Wolfspeed Announces Key Milestones and Operational Update

Mohawk Valley 200mm Silicon Carbide Fab Reaches 20% Utilization, Achieves LEED Certification

John Palmour Manufacturing Center Achieves Successful Activation of Initial Furnaces

Company Expects Temporary Impact from Equipment Incident at Durham 150mm Device Fab

DURHAM, N.C.--(BUSINESS WIRE)--Wolfspeed, Inc. (NYSE: WOLF), the global leader in silicon carbide technology, today provided an update on key milestones and an operational update.

“Having reached our 20% utilization target at Mohawk Valley, we are well-positioned to continue executing our 200mm vertical integration strategy ahead of other market participants”

Wolfspeed’s Mohawk Valley silicon carbide fab has reached 20% wafer start utilization, a critical step in the Company’s efforts to meet the growing demand for silicon carbide power devices. Additionally, Wolfspeed’s Building 10 Materials facility has achieved its 200mm wafer production target to support approximately 25% wafer start utilization at the Mohawk Valley fab by the end of calendar year 2024. Wolfspeed plans to update the market on its next utilization milestone for Mohawk Valley during its fiscal Q4 2024 earnings call in August.

The Mohawk Valley fab has also achieved LEED (Leadership in Energy and Environmental Design) Silver certification, a distinction from the world’s most widely used green building framework and rating system. The LEED Silver certification highlights Wolfspeed’s enduring commitment to going beyond compliance, promoting environmental health and industry leading sustainability.

This state-of-the-art Mohawk Valley facility is the world’s first purpose-built, fully automated 200mm silicon carbide fab, and when combined with Wolfspeed’s market-leading 200mm materials production, solidifies Wolfspeed’s competitive position as the only fully vertically integrated 200mm silicon carbide manufacturer at scale.

Additionally, Wolfspeed’s John Palmour Manufacturing Center (“the JP”) in Siler City, NC, which will be the world’s largest, most advanced silicon carbide materials facility upon completion, has installed and recently activated initial furnaces less than one year after vertical construction commenced. As a result, the facility is on schedule to achieve crystal qualification by early August 2024. This meaningful progress reinforces the Company’s confidence that it is well-positioned to ramp the JP in line with its target to deliver wafers from the facility to Mohawk Valley by the summer of 2025.

Wolfspeed also announced that it experienced an equipment incident at its Durham 150mm device fab that resulted in a temporary capacity reduction while the incident was being remediated. Production has been resumed and the Company expects that the Durham 150mm device fab’s capacity utilization can return to previously targeted levels by August. As a result of the production disruption, the Company does not expect an impact on fourth quarter revenue, but does expect to have an underutilization impact and incur other costs in the fourth quarter as described below.

“Having reached our 20% utilization target at Mohawk Valley, we are well-positioned to continue executing our 200mm vertical integration strategy ahead of other market participants,” said Gregg Lowe, president and CEO of Wolfspeed. “Further, recent advancements at the JP put Wolfspeed well on track to achieve our facility targets and significantly expand our materials capacity, driving meaningful progress towards our strategic goals. We quickly identified and resolved an equipment incident at our Durham 150mm device fab, and we continue to focus on execution as we move with urgency to continue this first-of-its-kind ramp.”

Business Outlook

Based on the Durham 150mm device fab equipment incident, Wolfspeed is updating its fiscal fourth quarter 2024 guidance as follows, and providing a preliminary outlook on fiscal first quarter 2025 revenue and non-GAAP gross margin:

• Targeted fiscal fourth quarter revenue from continuing operations is unchanged at $185 million to $215 million; and a potential negative impact to fiscal first quarter 2025 revenue of approximately $20 million.
• Targeted fourth quarter GAAP gross margins in the range of (4%) to 4% and non-GAAP gross margins in the range of 0% to 8%, due to an underutilization impact realized in the fourth quarter and other fourth quarter costs related to the equipment incident. The Company also expects fiscal first quarter 2025 non-GAAP gross margins in a similar range due to underutilization it will realize in the period.
• Fourth quarter GAAP net loss from continuing operations is targeted at $204 million to $182 million, or $1.61 to $1.44 per diluted share. Non-GAAP net loss from continuing operations is targeted to be in a range of $122 million to $105 million, or $0.96 to $0.83 per diluted share. Targeted non-GAAP net loss from continuing operations excludes $77 million to $82 million of estimated expenses, net of tax, primarily related to stock-based compensation expense, amortization of discount and debt issuance costs, net of capitalized interest, project, transformation and transaction costs and loss on Wafer Supply Agreement.

About Wolfspeed, Inc.:

Wolfspeed (NYSE: WOLF) leads the market in the worldwide adoption of silicon carbide technologies that power the world’s most disruptive innovations. As the pioneers of silicon carbide, and creators of the most advanced semiconductor technology on earth, we are committed to powering a better world for everyone. Through silicon carbide material, power modules, discrete power devices and power die products targeted for various applications, we will bring you The Power to Make It Real. Learn more at www.wolfspeed.com.

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Wolfspeed® is a registered trademark of Wolfspeed, Inc.

Mohawk Valley Fab Utilization Rate:

Wolfspeed measures the utilization rate based on the number of wafer starts per week at the Mohawk Valley fab as compared to the number of wafer starts at its expected utilization level. Wolfspeed may experience fluctuations in the utilization rate at the Mohawk Valley fab as we continue to install and qualify new machinery and ramp up production.

Non-GAAP Financial Measures:

This press release provides the Company's business outlook on both a GAAP and a non-GAAP basis. The GAAP guidance measures include certain costs, charges and expenses that are excluded from non-GAAP guidance. By publishing the non-GAAP measures, management intends to provide investors with additional information to further analyze the Company's performance, core results and underlying trends. Wolfspeed's management evaluates results and makes operating decisions using both GAAP and non-GAAP measures included in this press release. Non-GAAP results are not prepared in accordance with GAAP, and non-GAAP information should be considered a supplement to, and not a substitute for, financial statements prepared in accordance with GAAP. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures to their most directly comparable GAAP measures attached to this press release.

Forward Looking Statements:

The schedules attached to this release are an integral part of this release. This press release contains forward-looking statements involving risks and uncertainties, both known and unknown, that may cause Wolfspeed’s actual results to differ materially from those indicated in the forward-looking statements. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about future growth in the demand for silicon carbide power devices and our ability to meet such demand, our ability to continue to achieve targeted utilization rates at the Durham and Mohawk Valley fabs, our ability to execute on our 200mm vertical integration ahead of other market participants and the impact of the recent incident at our Durham 150mm device fab to our financial results and our ability to achieve our targets for the fourth quarter of fiscal 2024 and beyond. Actual results could differ materially due to a number of factors including but not limited to, risks associated with our expansion plans, including design and construction delays, cost overruns, the timing and amount of government incentives actually received, including under the CHIPS and Science Act, issues in installing and qualifying new equipment and ramping production, poor production process yields and quality control, and potential increases to our restructuring costs; our ability to shift device production from Durham to Mohawk Valley and complete remediation in our Durham 150mm device fab in a timely manner; changes in progress on infrastructure development or changes in customer or industrial demand that could negatively affect product demand, including as a result of an economic slowdown or recession; the risk that we may experience production difficulties that preclude us from shipping sufficient quantities to meet customer orders or that result in higher production costs, lower yields and lower margins; the risk that our results will suffer if we are unable to balance fluctuations in customer demand and capacity, including bringing on additional capacity on a timely basis to meet customer demand; risks associated with the ramp-up of production of our new products, and our entry into new business channels different from those in which we have historically operated; the risk that the markets for our products will not develop as we expect, including the adoption of our products by electric vehicle manufacturers and the overall adoption of electric vehicles; the risk that we or our channel partners are not able to develop and expand customer bases and accurately anticipate demand from end customers, including production and product mix, which can result in increased inventory and reduced orders as we experience wide fluctuations in supply and demand; risks related to international sales and purchases; the rapid development of new technology and competing products that may impair demand or render our products obsolete; the potential lack of customer acceptance for our products; the risk that customers do not maintain their favorable perception of our brand and products, resulting in lower demand for our products; the risk that our products fail to perform or fail to meet customer requirements or expectations, resulting in significant additional costs; and other factors discussed in our filings with the Securities and Exchange Commission (SEC), including our report on Form 10-K for the fiscal year ended June 25, 2023, and subsequent reports filed with the SEC. These forward-looking statements represent Wolfspeed's judgment as of the date of this release. Except as required under the U.S. federal securities laws and the rules and regulations of the SEC, Wolfspeed disclaims any intent or obligation to update any forward-looking statements after the date of this release, whether as a result of new information, future events, developments, changes in assumptions or otherwise.

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