Wolfspeed results highlight costs of building huge SiC fab

Wolfspeed results highlight costs of building huge SiC fab

Business news |
By Nick Flaherty

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Wolfspeed has highlighted the high cost of building its 200mm silicon carbide (SiC) fab where it is competing with Infineon for the title of the world largest power fab.

Wolfspeed saw 24% growth in revenue this year, with design-ins worth $8.3bn. The advance payments for the deals were a key feature of the $5bn funding of the fab in Mohawk Valley, New York state.  

The fourth quarter revenue was up slightly at $235.8 million, compared to $228.5 million. The net loss from continuing operations, which doesn’t include the fab costs, was $113.3 million, compared to $61.8 million, largely as a result of the underutilisation of the fab as it ramps up.

The full year saw revenue of $921.9m, up from $746.2m last year. The net loss rose to $329.9m from $295.1m previously.

“We are very pleased with our progress in fiscal 2023 as we secured $5 billion of funding to support our continued capacity expansion plans, initiated construction on our 200mm materials factory in North Carolina, and generated initial revenue from the Mohawk Valley 200mm device fab,” said Gregg Lowe, CEO of Wolfspeed.

“With approximately $8.3 billion of customer design-ins secured in the last 12 months, customers are continuing to select Wolfspeed for their future silicon carbide device needs, so we must remain keenly focused on scaling our materials and device capacity in fiscal 2024.”

The company is forecasting flat revenue of $220 million to $240 million in the next quarter with a loss of $145 million to $169 million.

As part of expanding the production footprint to support expected growth, the company says it is incurring significant factory start-up costs relating to facilities it is constructing or expanding that have not yet started revenue generating production. These factory start-up costs have been and will be expensed as operating expenses. When a new facility begins revenue generating production, the operating costs of that facility that were previously expensed as start-up costs will instead be primarily reflected as part of the cost of production within the cost of revenue, net line item in our statement of operations.

The new SiC fab in Marcy, New York began generating production at the end of fiscal 2023 and the costs of operating this facility going forward will be primarily reflected in cost of revenue. However during the period when production begins, but before the facility is at its expected utilization level, it expects some of the costs to operate the facility will not be absorbed into the cost of inventory.

The costs incurred to operate the facility in excess of the costs absorbed into inventory are referred to as underutilization costs and are expensed as incurred to cost of revenue. “We expect that these costs will be substantial as we ramp up the facility to the expected utilization level. We incurred $39.5 million and $160.2 million of factory start-up costs for the fourth quarter and full fiscal year 2023, respectively, which accounted for a significant portion of our operating expenses,” said the company.

“For the first quarter of fiscal 2024, we target our operating expenses to include approximately $8 million of factory start-up costs primarily in connection with our materials expansion efforts and our cost of revenue, net, to include approximately $37 million of underutilization costs primarily in connection with our new silicon carbide device fabrication facility in Marcy, New York.”

Infineon is expanding its SiC fab in Kulim, Malaysia, to


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