Wolfspeed Expands 150mm Silicon Carbide Wafer Supply Agreement with a Leading Global Semiconductor Company

Rhea-AI Summary

Wolfspeed, Inc. (NYSE: WOLF) has announced an expanded supply agreement with a leading global semiconductor company, now worth approximately $275 million. The agreement calls for Wolfspeed to supply 150mm silicon carbide bare and epitaxial wafers, reinforcing the industry-wide transition from silicon to silicon carbide semiconductor power devices. The adoption of silicon carbide-based power solutions is rapidly growing across multiple markets, including industrial and EVs. The agreement will enable silicon carbide applications in renewable energy, electric vehicles, charging infrastructure, industrial power supplies, traction, and variable speed drives. Wolfspeed is the global leader in the manufacturing of silicon carbide wafers and epitaxial wafers, expanding its manufacturing capacity in the United States and opening a new, automated materials factory in Siler City, North Carolina later this year.

Insights

Market Research Analyst

The expansion of Wolfspeed's supply agreement to $275 million signals robust demand for silicon carbide (SiC) across multiple industries, indicative of a shift in semiconductor preferences. SiC wafers are crucial for power device manufacturers, as they enable the creation of smaller, lighter and more energy-efficient designs. The significance of this deal lies in its potential to catalyze the industry-wide transition from traditional silicon to SiC, which is especially relevant for sectors focusing on energy efficiency and electrification, such as renewable energy, electric vehicles (EVs) and industrial power supplies.

From a market perspective, the agreement underscores Wolfspeed's strategic positioning as a key supplier, which could influence their market share and competitive edge. The expansion also suggests confidence in Wolfspeed's manufacturing capabilities, particularly as they prepare to increase their production capacity with a new automated materials factory. This development could have a ripple effect, potentially lowering SiC prices due to increased supply, thereby accelerating adoption rates in the mentioned industries.

Financial Analyst

The financial implications of the expanded supply agreement for Wolfspeed are multifaceted. The $275 million contract represents a significant revenue stream, which could positively impact Wolfspeed's financial performance and attractiveness to investors. The long-term nature of the agreement provides a degree of revenue predictability and stability, which is often valued by the stock market. Additionally, the investment in a new materials factory suggests a strategic allocation of capital towards scaling up production capacity, which is expected to meet the burgeoning demand for SiC wafers.

Investors should note the potential for increased operational efficiencies and economies of scale that may arise from the new automated factory. This could lead to margin improvements over time. However, they should also be aware of the risks associated with capital-intensive expansions, including execution risk and the possibility of market demand not meeting expectations, which could affect the return on investment.

Semiconductor Industry Expert

The transition from silicon to silicon carbide in semiconductor power devices is a pivotal technological shift. Silicon carbide offers superior properties, such as higher thermal conductivity, greater electron mobility and better energy efficiency compared to silicon. These characteristics are particularly advantageous for applications in EVs and renewable energy, where efficiency and performance are paramount.

The expanded supply agreement not only reflects the increasing demand for SiC-based solutions but also reinforces Wolfspeed's leadership in the SiC sector. The move to produce 200mm wafers is a strategic one, as larger wafer sizes can lead to cost reductions and productivity gains. This transition is a significant technical milestone for the semiconductor industry and could set a new standard for SiC wafer production.

Expanded supply agreement is now worth approximately $275M and demonstrates continued demand for silicon carbide across several critical industries

DURHAM, N.C.--(BUSINESS WIRE)-- Wolfspeed, Inc. (NYSE: WOLF), the global leader in silicon carbide technology, today announced the expansion of an existing long-term silicon carbide wafer supply agreement with a leading global semiconductor company. The expanded agreement, which is now worth approximately $275 million in total, calls for Wolfspeed to supply the company with 150mm silicon carbide bare and epitaxial wafers, reinforcing both companies’ visions for an industry-wide transition from silicon to silicon carbide semiconductor power devices.

“As the global leader in silicon carbide wafer production, Wolfspeed is uniquely positioned to be a critical supplier of high-quality and advanced silicon carbide materials at scale. We will continue to be an important partner to power device manufacturers who need the highest-quality silicon carbide wafers to service their customers,” said Dr. Cengiz Balkas, SVP and GM of Materials for Wolfspeed. “This agreement further strengthens our long-time partnership with a best-in-class power semiconductor manufacturer. Our collective efforts are helping to address the rapidly expanding opportunity for silicon carbide and better address the unfulfilled demand that exists in the marketplace today.”

The adoption of silicon carbide-based power solutions is rapidly growing across multiple markets, including industrial and EVs. Silicon carbide solutions enable smaller, lighter and more cost-effective designs, converting energy more efficiently to unlock new applications in electrification. This supply agreement will enable silicon carbide applications in a broad range of industries, such as: renewable energy and storage, electric vehicles, charging infrastructure, industrial power supplies, traction and variable speed drives.

Wolfspeed is the global leader in the manufacturing of silicon carbide wafers and epitaxial wafers. The company is currently expanding its manufacturing capacity in the United States and has plans to open a new, automated materials factory in Siler City, North Carolina later this year that will produce 200mm silicon carbide wafers. The new materials factory will increase Wolfspeed’s current materials production capacity by ten times.

About Wolfspeed, Inc.:

Wolfspeed (NYSE: WOLF) leads the market in the worldwide adoption of silicon carbide technologies. We provide industry-leading solutions for efficient energy consumption and a sustainable future. Wolfspeed’s product families include silicon carbide material and power devices targeted for various applications such as electric vehicles, fast charging, and renewable energy and storage. We unleash the power of possibilities through hard work, collaboration and a passion for innovation. Learn more at www.wolfspeed.com.

X (formerly Twitter): @Wolfspeed

LinkedIn: @Wolfspeed

Wolfspeed® is a registered trademark of Wolfspeed, Inc.

Forward Looking Statements:

This press release contains forward-looking statements by Wolfspeed involving risks and uncertainties, both known and unknown, that may cause Wolfspeed’s actual results to differ materially from those indicated. Actual results may differ materially due to a number of factors, including risks associated with Wolfspeed’s expansion plans, including, among other things, design and construction delays and cost overruns, timing and amount of government incentives actually received, and delays or other difficulties in preparing for and ramping production; the risk of production or supply chain challenges that impact Wolfspeed’s ability to ship in sufficient quantities to satisfy customer requirements; the continued pace of the transition to using silicon carbide devices in electric vehicles and other industrial uses; the risk that Wolfspeed may be unable to manufacture its products with sufficiently low cost to offer them at competitive prices or with acceptable margins; customer acceptance of Wolfspeed’s products; the risk that demand for silicon carbide will not grow as Wolfspeed expects; the rapid development of new technology and competing products that may impair demand or render Wolfspeed’s products obsolete; and other factors discussed in Wolfspeed’s filings with the Securities and Exchange Commission, including its report on Form 10-K for the year ended June 25, 2023, and subsequent filings. For additional product and company information, please refer to www.wolfspeed.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240131746353/en/

Media Relations:

Bridget Johnson

Head of Corporate Marketing and Communications

847-269-2970

media@wolfspeed.com

Investor Relations:

Tyler Gronbach

VP, External Affairs

919-407-4820

investorrelations@wolfspeed.com

Source: Wolfspeed, Inc.

FAQ

What is the expanded supply agreement worth?

The expanded supply agreement is now worth approximately $275 million.

What does the expanded agreement call for Wolfspeed to supply?

The expanded agreement calls for Wolfspeed to supply 150mm silicon carbide bare and epitaxial wafers.

What industries will benefit from the supply agreement?

The supply agreement will benefit industries such as renewable energy, electric vehicles, charging infrastructure, industrial power supplies, traction, and variable speed drives.

What is Wolfspeed's role in the industry-wide transition from silicon to silicon carbide semiconductor power devices?

Wolfspeed is uniquely positioned to be a critical supplier of high-quality and advanced silicon carbide materials at scale.

Where is Wolfspeed expanding its manufacturing capacity?

Wolfspeed is expanding its manufacturing capacity in the United States and has plans to open a new, automated materials factory in Siler City, North Carolina later this year.