Wolfspeed Inc at UBS Global Technology and AI Conference Transcript

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

Question: Francois-Xavier Bouvignies - UBS Investment Bank - Analyst : So maybe the first question, which is in tops of many people's mind, is when are you expecting the business to have passed the bottom of the down cycle given the current dynamic that we see in auto and industrial? This is the very important question that everybody has.

Question: Francois-Xavier Bouvignies - UBS Investment Bank - Analyst : And when you look at '25 then in this backdrop, you mentioned the 75% increase, how should we think about the recovery for you specifically? Do you think you could grow in '25? It's a possibility given this backdrop? Or how do you -- we should think about that?

Question: Francois-Xavier Bouvignies - UBS Investment Bank - Analyst : And if we look at the automotive and industrial side, can you explain the content opportunity in terms of an application that you see very strong? Separately auto, if you take like inverters, hybrid, in a hybrid model car or maybe a full EV onboard charger and then industrial, what is happening as well? What could drive the --

Question: Francois-Xavier Bouvignies - UBS Investment Bank - Analyst : So if we think about the move to 200 millimeter, seems to be an important shift as well for you guys and the shift from 150. Can you walk us through the transition of this? When it's going to happen? And when should we expect the revenues from 200 millimeter to come through?

Question: Francois-Xavier Bouvignies - UBS Investment Bank - Analyst : Great, Neill. So I have two questions from the audience. One is on balance sheet. So we'll talk about that later if you don't mind. One is on the -- the other one is on the -- in the most basic way possible, can you please tell me how design-ins and design wins translate into revenues over time? When does it show up on the income statement?

Question: Francois-Xavier Bouvignies - UBS Investment Bank - Analyst : Great. So moving on maybe to the margin side. I mean you spoke previously about the cost of 200 millimeter between to be 40% lower. I mean is it still the case today? Is that assumption? And how is it going to transfer your gross margin as you move to 200 millimeters?

Question: Francois-Xavier Bouvignies - UBS Investment Bank - Analyst : And one common question as well is on the pricing for '25. Obviously, we are in another oversupply environment for now because of the demand slowdown that you mentioned. How should we think about the pricing in '25 and beyond? If you can elaborate your strategy here on the pricing and how you defend yourself.

Question: Francois-Xavier Bouvignies - UBS Investment Bank - Analyst : And then moving on to the P&L. I mean, on the EBIT side, I mean, when should we expect Wolfspeed to be profitable again on EBIT?

Question: Francois-Xavier Bouvignies - UBS Investment Bank - Analyst : Moving to the market side of things. One of the key highlights recently is the China strength in terms of market dynamic. Can you explain what is your opportunity there? What is your market share in China? Obviously, a lot of the EV growth is coming from there, right? So do you have the same picture from your -- in terms of orders, backlog China is still a big part of it?

Question: Francois-Xavier Bouvignies - UBS Investment Bank - Analyst : And one driver, of course, in EV, our understanding is that China is mainly using IGBTs for now and the shift to 800 volts could be like a trigger to the adoption of silicon carbide. Is there a scenario that you see a very significant acceleration in your China business in '25 because the Chinese are moving to silicon carbide and 800 volts specifically? And if you could provide any data point on that.

Question: Francois-Xavier Bouvignies - UBS Investment Bank - Analyst : And then on the competition side of things, China is also trying to build a lot of silicon carbide capabilities and capacity, both on the substrate and device. What's your view on the competition there in China at the moment? And if you could separate both substrate and device as well, it would be helpful. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 03, 2024 / 9:15PM, WOLF.N - Wolfspeed Inc at UBS Global Technology and AI Conference

Question: Francois-Xavier Bouvignies - UBS Investment Bank - Analyst : Great. Now moving on to the balance sheet because I have a few questions as well on that front. Can you talk a bit about your access to funding over the next few years? What levers do you have to pull for liquidity and investment needs basically?

Question: Francois-Xavier Bouvignies - UBS Investment Bank - Analyst : Great. And you don't see any risk of change with the change of administration and so forth? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 03, 2024 / 9:15PM, WOLF.N - Wolfspeed Inc at UBS Global Technology and AI Conference

Question: Francois-Xavier Bouvignies - UBS Investment Bank - Analyst : I have two questions from the audience. Can you comment on balance sheet and efforts with customers and/or government CHIPS Act that are complicated by leverage?

Question: Francois-Xavier Bouvignies - UBS Investment Bank - Analyst : The other question is you have three convertible bonds outstanding and the 2028 and 2029 are trading below $0.50 to the dollar. The outstanding amount of the '26 convertible is $575 million. What refinancing or restructuring plans do you have in mind?

Question: Francois-Xavier Bouvignies - UBS Investment Bank - Analyst : So can you talk about the CapEx side of things? With all the things going on, where the CapEx, what should we expect in terms of CapEx in the next two, three years? How is it going to shape out?

Question: Francois-Xavier Bouvignies - UBS Investment Bank - Analyst : And I mean you have been cutting as well some capacity plan on top of that. I mean, it's just not only the front end, you have also some change of capacity. How do you do the trade-off, of course, between free cash flow and also the long-term opportunity where it's something that requires a lot of investment ahead of time, if you see what I mean?

Question: Francois-Xavier Bouvignies - UBS Investment Bank - Analyst : And the free cash flow? I mean, if we think about the prospect, let's say, in one year and in two years' time, two, three years, what is the net gross free cash flow net of the CHIPS Act and all the help and the growth? How should we think about the free cash flow of the company? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 03, 2024 / 9:15PM, WOLF.N - Wolfspeed Inc at UBS Global Technology and AI Conference

Question: Francois-Xavier Bouvignies - UBS Investment Bank - Analyst : Great. On that note, we are running out of time. Thank you all for listening. Thank you, Neill. Thank you, Tyler. Thanks for your time.