Wolfspeed’s new factory hits milestone; incident at Durham plant impacts outlook

Wolfspeeds (NYSE:WOLF), the new silicon carbide fab in New York’s Mohawk Valley has reached a launch wafer utilization of 20%, a critical milestone, but an incident at its Durham, North Carolina, facility has prompted the semiconductor company to update its forecast.

Shares Decrease of 1% while premarket trading on Tuesday.

At the 150mm equipment factory in Durham, “an equipment incident occurred… resulting in a temporary reduction in capacity while the incident was resolved,” the company reported.

“We quickly identified and remediated an equipment incident at our 150mm equipment factory in Durham and remain focused on implementation as we work diligently to continue this first-of-its-kind production ramp,” said Gregg Lowe, CEO of Wolfspeed.

Wolfspeed does not expect the incident to have an impact on fourth-quarter revenue. The company continues to expect revenue of between $185 million and $215 million. Analysts’ consensus estimate is for revenue of $201 million.

However, revenue in the first quarter of fiscal 2025 could be negatively impacted by $20 million.

In addition, the expected adjusted loss per share for the fourth quarter is now between $0.96 and $0.83, significantly higher than previous expectations, which were between $0.86 and $0.72 loss per share. Analysts had expected a loss of $0.82 per share.

The company is expected to report its fourth-quarter results on August 14.

Wolfspeed also announced that its John Palmour Manufacturing Center in Siler City, North Carolina, “installed and recently commissioned the first furnaces less than a year after vertical construction began.”

Once completed, it will be the world’s largest silicon carbide materials production facility and will begin supplying wafers to the Mohawk Valley plant next summer.

“Wolfspeed has announced important milestones: Mohawk Valley has reached 20% utilization and JP is on track for qualification in August,” TD Cowen analyst Joshua Buchalter said in a note. “But the equipment incident is the latest in a series of mishaps that have tested investors’ patience.”

The latest incident follows a report last week that Wolfspeed is delaying construction of a $3 billion chip factory in Germany. Construction of the factory, which will produce computer chips for electric cars, has been pushed back to at least mid-2025, two years later than originally planned.

Wolfspeed has reduced capital spending following weakness in the EU and US electric vehicle markets and shifted its focus to increasing production at its New York plant.