Core Viewpoint - Wolfspeed reported mixed results for the second quarter of fiscal 2025, with a decline in revenues but strong demand in electric vehicles (EVs) and support from government initiatives like the CHIPS Act [1][2][7]. Group 1: Financial Performance - Revenues for Wolfspeed decreased by 13.4% year over year to $180.5 million [2]. - The company experienced a sequential decline of 6% in power device revenues and an 8% drop in materials revenue due to reduced inventory levels from customers [15]. - Gross margin fell significantly by 90.6% year over year, primarily due to underutilization costs at the Mohawk Valley facility [16]. - For the third quarter of fiscal 2025, Wolfspeed expects revenues between $170 million and $200 million, with a projected non-GAAP loss of 76 to 88 cents per share [17][18]. Group 2: Market Demand and Growth Drivers - Wolfspeed's EV revenues surged by 92% year over year, driven by increased demand and investments from major automotive companies like General Motors [8]. - The Mohawk Valley facility generated $52 million in revenues during the second quarter, with expectations for growth to between $55 million and $75 million in the next quarter [9]. - The company is benefiting from a growing network of partnerships, including collaboration with Infineon Technologies, which enhances supply chain stability and supports demand for silicon carbide solutions [10]. Group 3: Technological Advancements - Wolfspeed introduced its Gen 4 technology platform, which aims to improve system efficiency and reduce development costs, offering a 21% reduction in on-resistance and up to 15% lower switching losses [12][13]. - This new platform is focused on high-power applications, including EV powertrains and renewable energy, positioning the company for significant performance improvements [13]. Group 4: Competitive Positioning - Over the past month, Wolfspeed shares have declined by 19.8%, underperforming the broader Zacks Computer and Technology sector and the Zacks Semiconductor – Discretes industry [3][6]. - The company has underperformed compared to industry peer Tokyo Electron, which saw a 6.4% increase in stock value over the same period [6].

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Financial Performance - Year-over-year revenue decreased by $30.6 million to $375.2 million, with a gross margin decline to -19.6% from 12.9%[119] - Operating loss increased to $553.1 million compared to $193.0 million, with diluted loss per share at $5.12 compared to $1.99[119] - Revenue for the three months ended December 29, 2024 decreased to $180.5 million, down 13% from $208.4 million in the same period of 2023[130] - Gross profit for the three months ended December 29, 2024 was a loss of $37.2 million, compared to a profit of $27.8 million in the same period of 2023, representing a 234% decline[132] - Underutilization costs were $55.3 million compared to $70.0 million, impacting gross profit significantly[119] Investment and Capital Expenditure - The company plans to invest approximately $1.1 billion to $1.3 billion in net capital investment for fiscal 2025[124] - The company expects to invest approximately $2.0 billion in the Mohawk Valley Fab, with $1.2 billion spent to date and $467.2 million received in reimbursements[154] - A new materials manufacturing facility in Siler City, North Carolina is projected to cost approximately $2.3 billion, with $1.9 billion spent as of December 29, 2024[155] - For fiscal 2025, the company targets capital investments of approximately $1.1 billion to $1.3 billion, primarily for capacity and infrastructure projects[156] Debt and Financing - Long-term debt increased to $6,423.8 million at December 29, 2024, compared to $6,161.1 million at June 30, 2024[119] - The company expects to need additional funding to complete its intended capacity expansions and has issued $250.0 million in senior secured notes due 2030[146] - The company is evaluating options to refinance its 1.75% convertible senior notes due May 1, 2026, including potential equity-linked securities[147] - The company issued an additional $250.0 million of 2030 Senior Notes in Q2 fiscal 2025, with the ability to issue up to $500.0 million more under certain conditions[151] Operational Changes - The company initiated a headcount reduction and facility consolidation plan to optimize its cost structure[123] - The Mohawk Valley Fab began revenue production in late fiscal 2023, supporting increased production capacity[120] - Cash used in operating activities of continuing operations increased by 11% to $327.1 million for the six months ended December 29, 2024[159] - Cash provided by financing activities decreased by 66% to $318.5 million, primarily due to lower proceeds from financing activities compared to the previous period[162] Research and Development - Research and development expenses were $95.3 million for the six months ended December 29, 2024, compared to $89.4 million for the same period in 2023[129] - Research and development expenses for the six months ended December 29, 2024 increased by 7% to $95.3 million from $89.4 million in the same period of 2023[133] Other Financial Metrics - Sales, general and administrative expenses for the three months ended December 29, 2024 decreased by 21% to $51.1 million from $64.9 million in the same period of 2023[134] - Factory start-up costs for the three months ended December 29, 2024 increased by 117% to $22.8 million compared to $10.5 million in the same period of 2023[135] - Loss on disposal or impairment of long-lived assets for the three months ended December 29, 2024 was $125.8 million, a significant increase from $0.3 million in the same period of 2023[136] - Interest expense for the three months ended December 29, 2024 increased by 25% to $80.5 million from $64.3 million in the same period of 2023[138] Cash and Investments - Cash, cash equivalents, and short-term investments totaled $1,404.8 million at December 29, 2024, down from $2,174.6 million at June 30, 2024[119] - As of December 29, 2024, total cash, cash equivalents, and short-term investments decreased to $1,404.8 million, down $769.8 million from June 30, 2024[149] - The market value of MACOM common stock held by the company was approximately $95.0 million as of December 29, 2024, with a potential decrease of $9.5 million if market values drop by 10%[166] - The company received a total of $2 billion in unsecured deposits from Renesas Electronics America Inc., with $1 billion received in Q1 fiscal 2024 and subsequent deposits of $500 million and $500 million in Q3 and Q4 fiscal 2024, respectively[150]

Core Viewpoint - Wolfspeed reported a narrower non-GAAP loss in Q2 fiscal 2025 compared to estimates, but the loss widened year-over-year, indicating ongoing challenges in the market [1][5]. Financial Performance - The company reported revenues of $180.5 million, a decrease of 13.4% year-over-year, but slightly above consensus estimates by 0.63% [2]. - Non-GAAP gross margin fell to 2%, down from 16% in the same quarter last year, primarily due to $28.9 million in underutilization costs [4]. - Non-GAAP operating loss was $105.2 million, wider than the $70.8 million loss reported in the previous year [5]. Revenue Breakdown - Mohawk Valley Fab contributed $52 million in revenues during the quarter [2]. - Power Products accounted for 50.3% of total revenues, while Materials Products contributed 49.7% [2]. - Power Products revenues decreased by 15.7% year-over-year to $90.8 million, and Materials Products revenues decreased by 10.9% year-over-year to $89.7 million [2]. Balance Sheet and Cash Flow - As of December 29, 2024, the company had cash and short-term investments of $1.40 billion, down from $1.69 billion as of September 29, 2024 [6]. - Long-term debt increased to $3.38 billion from $3.13 billion over the same period [6]. - Free cash outflow was $598.1 million, consisting of $195.1 million in operating cash outflow and $401.8 million in capital expenditures [6]. Future Guidance - For Q3 fiscal 2025, Wolfspeed expects revenues between $170 million and $200 million, with a non-GAAP loss projected between 88 and 76 cents per share [7]. - The company anticipates a non-GAAP gross margin ranging from negative 3% to 7% and operating expenses between $104 million and $99 million [7]. - Restructuring-related costs of $72 million are expected, with $35 million in cost of revenues and $37 million in operating expenses [8]. Market Performance - Wolfspeed's shares have declined by 82.3% over the past year, significantly underperforming the Zacks Computer & Technology sector, which returned 26.7% [3].

Core Insights - The transformative potential of artificial intelligence (AI) could add $2.6 trillion to $4.4 trillion in annual value, necessitating increased demand for specialized semiconductors [1] - Silicon carbide (SiC) semiconductors outperform traditional silicon, offering energy efficiency improvements exceeding 40% in high-temperature environments [2] - Wolfspeed (WOLF) is positioned to capitalize on the growing demand for SiC semiconductors, which are essential for AI applications in data centers [3] Company Overview - Wolfspeed dominates the SiC semiconductor market with wide-bandgap chips that reduce energy loss in power-intensive applications, with a projected 30% annual growth for SiC chips through 2032 [4] - The company has invested in the world's largest 200mm SiC manufacturing facility in New York and is constructing another in North Carolina, enhancing production efficiency [5][6] - Despite market leadership, Wolfspeed shares have declined 93% over the past 36 months, trading at less than 1x trailing sales due to near-term challenges [7] Growth Potential - Analysts forecast a 46% revenue increase for Wolfspeed in fiscal 2026 as production capacity expands and demand accelerates, supported by a recent $200 million equity offering [8] - The U.S. CHIPS Act could provide Wolfspeed with $750 million in proposed direct funding, part of a potential total of $2.5 billion to support U.S. capacity expansion [9] Market Challenges - Recent political developments have created uncertainty regarding the timing of CHIPS Act funding, although bipartisan support for semiconductor production suggests eventual funding [10] - Wolfspeed faces risks from larger competitors entering the SiC market and potential shifts in AI chip architecture that could impact demand [11] Investment Opportunity - Wolfspeed presents a unique investment opportunity for risk-tolerant investors, with $11 billion in design wins and critical positioning in AI and electric vehicles [12]

WOLFSPEED CONFIDENTIAL & PROPRIETARY © 2025 Wolfspeed, Inc. All rights reserved. Wolfspeed® and the Wolfstreak logo are registered trademarks and the Wolfspeed logo is a trademark of Wolfspeed, Inc. FORWARD-LOOKING STATEMENTS AND NON-GAAP MEASURES Note on Forward-Looking Statements Wolfspeed FY25 Q2 Earnings J A N U A R Y 2 9 , 2 0 2 5 The schedules attached to this presentation are an integral part of the presentation. This presentation contains forward-looking statements involving risks and uncertainties, ...

Revenue Performance - Consolidated revenue for Q2 FY2025 was $181 million, down from $208 million in Q2 FY2024, with Mohawk Valley Fab contributing $52 million compared to $12 million[4]. - Revenue for the three months ended December 29, 2024, was $180.5 million, a decrease of 13.4% compared to $208.4 million for the same period in 2023[21]. - Power Products revenue for the three months ended December 29, 2024, was $90.8 million, down from $107.7 million for the same period in 2023[26]. - The company is targeting revenue from continuing operations in the range of $170 million to $200 million for Q3 FY2025[4]. Net Loss and Earnings Per Share - GAAP net loss is projected to be between $(295) million and $(270) million, translating to $(1.89) to $(1.73) per diluted share for Q3 FY2025[4]. - Non-GAAP net loss is expected to range from $(138) million to $(119) million, or $(0.88) to $(0.76) per diluted share for Q3 FY2025[4]. - The company reported a basic and diluted loss per share of ($2.88) for the three months ended December 29, 2024, compared to ($1.15) for the same period in 2023[21]. - GAAP net loss from continuing operations for the three months ended December 29, 2024, was ($372.2) million, compared to ($126.2) million for the same period in 2023[48]. - Non-GAAP diluted loss per share for the six months ended December 29, 2024, was ($1.86), compared to ($1.09) for the same period in 2023[48]. Gross Margin and Operating Loss - GAAP gross margin for Q2 FY2025 was (21)%, a decrease from 13% in Q2 FY2024, while non-GAAP gross margin was 2%, down from 16%[4]. - Non-GAAP gross profit for the three months ended December 29, 2024, was $3.2 million, with a non-GAAP gross margin percentage of 2%, compared to $34.2 million and 16% in the same period of 2023[44]. - The company incurred a GAAP operating loss of ($323.0) million for the three months ended December 29, 2024, compared to ($98.1) million for the same period in 2023[45]. - Non-GAAP operating loss for the three months ended December 29, 2024, was ($105.2) million, with a non-GAAP operating loss percentage of 58%, compared to ($70.8) million and 34% in the same period of 2023[45]. Operating Expenses and Restructuring Costs - Total operating expenses for the three months ended December 29, 2024, were $285.8 million, significantly higher than $125.9 million for the same period in 2023[21]. - Restructuring-related costs incurred in Q2 FY2025 amounted to $188.1 million, with $31.4 million recognized in cost of revenue and $156.7 million as operating expense[6]. - For Q3 FY2025, the company expects to incur $72 million in restructuring-related costs, with $35 million recognized in cost of revenue and $37 million as operating expense[7]. Cash Flow and Assets - Cash and cash equivalents decreased to $614.0 million as of December 29, 2024, from $904.4 million at the end of the previous period[25]. - Total current assets decreased to $2,227.1 million as of December 29, 2024, from $2,999.6 million as of June 30, 2024[23]. - Long-term debt increased to $3,384.2 million as of December 29, 2024, compared to $3,126.2 million as of June 30, 2024[23]. - Free cash flow for the six months ended December 29, 2024, was ($1,126.3) million, compared to ($1,271.6) million for the same period in 2023[51]. - Total free cash flow for the three months ended December 29, 2024, was ($598.1) million, compared to ($755.2) million for the same period in 2023[51]. Future Outlook - The company expects a GAAP net loss from continuing operations outlook range of ($295) to ($270) million for the three months ending March 30, 2025[54]. - Non-GAAP net loss from continuing operations outlook range for the same period is projected to be ($138) to ($119) million[54]. - Total adjustments to GAAP net loss before provision for income taxes for the three months ending March 30, 2025, are estimated at $119 million[54]. Strategic Initiatives - Wolfspeed aims to leverage its silicon carbide technologies to capitalize on long-term opportunities in high-voltage solutions[4]. - Wolfspeed has completed a $200 million at-the-market equity offering to strengthen its balance sheet and support growth plans[3]. - The company incurred $22.8 million in factory start-up costs and $28.9 million in underutilization costs in Q2 FY2025[11].

Core Viewpoint - Ambarella is positioned for a brighter future compared to Wolfspeed, which faces significant challenges in its core business and valuation [1][4][11]. Group 1: Wolfspeed Overview - Wolfspeed's stock price has declined over 90% in the past two years due to rising interest rates impacting growth in green energy and EV markets, and increased production costs [2]. - The company has been restructuring, including workforce reductions and leadership changes, with analysts expecting a 2% revenue dip in fiscal 2025 [3]. - Wolfspeed's current trading valuation is 8 times this year's sales, with an enterprise value of $6.2 billion, which is considered high given its challenges [4][11]. Group 2: Ambarella Overview - Ambarella specializes in image processing systems-on-a-chip and computer vision chips for various applications, including security cameras and connected vehicles [5]. - The company faced headwinds such as U.S. regulatory restrictions on sales to Chinese customers, a cooling IoT market, and competition from other chipmakers [6]. - Despite these challenges, Ambarella's revenue grew by 1.7% in fiscal 2023 and is expected to rebound with a projected 23% growth in fiscal 2025, driven by its automotive and IoT sectors [7][8]. Group 3: Future Projections - Ambarella's CEO indicated record levels of AI revenue, contributing to a higher average selling price, with expectations for continued growth in automotive and IoT markets [9]. - Analysts forecast revenue and adjusted earnings growth of 16% and 44%, respectively, for fiscal 2026, supported by the increasing demand for computer vision chips [9]. - Ambarella's enterprise value is currently $3.1 billion, trading at 10 times next year's projected sales, with potential for significant valuation increases if market conditions improve [12]. Group 4: Comparative Valuation - Wolfspeed's enterprise value includes $3.1 billion in long-term debt, while Ambarella has no long-term debt, which may affect their relative valuations [12]. - Ambarella could potentially surpass Wolfspeed in valuation if it continues to meet or exceed growth expectations, with a possible enterprise value of $3.8 billion by the end of fiscal 2026 [12][13].

Earnings Report and Estimates - Wolfspeed is scheduled to report its second-quarter fiscal 2025 results on Jan 29 [1] - The company expects a non-GAAP net loss between 89 cents and $1 14 per share for Q2 fiscal 2025 [2] - The Zacks Consensus Estimate for Q2 fiscal 2025 loss is $1 01 per share, compared to a loss of 55 cents per share in the year-ago quarter [2] - Wolfspeed anticipates Q2 fiscal 2025 revenues in the range of $160-$200 million [2] - The consensus revenue estimate is $179 37 million, indicating a 13 93% decline from the year-ago quarter [3] Performance and Market Position - Wolfspeed's fiscal Q2 performance is expected to benefit from its strong position in the semiconductor market, particularly in the EV and high-voltage power sectors [4] - The company's EV revenues grew over 250% year-over-year in fiscal Q1, with momentum expected to continue in Q2 [5] - Wolfspeed is focusing on becoming a leader in 200-millimeter silicon carbide by cutting costs and optimizing investments, which is expected to enhance profitability and operational efficiency [6] - The company aims to capitalize on the growing demand for silicon carbide in the global EV shift, as well as in industrial and energy markets [6] Revenue and Design Wins - Wolfspeed anticipates increased revenue contributions from its Mohawk Valley facility, targeting $50-$70 million as production ramps up [7] - The company has a strong backlog of design wins, supporting over 125 car models across more than 30 OEMs, which is expected to be a tailwind in Q2 [7] - In fiscal Q1 2025, Wolfspeed recorded $1 3 billion in design wins (its third highest on record) and $1 5 billion in design-ins, with approximately 70% for EV platforms [8] - The trend of strong design wins is expected to continue in Q2 [8] Competitive and Market Challenges - Increasing competitive pressure, delays in expected EV demand, persistent supply chain constraints, and weakness in the industrial and energy domain across Asia, particularly China, are expected to negatively impact Wolfspeed's top line in Q2 [8] Stocks to Consider - Bill Holdings (BILL) has an Earnings ESP of +29 71% and a Zacks Rank 1, with shares gaining 17 4% in the trailing 12 months [11] - AMETEK (AME) has an Earnings ESP of +0 54% and a Zacks Rank 2, with shares gaining 13 7% in the trailing 12 months [12] - CyberArk Software (CYBR) has an Earnings ESP of +2 71% and a Zacks Rank 2, with shares surging 52 4% in the trailing 12 months [12]

Group 1 - Wolfspeed is investing heavily in improving its manufacturing capabilities, which is expected to be a significant growth driver for the company [1] - The company continues to experience cash burn as it pursues these investments [1] - Wolfspeed is highlighted as a key player in the artificial intelligence sector, suggesting that investors in AI stocks should pay attention to this company [1] Group 2 - The discussion includes Wolfspeed's business strategy and growth opportunities, indicating a focus on long-term potential despite current financial challenges [1] - Potential risks associated with the company's strategy are acknowledged, emphasizing the need for careful consideration by investors [1]