Dive Brief:
- Semiconductor firm Wolfspeed plans to close one of its 150-mm silicon carbide wafer production facilities in Durham, North Carolina, according to a Q4 earnings call.
- The closure is partially due to an equipment facility issue reported in June that resulted in a temporary capacity reduction.
- The incident negatively impacted Wolfspeed’s gross margin by 500 basis points due to underutilization charges, repair costs and lower yields, CFO Neill Reynolds said on the call.
Dive Insight:
The company is still evaluating when the plant will officially close and how many job cuts there will be.
“We will come back at our next earnings call with our future device production plans, as we work through these plans internally and with our customers,” Reynolds said.
On top of the equipment issue, the Durham device fab’s $64 million of revenue for the quarter, down approximately 40% year-over-year, was also “driven by continued weakness in industrial and energy markets.”
The company is still expanding its other materials manufacturing facility in Durham, according to a 10-K securities filing.
Meanwhile, Wolfspeed’s 200-mm Mohawk Valley fab saw 20% utilization in June and continued to see strong revenue growth from that fab.
President and CEO Gregg Lowe noted on the call that although the Mohawk fab is highly automated, the Durham location is decades old so it cannot withstand issues like this. The equipment incident has since been completely rectified and repaired, Lowe added.
Wolfspeed also plans to migrate its 150-mm device manufacturing to Mohawk Valley in the future, Lowe said on the call.
Reynolds also said during the Q4 call that they’re seeing the EV-specific revenue dip at the Durham fab, prompting the company to put a lot more industrial and energy revenue into Mohawk Valley during the transition.
Wolfspeed is still committed to opening a new $5 billion silicon carbide materials plant in Siler City, North Carolina, and promises to employ 1,800 people by 2030. President Joe Biden touted the company’s investment in the state last March.
The plant will increase Wolfspeed's materials capacity more than 10-times more, span 445 acres and is on track to deliver wafers to the Mohawk facility by the summer of 2025, according to the June company update.
