Great. Then just as my follow-up, Neill, just sticking with the theme of liquidity here for a second, looks like spending falls off and you've done a good job to kind of throttle that back. As you did talk about some of the potential sources of cash, I didn't hear a 200-millimeter supply agreement is part of that. I'm just curious, have things changed. Are you still in discussions in negotiating the potential for that? Maybe just update, or if that was purposely missed or whether or not what the expectations around an additional agreement might be? Thanks.

Question: Jed Dorsheimer - William Blair - Analyst : Great. Thanks guys.

Question: George Gianarikas - Concord - Analyst : Hello? Can you hear me?

Question: George Gianarikas - Concord - Analyst : Hello?

Question: George Gianarikas - Concord - Analyst : I'm sorry about that. Thank you. So, thank you for taking my question. I'd just like to ask about your revenue breakeven. I think you said under $1 billion. If you could just sort of help us understand exactly when you think that's achievable, and how realistic you think those revenue targets are in the current environment? Thank you.

Question: George Gianarikas - Concord - Analyst : And maybe as a follow-up, you traditionally discuss design-wins and design-ins. How have those been trending and has the current state of your financials impacted customer interest? And thank you.

Question: Samik Chatterjee - JPMorgan - Analyst : Yeah, thank you for taking my questions. Maybe to start with, in terms of the revenue contribution from Durham, which you're winding down, seems to us relative to the guidance you provided last quarter, the revenue from Durham did track towards the -- on the power products side, did track towards the higher end or higher than what you were sort of implying, and Mohawk did have more muted sort of increase. The question really around that is, are we seeing a slower transition for some reason than you had expected 90 days ago? And is that sort of any change to the timeline relative to maybe how the ramp-down of Durham sort of feeds through the year? And for my follow-up, really the question is more around the CHIPS Act funding, which you mentioned the two things that you need to work on. One is the convert, and then you have some operational milestones to achieve. If you I guess you won't really talk about what those operational milestones are, but can you give us some sense about what is the timeframe in which you expect to achieve those operational milestones? Thank you.

Question: Jack Egan - Charter Equity Research - Analyst : Great. Thanks for taking the question. So after the -- over the past few quarters, there have been quite a few puts and takes on your revenue mix between automotive and industrial. And on this call, you mentioned that automotive will grow through 2025. So, I was wondering if you could just level set us on how your device revenue breaks down by end market right now, and then also maybe go over how that might change over time just as a result of consolidating your fab footprint into Mohawk Valley. And then, I had a follow-up.

Question: Jack Egan - Charter Equity Research - Analyst : Great. Okay, thanks. That's helpful. I guess, a bit of a longer-term one here then. I was hoping you could talk a bit about wafer thickness. So, some competitors toward the end of last year announced that their 8-inches wafers will be 350 microns thick versus the typical 500 micron thickness. And I believe Wolfspeed has that product in development to thinner wafers and maybe potentially qualification, too. So, I'm just curious as to how Wolfspeed's progressing in the development or qualification of that. And then, I was wondering about the thinking there as it relates to both the wafers that you are using internally at Mohawk Valley as well as the external materials that you are selling to customers in the materials business.

Question: Craig Irwin - Roth Capital Partners - Analyst : Thank you for taking my questions. So, Tom, it's nice to have your 19 years of history with Wolfspeed. I guess the first decade you were on the Board, the silicon carbide power business, so there was a line item nobody really cared about. I guess, the company obviously cared, but there was a very interesting level of support, I guess, even from the early 90s, from the US government for that business. Is there any reason to think that the interest and support for that business has changed over the last year? I mean, we did see additional funding into that business from the US government this last year in form of a grant. Do you think the appetite for these customers is growing or shrinking given the general impact from power across all areas of the economy?

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

Question: Harsh Kumar - Piper Sindler - Analyst : Yeah. Hey, guys. Thank you for squeezing me in. I had just two simple questions. I just wanted a clarification. I think Neill or Tom, you might have mentioned that your breakeven for revenues will be $1 billion or a little under $1 billion call it. Does that the $250 million a quarter number, does that include startup and underutilization costs? That's a clarification that I wanted. And then, you also said that your CapEx will fall quite dramatically. Is it possible for CapEx to fall close to zero next year outside of maintenance CapEx? And then, I had a quick one another one.

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

Question: Harsh Kumar - Piper Sindler - Analyst : Thank you, Neill.