DURHAM – Wolfspeed is actively seeking locations for expansion sites, both for materials manufacturing plants and also for potential semiconductor wafer fabrication facilities, the company confirmed during a quarterly and annual earnings call tis week. And, following the earnings report, WRAL TechWire reporter Jason Parker spoke with Wolfspeed CEO Gregg Lowe about the company’s performance, the possibility of an expansion in North Carolina, and why the company is primed for growth as demand for semiconductors remains high across the globe.
The transcript of the interview appears below, and has been lightly edited. Lowe tells WRAL TechWire about the company’s hiring and retention programs, why the US CHIPS Act is so important, and goes in depth on why silicon carbide–the company’s technology–is in such high demand right now.
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Earnings, growth, forecast
WRAL TechWire (TW): We listened in to the earnings call from Wolfspeed. Can you summarize the key points from the call, which covered earnings from the fourth quarter and Wolfspeed’s fiscal year 2022, for us?
Gregg Lowe, CEO of Wolfspeed (Lowe): We had a really great 2022 and a fantastic end of the year. Our revenues came in ahead of target, our margins came in ahead of target, and everyone was obviously super excited about that, but probably the thing that caught most people’s attention was that we increased our outlook for fiscal 2026.
We had a target of $2.1 billion for 2026, and just with the amount of momentum that we’re getting right now, we increased that $2.1 billion by 30 to 40 percent, which is a pretty giant move. We’re pretty excited about that.
What’s basically transpired is that for the last three quarters in a row, we’ve had a record amount of design-ins, which is basically when a customer has told us “we’ve done all the evaluations, and we’re going with you, you’re going to be our supplier.”
We’ve had a record number of customers and a record number of businesses that has come our way through that venue. We’re super excited about that, and just to put that in perspective, three quarters ago, we set a record for $1.6 billion for design-ins, and that was 60% higher than the previous record. Two quarters ago, we tied that record at $1.6 billion, and this past quarter we did $2.6 billion.
Another billion dollars on top of a record, that’s a pretty enormous amount of wins.
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What is driving demand
TW: What’s happening to drive that customer demand and customer interest?
Lowe: There’s a huge, secular transition to our technology. That’s being driven by the increasing adoption of electric vehicles and the increasing adoption of silicon carbide in those electric vehicles. The reason silicon carbide is so exciting in electric vehicles is that for the same battery size, your car is going to be able to go further. That’s some 5-15% further in range, and range is everything in an electric vehicle. Our company is making the chips for that, it’s an exciting time for that.
TW: You’d mentioned on the fourth quarter earnings call that some 70-75% of those design-ins during the quarter were in the automotive industry. And, you’d noted, if I’m remembering correctly, that even though that 25-30% in non-automotive may seem small by comparison, standing alone, those design-ins would have also previously set a record just a year ago.
Lowe: That’s exactly right.
Update on existing facilities
TW: It does seem that demand is increasing for semiconductors, as we’re aware that the global semiconductor shortage continues. Wolfspeed opened in the past fiscal year the wafer fab facility in Mohawk Valley, New York, which you’d said on the earnings call an investment that was “well timed.” Can you fill us in on where things stand with this facility, the importance of that investment, and the fact that you’d mentioned on the earnings call that the facility may already be operating at full capacity with overdemand for semiconductors?
Lowe: Well, thank goodness, that we decided three years ago, to embark on building a new manufacturing facility. We put a shovel in the ground in March 2020, which was basically day one of COVID in the U.S. And all through COVID, we just continued building that factory, and opened it in April 2022. And thank goodness we had the foresight to do that, and quite frankly, the courage to do that, because that capacity is coming online exactly at the same time there is a huge secular transition from silicon to silicon carbide in the semiconductor industry.
We did mention in our call last night, just with the sheer momentum of the business, that indicates to us that that manufacturing facility, which is the world’s largest silicon carbide wafer fab, that that facility is not going to be enough. We’re talking about investing in more manufacturing facilities, and we’re going to have to do that from a wafer fab perspective but also from what we call materials, so the raw silicon carbide crystal growth technology. All of that is coming together at the perfect timing.
TW: You’ve also expanded the facility here in Durham, in RTP, which is now a materials facility right now, correct?
Lowe: Yes, that’s exactly right. What we did was, we took an opportunity to take a facility that was not a manufacturing facility that was, think of indoor basketball courts. And yes, everyone in North Carolina loves basketball, but they love even more silicon carbide as the world is starting to take off with that. So we’ve converted office space, and facilities like that to silicon carbide manufacturing right here on campus. And we also know that we’re going to need to expand beyond that, so we’re looking at other additional opportunities for us to expand our manufacturing for that silicon carbide technology.
Wolfspeed is considering expansion sites, CEO says on earnings call
Expansion in NC
TW: You’d indicated on the earnings call that the company has been in discussions with multiple municipalities and a number of states for that expansion. Is North Carolina a possibility as the site for a possible expansion?
Lowe: Oh, absolutely, North Carolina is definitely in the discussion, and we’re very engaged at the state level and at the local level and so forth. And we’re pretty close to a decision, a decision certainly before the end of the year. We’re really pleased with the engagement that we’ve had here locally, and across the country as well, but very good engagement in North Carolina.
TW: Gregg, you were at the White House, in the Rose Garden, for the signing of the US CHIPS Act, which is a significant move forward in terms of boosting domestic semiconductor production. What does the passage, and the signing of that bill, and it going into effect, mean for the company’s expansion and for the possibility of considering sites in North Carolina, or possibly in other locations?
Lowe: Well, it definitely gives an amount of funding for building manufacturing of semiconductors here in the United States, including both wafer fabs as well as the materials business that we have. There’s definitely funding there, but that funding depends on local support as well, so the federal government, and the easiest way to describe it is that the government will match local funding, which is why local funding is important, too.
We’re super excited about it, it was really great to see this as a bipartisan act of Congress. This is a really good opportunity for the United States to continue to invest in probably what is the most important technology for our country.
TW: Sounds like, based on the US CHIPS Act, that both the fabrication of semiconductors at wafer fabs and the materials plants, where materials can be prepared for fabrication, will remain important and will qualify for the federal funding. So, are both a new materials factory, as well as a new wafer fab build out on the table in North Carolina?
Lowe: Yes, and we’re looking at a number of different options for wafer fabs and on the materials side of things. North Carolina has been great to work with, we’ve had a good partnership with New York has as well, so we’re closing in on a final decision there, and I’m certain it will be before the end of the year.
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Future for Wolfspeed?
TW: We wrote in a story following the earnings call, a subheader, something like “Oh, what a year.” It’s been nearly a full year since the company rebranded to Wolfspeed, switched the stock market exchange how the company traded, and it seems like a record year for earnings and revenues as well. Given where you’ve said the industry is headed, and the pull of silicon carbide as a leading technology across clean energy sectors, what is Wolfspeed’s opportunity looking forward?
Lowe: Certainly up and to the right. I made a mention yesterday in our earnings call, a lot of people want to ask what percentage of share are you getting, and are you gaining share. Well, share is your revenue divided by the market, but that denominator is growing so rapidly it’s almost impossible to even calculate share. So you’ve got a wildly expanding and rapidly expanding market.
We’re a leader in this technology, with 60% of the market right now covered by Wolfspeed technology.
What we’re saying is this: We’ve got a transition happening in the semiconductor market, a technology that has been based on silicon for the last 50 years, and an entire industry that’s been based on silicon for the last 50 years, and now it’s transitioning to silicon carbide.
Wolfspeed being in a leadership position in this gives us a great opportunity. What I tell our team every day is that we’ve got to run faster and faster and faster, because the appetite for this technology is just endless right now. A super exciting time for us, we’re seeing applications in EVs, charging infrastructure, grid, and of course across a lot of industrial applications, too.
It’s a very fun place to work right now, because some day we’re going to look back and tell our grandkids that I was at that company when we converted the industry from silicon to silicon carbide, and we were the ones that did it.
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State of Triangle jobs market
TW: Each week, we publish the WRAL TechWire Jobs Report. How are you seeing the local labor market here in the Triangle, and your ability to attract and retain quality workers, given the expansion plans and the need for highly trained professional workers?
Lowe: When I joined the company five years ago, we started a strong effort to connect to the local universities and community colleges, and we’ve had a great ability to attract and retain students coming out of engineering programs and various different curriculums across a wide number of universities. We’re very, very fortunate that North Carolina as a really rich heritage of university and upper-level education, whether that’s NC State, Duke, NC A&T, NC Central, Wake Forest, Elon, there’s just so many different places to pull from. And, of course, the Raleigh-Durham area is just a really nice place to live.
At the college level, we started a program five years ago, that right now is about 150-ish interns that come in every year from colleges who then spend a summer with us, that’s a fantastic program, but on top of that, we’ve become an extremely attractive place to work for experienced people in semiconductors. If you’re a power semiconductor person in the industry, you know the industry is moving from silicon to silicone carbide, and you want to be on that fast train that’s heading to the future, quite frankly, and that’s been a real positive for us. It’s actually quite easy to get their attention, they’ve been reaching out to us.
In terms of the typical labor pool, in general, of course there’s a huge problem with that, but we just try to make ourselves an attractive place to work, where you can come in and do some pretty cool stuff, but to do it in an environment that is welcoming, encouraging, and supportive of you as an employee, and that includes if you’ve got a situation where you need to work from home some days of the week or maybe all of the days of the week. We’ve got a program, Work Where it Works, and if you’ve got a situation where it’s just going to be better for you, maybe it’s a family situation, with a parent at home, maybe it’s a child, we’ve got that program, it’s been a huge positive for us, and we’re super supportive of it.
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Acquisition target?
TW: Given the company’s size, the recent acceleration of demand, and the growth potential for the industry, plus the previously stated need for capital to continue that growth, is Wolfspeed an acquisition target?
Lowe: You know, we’re really focused on driving our own internal efforts, through partnerships we’ve had to design products into a wider number of customers, and what we’re doing with our own sales force in terms of design-ins and so forth. Our focus is really on executing right now, and I think we’ve got a 100% of our energy in that space.
TW: If an offer were to come, you wouldn’t consider it at all?
Lowe: Like I said, we’re focused on driving our own internal efforts right now, that’s a lot to do. We’re talking about converting an entire industry from silicon into silicon carbide, building the world’s largest fab, then realizing as soon as we built it that we’re going to need another one, which requires as I said on the call “a whole bunch of giddy-up,” so we’ve got a lot to do, and we’re just focused on executing.
