Wolfspeed Inc.

This is our first report on semiconductors player, Wolfspeed. As a result of macroeconomic disruptions, Wolfspeed delivered a mixed result, failing to meet Wall Street expectations with respect to revenues. However, the management did continue to execute its strategy and delivered an earnings beat in the quarter. They opened Mohawk Valley, their fully automated 200-millimeter silicon carbide semiconductor wafer fab. The company is currently running initial lots, after which it will transition to product and customer qualification and then production shipments. With Mohawk Valley’s official opening at the end of April, the company will be better able to meet the steepening demand curve for silicon carbide devices, which will only get better as it ramps up production capacity. The management expects net capital expenditures of approximately $550 million this fiscal year, up from $475 million previously announced. This change is due to the timing of New York State reimbursements for the Mohawk Valley fab. They also expect to receive these reimbursements in the first half of fiscal 2023. Based on their strategy and long-term growth potential, we give their stock a ‘Hold’ rating.