Doanh thu của Wolfspeed tăng 11% trong quý 12 mặc dù nguồn cung hạn chế
News: Microelectronics
31 January 2022
For its fiscal second-quarter 2022 (ended 26 December 2021), Wolfspeed Inc (formerly Cree Inc) of Durham, NC, USA has reported a sixth consecutive quarter of revenue growth (for continuing operations) to $173.1m (near the high end of the $165–175m guidance range). This is up 11% on $156.6m last quarter and 36% on $127m a year ago.
| Fiscal | Q2/2021 | Q3/2021 | Q4/2021 | Q1/2022 | Q2/2022 |
| Revenue | $127m | $137.3m | $145.8m | $156.6m | $173.1m |
After divesting its Lighting Products business in May 2019 and its LED Products business in March 2021, on 4 October Cree changed its name to that of its Wolfspeed business unit, focused on manufacturing silicon carbide materials as well as both silicon carbide (SiC) and gallium nitride (GaN) power-switching & RF semiconductor devices.
“Last November, we held an Investor Day at the New York Stock Exchange, where we outlined how the team is focused on driving the industry transition from silicon to silicon carbide by expanding our leading market position with innovative new solutions, building additional capacity in New York and North Carolina to support what we see as a steepening demand for silicon carbide solutions, growing our opportunity pipeline and converting to design-ins at a very robust pace,” says CEO Gregg Lowe.
“Our power business continues to see increasingly robust demand from the automotive markets, and we’re also encouraged by rising demand across a number of industrial and energy customers,” says Lowe.
Power device revenue was up 37% quarter-on-quarter and more than 100% year-on-year. “We saw significant growth in both direct and distribution channel customers,” notes chief financial officer Neill Reynolds. “Since we converted the Durham fab over to primarily a power device factory, we just saw record output in that factory,” he adds.
“On the RF device front, we continue to see solid demand from a 5G and aerospace & defense perspective, which increased over the prior year, but was relatively flat over the prior quarter. Last quarter, Wolfspeed saw some supply constraints and some lower productivity as its Malaysian contract manufacturer continued to ramp activities back up following a COVID-19 outbreak (which led to a seven-day closure). “We continue to increase capacity,” says Reynolds. “We’re seeing some benefits from the output in Malaysia.”
“From a materials perspective, demand for our 150mm silicon carbide substrates remains very strong. This resulted in year-over-year growth, though roughly flat versus the prior quarter as we continue to increase capacity and better match supply with demand,” says Reynolds.
In May 2019, Cree began a multi-year factory optimization plan. In Durham, the firm has converted an old lighting and office space into industrial space for a significant expansion of its crystal growth and epi capability (part of a plan to increase silicon carbide materials capacity by 30x). “Our expansion enabled us to increase the number of growers, and take advantage of our continued crystal growth technology improvements, which increased production yield,” the firm said last quarter.
Also, in September 2019 Cree announced that the plan was being anchored by a new automated 200mm SiC device fabrication facility at Marcy in Mohawk Valley, New York State (expanding from the firm’s existing 150mm-wafer SiC device fab in Durham).
On a non-GAAP basis, gross margin was 35.4%, up from 33.5% last quarter (and towards the high end of the 33.7-35.7% guidance range), driven by improved output cost and yields from the Durham fab and the Malaysia subcontractor, as well as $8.5m lower depreciation expense resulting from a 2-5 year extension in the useful lives of certain machinery and equipment assets following the divestiture of the LED Products business and the continued investment in 200mm technology. This was partially offset by device products comprising a greater proportion of the revenue mix (since they have a higher cost base and hence lower profitability than materials). “The profitability of the device business [which has had a sub-optimal production footprint in North Carolina] improved significantly versus last quarter with the better factory performance [as the firm works through factory transitions and improves yields],” says Lowe. “So, over time, we would expect that mix impact to dissipate.”
Operating expenses were $86.6m (below the expected $88m). This was up slightly from last quarter, due largely to R&D, including investment in 200mm efforts (supporting the ramp-up of the new Mohawk Valley fab), plus hiring staff to support sales & marketing activities. In addition, during the quarter Wolfspeed incurred start-up costs (primarily related to Mohawk Valley) totaling about $11m (up from $8.6m last quarter).
Net loss has been cut further, from $26.6m ($0.24 per diluted share) a year ago and $23.8m ($0.21 per diluted share) last quarter to $18.6m ($0.16 per diluted share, almost bettering the guidance range of $0.16-0.20).
Cash outflow from operations was –$32.5m (almost halved from –$62.5m last quarter). Capital expenditure (CapEx) was $144m (down from $208.5m last quarter). Free cash outflow was hence –$176m (cut from $272m last quarter). Cash, cash equivalents and short-term investments has hence fallen from $857.8m at the beginning of the quarter, but Wolfspeed still has about $700m of cash and liquidity on hand to support current plans.
Additionally, in December, Wolfspeed incurred a loss of $24.8m on completing the redemption of its 0.875%-convertible senior notes due 2023 (issued in August 2018) in exchange for about 7.1 million shares of common stock, leaving the firm with convertible debt with a face value of $575m. “This transaction better positions us to capitalize on increasing demand by strengthening the balance sheet, increasing optionality and preserving cash during our peak investment period,” believes Reynolds. “We will continue to be opportunistic from a capital market standpoint to ensure we have the flexibility to invest as we see fit to capitalize on a market-leading position and support continued growth.”
During the quarter, Wolfspeed secured a record $1.6bn of design-ins. “Our device opportunity pipeline continues to grow and is now well above $20bn, underscoring the enormous demand we’re seeing across all end-markets. The pipeline also reflects more than 8700 projects [up from 8200 last quarter], and our team continues to identify new opportunities at a rapid pace,” notes Lowe. “More importantly, the sales team continues to convert design-ins at a high rate across a wide range of applications. This includes things like personal watercraft and snowmobiles, defense applications, trains, electric vehicle (EV) charging, a plasma generator and an electric vertical takeoff and landing (VTOL) aircraft.” The design-in total for fiscal first-half 2022 is $2.1bn (mostly automotive-related, but industrial and RF as well). This is up 70% year-on-year and well above the original plan. “At this pace, we are on a trajectory to significantly exceed our design-in total from fiscal 2021 [of $2.9bn],” notes Lowe.
“This positive momentum is a direct result of customers adopting silicon carbide at a faster rate than we originally anticipated and is creating a stronger tailwind for our long-term revenue outlook than we showed at our Investor Day back in November… We were projecting $2.1bn of total revenue at the company level and roughly $1.4bn of device revenue. It’s that device revenue where we’re seeing the momentum. There’s three things that are really kind of driving all of this. The adoption rate of electric vehicles is well ahead of plan. The adoption of silicon carbide inside both EVs and the industrial markets is well above any expectation we had. Finally, our win rate in this business is actually ahead of our plan as well.”
“To support our rapid growth, it’s critical that we continue to invest in people. We have attracted senior talent from a variety of exceptional companies and have demonstrated a tremendous ability to bring in people from the outside with substantial amounts of automotive experience or semiconductor wafer fab experience. The opportunity to join Wolfspeed as we drive the industry transition to silicon carbide is exciting, and we’re taking advantage of this excitement to attract some of the industry’s finest leaders and innovators,” says Lowe.
“Adding to our management team with proven semiconductor leadership is a critical factor to our future success, and the Durham fab team – now led by Missy Stigall – has made solid progress in a relatively short amount of time, already contributing to positive results,” comments Lowe. “In addition, we recently added Joe Robel – who has more than 20 years of semiconductor manufacturing experience – to lead our global back-end operations, including oversight of our subcontractor in Malaysia,” he adds. “We expect continued operational improvements in our Durham fab, and our Malaysia subcontractor will have a positive impact on gross margin and capacity for the remainder of the year.”
For fiscal third-quarter 2022 (to end-March), Wolfspeed targets double-digit sequential revenue growth for a second consecutive quarter, to $185–195m, driven by all areas of the business but led by power devices (doubling year-on-year for a second consecutive quarter) and improved output from RF and materials. “We’re going to see more productivity, more power device ramp-up as we work into Q3,” says Reynolds. “Revenue here in the shorter term is really more of a function of supply than it is demand. Revenue is going to be just a function of the how well we can drive productivity through the current footprint that we have. Growth and capacity that we’re seeing now really is a direct result of the new operations leadership just making an impact.”
Gross margin should be 35–37%. “We anticipate seeing better performance in the fab and the back-end, offset by some of that product mix,” says Lowe. “Even as you move out into Q4, we should see the margins flattish, maybe even moving up from 36%, he adds. “The key to our gross margin transition for the mid-30s to 50% in 2024 is largely based on three elements, including optimizing Durham, transitioning from 150mm to 200mm wafers, and driving revenue through Mohawk Valley,” says Reynolds. “We are on track with all three elements and anticipate modest continued improvement in gross margin over time.”
Operating expenses are expected to rise to $88–89m for fiscal Q3. “We anticipate operating expenses will continue to slowly increase over time as we continue to invest in R&D and sales & marketing resources, but expect that it will become a smaller percentage of revenue as we enter the middle of the decade,” says Reynolds. “We are also continuing to identify areas across the business to reduce costs and improve productivity, as we scale our global operations to better support our customers. For example, we will be opening a global capability center in Belfast, Northern Ireland, in partnership with the Northern Ireland government. This facility will operate as a shared services hub for Wolfspeed’s IT organization, helping drive critical IT innovation and expansion of global digital capabilities.”
Net loss is targeted to be $15–20m ($0.12–0.16 per diluted share) in fiscal Q3.
“We expect a total of $80m of start-up costs in fiscal 2022, with the majority of these costs incurred in the second half of the fiscal year as we qualify and ramp the Mohawk Valley fab,” says Reynolds.
“We are continuing to experience a much steeper demand curve from our customers for silicon carbide products than we had initially anticipated,” says Reynolds. “This has led to supply constraints where some customer orders [more than $100m worth] will not be fulfilled this fiscal year and channel inventory levels will remain low until we ramp production in our Mohawk Valley fab. We are confident that we will be able to meet this demand once Mohawk Valley is up and running. But in the meantime, we continue to accelerate CapEx capacity investments and improve output in our Durham facilities,” he adds.
“We are anticipating net capital expenditures of about $475m this year, stepping down in the back half of 2022, as we receive more reimbursements [of the pending $500m, from the state of New York] for the Mohawk Valley construction. At Mohawk Valley, we have more than 60 tools in place, are currently testing equipment, and we expect to begin running wafers later this quarter,” says Reynolds. “We’ll start the qualification in this quarter, and then we’ll quickly transition to from internal to customer qualifications shortly after that,” he adds. “We don’t expect to realize any meaningful revenue from the facility until the second half of fiscal 2023.”
“We have invested heavily not only in our products but in expanding our capacity and the talent needed to run it,” says Lowe. “The expected return on these investments is compelling and we will continue to invest in both capacity and talent to ensure we meet the steepening demand from our customers.”
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