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Technology Stocks : Semi Equipment Analysis
SOXX 316.33+1.3%Dec 10 4:00 PM EST
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From: Julius Wong10/12/2024 7:52:16 AM
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Wolfspeed jumps after Roth Capital cites talks of supply deal

Oct. 11, 2024 10:00 AM ET
By: Ravikash Bakolia, SA News Editor

sefa ozel/E+ via Getty Images

Wolfspeed (NYSE: WOLF) stock rose about 10% on Friday after Roth Capital noted that the company is in final negotiations to supply 200mm wafers to a few major third-party customers.

The firm maintained its Buy rating and $25 price target on the stock.

Analysts led by Craig Irwin noted that its sources confirmed that Wolfspeed is in final negotiations to supply 200mm wafers to a few major third-party customers. These agreements could include material up-front cash payments.

The analysts added that clients thinking low-cost Asian producers are a threat need to remember global power semis Original Equipment Manufacturers, or OEMs, see a greater advantage in moving to larger wafer sizes with a proven supplier. The analysts expect announcements shortly.

Customers want continued access to large diameter silicon carbide, or SiC, wafers (as these are the most economical), so the analysts believe Wolfspeed's leadership here has customers slow to qualify newer entrants.

Irwin and his team expect that the company could get the CHIPS Act funding before the election. Wolfspeed is negotiating final terms for a memorandum of terms with the CHIPS office for the federal loan.

In addition, the analysts added that charges for the Durham facility exit are likely much lower than feared. They believe the charges for the company's management's accelerated exit of the Durham facility are likely well under the $1B, which has been considered a worst case scenario.
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