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To: EvanG who wrote (10574)	11/1/2022 8:11:58 AM
From: slacker711	1 Recommendation Recommended By OldAIMGuy Read Replies (2) \| Respond to of 10712

Slide 64 - Surprise gross margin hit at Durham almost wipes out Durham optimization improvement. Not clear if RF margins recover, which wasn't quite how it was worded at earnings. They should have given both halves of the margin hit due to RF at earnings. 3% hit to margins due to not making the RF diameter shift and 2% due to power having a higher Durham mix. However, their explanation makes more sense to me now. They aren't able to fulfil the demand for power devices in the next few years and so can't shut down the Durham fab for the move to 150mm RF. Durham will continue to produce 150mm power devices and the 100mm RF production will remain in place (rather than being shut down). That translates to increasing '24 guidance from $1.5 billion to $1.6 billion but falling GM's. Total gross profits will drop by $30m but they'll satisfy more customer demand. Seems like a good long-term trade-off. They also took '26 guidance up by ~$100m to $2.95 billion. I'm skeptical of the idea that they will be demand constrained for a decade. At some point, we'll see demand for power devices slacken and they'll make the RF transition then. The situation points to some interesting issues for competitors when they decide to make the transition to 200mm.

To: EvanG who wrote (10574)	11/2/2022 5:19:27 PM
From: EvanG	Respond to of 10712

Another interesting thing is that Wolfspeed is losing money on wafer supply agreements. Would have thought that had the best margins.

To: EvanG who wrote (10574)	11/22/2022 4:15:58 PM
From: ynotgoal	1 Recommendation Recommended By slacker711 Respond to of 10712

Wolfspeed is considering building a chip factory in Germany handelsblatt.com The American chip manufacturer Wolfspeed is considering building a factory in Europe and is also examining locations in Germany. "Many of our European customers would like to have a plant near them," CEO Gregg Lowe told Handelsblatt. "We've already looked at a dozen locations here," including in Germany. In the first half of 2023, he will decide whether Wolfspeed will settle in Europe, Lowe said. This is important in order to keep to the schedule: "The plant should go into operation at the beginning of 2027." So far, the company has only been manufacturing in the USA .