extravagant title, but I'll take a swipe at it. For today's purposes, you have investor relations. Let's just, let's call it that. Safe. And, and so what I was hoping to do is just start out very quickly, level set everybody, what the profile of the Wolfspeed business looks like, you know, once we get beyond the divestiture of the GaN RF business.
Yeah. So I think if you look at, you know, the size of Wolfspeed, and, and maybe, maybe, Gary, what I can do there is talk a little bit about just some commentary, just about the overall business, kind of what we're seeing from that perspective. I think with the announcement of the RF divestiture sale, you know, that makes us, you know, the only kind of pure play, you know, silicon carbide, you know, integrated business in the industry from, you know, substrate capability all the way through, end devices and modules.
And what that really means for us now is, I think this is, you know, abundantly clear, you know, silicon carbide is at the, you know, you know, is at the core of the transition and the next generation of power high power electronic applications, particularly around high power semiconductors. And you know, we expect that market to grow from you know, where it is today, out to over, you know, $20 billion by the end of the decade. So maybe the highest growing industry or market in the industry at this time. And from a competitive perspective, and Gregg talked about it at our last earnings call, you know, we've got, you know, we you know, we're kind of the undisputed leader in this technology.
I think right now we're ramping 200mm power substrates at a very, very high quality and putting those into our Mohawk Valley fab. I would say that, you know, we're the only ones doing that in the world. I think if you look at 150mm substrates, you know, no one can really match our quality or our scale there either. So I think we feel very good about where we are post the RF divestiture in terms of the positioning we have in this high growth, you know, market. From a device perspective, we've put together $22 billion of design-ins just over the last three years, so we've got very good visibility with, you know, to revenue growth over that time.
That's with the likes of General Motors or Jaguar Land Rover, and many Tier 1s, as well. And a lot of end customers, I think strong end customers with, you know, with, with good capability that we're selling to, you know, mature companies over that time. And then on the substrate side, as you know, we've got, you know, 60% share on the merchant side, on substrates, doing deals with, you know, the major power semiconductor companies like ST or, you know, On Semiconductor or ROHM and others. So, very good capability from, you know, from that standpoint as well. So when you put all that together, you know, essentially what we're doing is we're going to leverage that advantage over time, to really invest in capacity.
The biggest thing we're doing now is investing in the JP, which is going to be the world's largest silicon carbide substrate facility in Siler City, North Carolina. I think that'll allow us really to advance our scale and capability as you think about that over time. So as we've divested the RF business, we expect that to happen here, you know, by the end of the year. It'll really allow us to focus on these power opportunities I just outlined, as you start to think about the company moving forward.
And so, if I'm not mistaken, that divestiture takes away, what? $35 million, roughly, in revenue?
That's right. Per quarter. Yeah, per quarter. Yep. Per quarter.
Will you have a residual substrate supply arrangement with MACOM?
Yes, and that was in the announcement that we made.
Okay.
We'll do a material supply agreement with them. We'll go through an MSA period where we're working together with them on a fab that we have in North Carolina, and we'll help supply them as we do today. Then post that MSA period, which would take about two to three years, you know, after that.
Got it. Got it. And so, you know, if the old is accurate, if the old group is accurate in the forecast, what you'll keep specific to that business on the material side is what? Roughly $12 million a year, $12 million a quarter in substrate supply to them?
I think it's something smaller than that. It's actually a pretty modest amount of, of revenue-
Yeah
... per year into-
Yeah
... into what's required there.
All right, well, let's get to what's more important. So the key performance indicator that everybody's watching is the bring up of Mohawk Valley. It's, it's all about feeding this shiny new facility in upstate New York with enough 200 millimeter silicon carbide materials. And so, you know, what you've laid out from a KPI perspective is this destination by the end of the fiscal year, the June quarter of next calendar year, to be at a 20%-
Yep
... utilization rate. And in the near term, for the current December quarter, I believe your revenue guidance includes about $10-$15 million of Mohawk Valley-generated revenue. Maybe if you can give us an update on where you stand with bringing up that facility, feeding it with enough wafers, and anything else you can add.
Yeah. So, you know, we're two months into the quarter. I think we've entered into our fiscal Q2, which is the December quarter here. I think we feel very good about where we're at from a guidance perspective for the quarter. And in that guidance, what we gave out was $10-$15 million revenue for Mohawk Valley. And what that means is, the prior quarter, we did about $4 million of revenue, so we're thinking about tripling that or so, you know, at the midpoint. What we talked about on the call, as it relates to the fab, is really just bringing up capacity at this point inside the fab. From a substrate perspective, the substrates that we're delivering to the fab have been very, very good.
The 200 millimeter substrates have been very solid from a quality perspective. We're seeing output levels that are better than our expectations from the 200 millimeter substrate perspective, and it's actually ahead of the fab. So we anticipate an equivalent 15% utilization in terms of substrate output and 200 millimeter from our Building 10 site in Durham to feed the fab. So I think step one is that piece of it's going very, very well. What we talked about on the call now is, now that we have the substrates, as you run those substrates through the fab and start fabbing them, it's having some bottlenecks inside the fab. Now, Gregg, our CEO, was actually up at the fab last week.
He was there on Thanksgiving Day, actually giving out turkey and meeting with employees and meeting with the fab team. And I'm happy to report there's been very, very good progress on a lot of the bottlenecks that we talked about at the earnings call just about a month ago. So we are seeing very positive performance. So I think we're solidly within the, you know, that $10-15 million revenue for the quarter. Now, looking forward, what that means is we should be able to double that again as you look into the March quarter into Q3, based on what we're seeing from the, not just the substrate standpoint, but the de bottlenecking of some of the process steps in the fab.
And then again, doubled again as you get out into the June quarter, which I think puts us confidently in place to get to the 20% utilization. And what that would mean is about $100 million per quarter revenue starting in December next year. So I think right now, all signs are pointing to, we've got the pieces together. We're seeing the fab get debottlenecked, and at this point, it's really about just driving, you know, cycle time and yields and driving process through the fab.
Okay. Let me see if I got all that straight.
Sure. Yeah, go ahead.
So, you know, maybe $30 million in revenue in the March quarter, possibly $60 million in the June quarter, possibly. And but the destination at 20% utilization would be $100 million-
in quarterly revenue.
Right.
Why the lag? And maybe you could help us bridge from a time perspective, $60 million-$100 million, even though you may be at 20% utilization in the quarter, that you're generating $60 million.
Yeah. So I think the 10-15, we put that midpoint around 12, so you're probably talking about 25 or 50-
I'm being optimistic.
In those times. Yeah, Gary. But basically, what that means is, yeah, so Mohawk Valley has the capability of doing $2 billion of annual device revenue at full capacity. So what that means is, at 20%, you'd expect to get to about, you know, $400 million a year or $100 million a quarter. So if you get the 20% utilization sometime in the June quarter timeframe, there'll be a lag from the time we actually have the starts utilization. That's a starts number, so how many wafers did we start in the fab in that timeframe? So you have to go through a full fab cycle time, to get that through the fab.
You'd have to get it shipped to our back-end facilities, and have those wafers converted into chips and then eventually sent out to customers. So there's just a bit of a lag between the starts time and when we would see, that revenue. Now, this is based on a, I would say, startup of the factory. I think over time, you'd see those cycle times improve, but as these are the early days of building out the fab, I think that's kind of a safe assumption around the time it would take from the time you start a wafer to the time you'd actually start to see, that revenue, occur.
I think, Gary, the other important point on all of this is that the crystal growth in Building 10, we've got 75% of the growers activated. The remaining will be installed between now and early next year. So, you know, and what we're doing now is we're probably by the end of this year, we'll be producing enough wafers to support a 15% utilization. So what we're actually doing is banking wafers because the fab is not ready to accept it. So we really like the performance of what we're seeing out of Mohawk. At the same time, we really like the performance of what we're seeing out of Building 10 from a substrate production perspective.
Got it. And to take Mohawk Valley to $2 billion in annual revenue generation, it's all contingent on the JP facility, and we'll get to that in a second. But I wanted to stick on-
Sure
... on the, you know, I wanted to stick on the 150 millimeter-
Yep
Silicon carbide wafer side, which I think you had a record quarter in the just reported September quarter. And if I'm not mistaken, that might be $100 million, roughly, in revenue?
$96, $97.
Okay.
Yeah.
My question is, what drove that record level, and is it repeatable?
Yeah, good question, Gary. So I think if you, Step one is, I think, as it relates to the, that side of the business, the raw material substrate, so 150mm is kind of legacy, 150mm technology, and we sell those, those substrates into the, into the marketplace. So there is, there's very heavy demand for those substrates, I think, both in the short term, where we are supply-demand disconnected on substrates right now. We're also seeing, good demand from a longer-term perspective, as many of the customers that we work with are looking for, you know, expansions or extensions of current agreements that we have. So we are seeing both, I'd say, a current, period and a future period, kind of, heavy demand for the 150mm substrates. We continue to see that.
So that's kind of step one. From a production perspective, I think what we're seeing is, you know, the team, the operations team in Durham, the materials operations team, just did a terrific job. I think the stated capacity we had a couple of quarters ago was about $90 million or so a quarter, capability. I think two quarters ago, they did close to $95 million. Last quarter, they went up to $96-$97 million. I would say that's at the high end of the capability. I think that was very good product. You know, very good execution by the team. You could see that come back down to the mean at some point, but given that we're hand-to-mouth with customers, we'll just push it every quarter as far as we can.
I don't want to commit to that being kind of the sustainable level until we can kind of prove it out over a longer, longer period of time.
Okay. I'm gonna address an elephant in the room, and, and that is, you know, some of the crosscurrents that we've been hearing in the silicon carbide market and maybe the electric vehicle market. One of your competitors was, you know, this year may end up only, you know, quadrupling its silicon carbide revenue versus, you know, increasing it fivefold, as previously anticipated. And, and, you know, that's a $200 million revenue shortfall for that company. And, and so, you know, the highlight was always that there were LTSAs-
... which underpin a lot of your business. You spoke about your-
Yeah
... your, your pipeline-
Design-ins.
... and your design-ins.... Are those really LTSA? I mean, are they really, non-returnable, non-refundable, or, you know, is there the option for customers to back out of those with no financial penalty in the future?
Yeah, I don't think we've ever talked about our demand in that light, Gary, but I get what I can tell you is, from an automotive perspective and the device level, what we're essentially shipping out of our Durham fab and now Mohawk Valley, from an automotive perspective, we see very, very heavy demand. In fact, what we're seeing is, we have over $100 million of unfulfilled auto demand right now that we if we had the capacity for, that we could fulfill.
I think a lot of what you're hearing in the, and Gregg referred to this on the call, I think last month, what you're hearing in terms of these cross currents on, on demand is that these are a lot of silicon-based, you know, electric vehicles that are probably, they're not selling, they don't have great range or capability in them, and, and they're not, you know, they're not, maybe they're not selling. What we're talking about is shipping into the ramps of the first of a kind models of silicon carbide-based electric vehicles. So these ramps, across a number of different customers, I named some of them earlier, are very much at the early stages of ramping these things.
I can tell you, both Gregg's time and my time, a significant amount of that time is meeting with, you know, executives at, you know, major OEMs and Tier 1s, on allocation reviews, reviewing supply. So I think we have a very broad, diverse set of demand across a lot of different customers, across our design-ins. And right now, what I would say is, that is pretty heavily supply, demand, you know, disconnected, and that's something that we're just focused on, on meeting. Tyler?
Yeah, and I think the other thing is, and Gary, we've talked about this, but, you know, we are only pursuing opportunities within automotive where we are the primary supplier. And that's not because we're- we have bravado, it's because it's logical to us, because we're supply constrained. So to take a secondary supply agreement where you have to stand at the ready with capacity, so that if the primary cannot fulfill the obligation, you know, for us, it just doesn't make good sense. So I think, you know, when you think about, you know, the profile of the different silicon carbide players, we're only going for primary supply agreements. We're not looking at secondary supply agreements.
Okay. Let's shift gears and talk about the JP, which is named after John Palmour, one of the co-founders of Wolfspeed, who passed what, a little over a year ago?
A year ago.
Yep.
Yeah.
Where do you stand with shelling that facility, and how far are we away from having product roll off that line? And this is 200 mm
Substrate supply, by the way, for silicon carbide.
Yeah. So from the JP perspective, this is, again, to give you a little bit, and I'll again give you some dates and times. First of all, the facility is on schedule, and it's on budget, and we're very happy about that. So it's progressing, you know, right in line with what our what we had expected, which is great. From a size perspective, the JP is gonna be able to fulfill 10 times more capacity than what we're able to do today at our current Durham campus. And to give you an idea of what that means, the current Durham campus is the largest silicon carbide facility in the world. So this is a very large step up in terms of capability, in terms of supply, and it's gonna be able to do that, all at 200 mm.
So we are making very good progress, I think, at the construction. You know, I've been down there, you know, several times over the last few months. I know Tyler's been down there as well. Gregg's been visiting it frequently. So I think we're on track. So our anticipation would be, as you get into the fall of next calendar year, so second half of the next year, calendar year, we should start some crystal production, with heavier production starting in the first half of calendar 2025. So that's really what we're looking at in that time frame.
Okay. That facility is being built in phases. It's a 400-acre piece of land or more.
Yep.
So you have, I think, a lot of optionality to build out the capacity. So, how should we think about the phases of the build-out and, you know, what drives your decision-making in extending the phases? Is it getting commitments from customers like Renesas, like the deal you recently signed?
Yeah. So it'll depend. I think what we're talking about here is building out a flexible manufacturing footprint in Siler City. So once we have the base capability that we've invested in, we are investing in right now, it leaves us, as you pointed out, Gary, a lot of flexibility in terms of how we can manage that. In step one of what we're building right now, we can fill the rest of the Mohawk Valley fab, and we can supply what we've talked to Renesas about, you know, as well within that fab, and probably have some left over for, you know, potentially some substrates for an additional fab beyond that. So I think it puts us in very, very good position from a, you know, from a capacity arrangement, if you think about things moving forward.
So I think we're in good shape with that. As it relates to what's next, it will just depend on do we need - do we have another fab? How would that work down in time? That's really not what we're focused on right now. What we're really focused on right now is getting the JP built, ensuring that we can fill, you know, Mohawk Valley to 20%, and then filling it with more substrates down the line over that timeline I just mentioned from the JP. So that's really what we're focused on right now. Anything beyond that, excuse me, is something that, you know, we'll think about, you know, as time goes on. But again, we have a lot of choices and a lot of flexibility in terms of how we can think about that.
And Gary, one thing to add to what Neill just said, as we're bringing up Siler, the other thing that we are also doing is we're kind of putting some belt and suspenders around Building 10. So we think that with continued innovation and R&D work, that, you know, 20% utilization is what we're hope-- you know, is what we intend to get out of Building 10. But we think there's a couple more points of productivity, and what we've done is we, we've put some satellite operations in place, of a facility in Farmers Branch, Texas, that will be doing epitaxy. We've got a facility very close to the Durham campus that will do back-end processing. So-
... in the event that Siler doesn't come on, like, the timeline that we originally thought, we do have the plan is to put some extra excess capacity in place in Building 10 to kind of bridge that.
Okay. Based on the current footprint that you're building out-
Mm-hmm.
In Siler City, how much of that output will be consumed internally through Mohawk Valley, and how much will be consumed externally?
Yeah. So if you look at what we have today, right now, the only deals that we have, or the only arrangements that we have, or contracts that we have for merchant sales is on 150 millimeter. That's what we are shipping today. The Renesas arrangement, where we did, you know, a $2 billion, you know, that's a reservation deposit or capacity reservation deposit with them, that will be fulfilled with 150 millimeter wafers for the first several years of that contract, leveraging our current capability. So there isn't really any significant incremental CapEx required to supply that deal. As you think out in time, though, we wouldn't be thinking about, you know, shipping any 200 millimeter substrates until after 2027.
By that time, the Mohawk Valley fab, you know, should be full. We would think about everything really focused on filling Mohawk Valley first, and then potentially supplying others as we get to the end of that, you know, kind of time frame.
A lot of people are worried about additional competition, too much capacity being built up, particularly on the substrate side-
of the equation, where I think China probably has, you know, some, some working product.
Yeah.
That's up for debate. You know, how do you see your business transitioning from a substrate perspective? How much of that business will be for internal capacity, looking five years down the road, and how much will be for merchant supply?
Yeah. So, a couple of things there. Just on what our strategy is in terms of growth. I mean, if you look at the size of the revenue capability for Mohawk Valley, we talked about $2 billion. Our Durham campus today, our small fab there, from a device perspective, can do about $400 million a year, and our expectation is to grow Mohawk Valley to its full capacity, and we have more than enough demand to you know, to support that and also fill Durham. So you think about $2.4 billion of device revenue capacity over time, just think about Mohawk Valley and the Durham fab.
From a materials perspective, you know, right now, we talked earlier, Gary, about $90-$95 million a quarter, let's say, in terms of material substrate capacity. I could see that growing, you know, over time. We're kind of gonna be capped, I think, around that level until we open up the JP. We could add more capacity to the JP, potentially sell more 150 millimeter wafers, certainly sell 200 millimeter wafers to, Renesas, but our focus is gonna be really on driving up the, the, the revenue and the value out of the device business over that time. And that's really where our focus is going to be, as you think about that, that kind of longer-range thinking type plan.
I think what we've seen over the last several months, you know, the supply out of China is making progress on six-inch. It's more of a industrial and energy grade, not automotive grade yet. I think, you know, as Gregg kind of mentioned on our most recent results call, you know, we've always assumed everybody was gonna get there with internal capability, but the truth is, they probably won't. So there probably is, as Neil mentions, opportunity for us to be smart about, you know, supplying more of the market, 150. It's just gonna be a question of, you know, who needs it? Yeah. I think that there's gonna be... You know, our view is there's gonna be some supply-demand disconnect, even on substrates, for some time.
The reason for that is we just talked about having a record quarter in selling 150 millimeter substrates today. We are seeing customers come back looking for additional, you know, arrangements in terms of more 150 millimeter capacity. The feedback we get, as Tyler mentioned, we're getting back in our own checks, is that the, you know, the China-based substrates are not really ready for, you know, being automotive, you know, capable, and that's at a 150 millimeter, no less 200 millimeters. So I think there's gonna be some, you know, some disconnects there in terms of supply, you know, for quite some time.
Okay. We talked already about the steps of improvement at Mohawk Valley from a revenue and from a utilization perspective. But, you know, the gating factor in creating those steps is tweaking the tools in the fab, as you described in your last earnings call. So starting out there, maybe if you could talk about, you know, how that's been going, what some of the remaining bottlenecks, production bottlenecks may be, and then as well, what are some of the more significant and impactful qualifications that you're going for, going through from a customer perspective?
Yeah. So we're managing through the qualification cycles now. I think I think as we talked about this, you know, maybe 4, 5, 6 months ago, we talked about having different customers taking parts at different stages. Well, that's really... If you fast-forward today, that's been actually very positive, and the reason for that is we've had very good success in qualification in the Mohawk Valley fab. So, you know, almost all the MOSFETs that we, if not all of the MOSFETs that we have tried to qualify, have qualified on first pass in the fab, which is very unusual. So, we're very proud of that fact. And what that speaks to is the capability of the technology of what we're delivering, to have that type of success first time.
So we've got the substrate, and we've got the qualified material, which I think makes us feel very confident in terms of being able to, you know, solve the delivery challenges, but also the competitiveness of our parts, you know, which I think is great. So that leaves us really with one challenge now: bringing up volume in the fab. And we've been working on various process steps. The process step that Gregg had been talking about on the last call, we've made very, very good progress on since then. And it's really just been... If you think about it, you know, these are the first, very first time. What we're trying to do is very challenging, you know, as we've learned. 200 millimeter substrates, first time running through a fab on these tools.
People have done this for a number of years at 150 millimeter, but these are the first time they're running through a 200 millimeter. You have to remember, silicon carbide substrates are very hard, so they can be very tough on the tools... You can think about trying to get the right maintenance schedules in to try and keep those tool times up. That's what we're talking about here. This is, these are solvable issues, which we've just proven, you know, at the process step we talked about last month. Our teams got together with the vendor team. They've worked together to solve this. Gregg's been up to fab several times for reviews, and we've worked through it. There are some process steps after that, and later in the fab that we're working through.
I wouldn't say anything to the extent that we were working through on what we talked about. That's what gives us really good confidence about, you know, driving volume through the fab. This is a matter of time to solve what I think are, you know, realistic, you know, challenges in bringing something up for the first time.
Okay. I think the decision to move forward with the Mohawk Valley fab, you know, going back maybe as long as five years ago, was contingent on some of the tax credits you get from the state of New York. And what we've seen is a slower bring up of Mohawk Valley. So based on the employment requirements to get those state tax credits, are you going to be able to fully utilize those?
Oh, yeah. We're well on our way to working with New York on reimbursements for tools and achieving the, you know, the milestones that we had agreed upon with them. And I think that's what's made it. If you look at Mohawk Valley right now, you know, getting through the build-out of the fab, getting the reimbursements from New York, which has been a terrific partnership for us, has all worked out well. And now what we're doing is, installing tools, and those tool reimbursements are coming in a lot faster than they do for construction, as you can imagine. And so when you think about, like, as we're adding tools to the fab right now, we're still drawing down on these credits from the state of New York, which is making Mohawk Valley is not really much of a cash drag for us right now.
You know, most of our CapEx is really going into the JP at this time to build out that facility, and that'll make this year from a CapEx investment perspective kind of the peak year in our journey here. And that'll allow us to have, I think, a modest step down as we get into fiscal 2025.
Okay. Your guidance for the current quarter is roughly, what? Mid-20% gross margin, and there's some utilization charges that are incorporated into that. And if not for those underutilization charges, you would probably be trending in the, what, low 30%?
Yeah.
Mid 30% range. I think the destination for gross margin is close to 50%.
Yeah.
I'm not sure exactly how that's been altered over the last, you know, several quarters, but I think 50% is the destination. Maybe if you can help bridge going from the mid-20% gross margin today up to 50%.
Yeah. Look, there's no real change into our gross margin plan in terms of how we achieve the margins. I think from a material substrate perspective, there's not a whole lot of work to do there. I think products from that perspective are already kind of at the company target, it's the company goal. So this is really about devices, and this is the same challenge we've always had. The Durham fab is higher cost. It's not nearly as competitive as Mohawk Valley will be, and it's on 150 millimeter substrates. As you make the transition from 150 millimeter substrate to a 200 millimeter substrate, this math is the same as on silicon. You get a 70% bigger surface area on the substrate itself. That drives a 40% cost improvement at the die level.
So I've said this many times, in probably every public statement, but all roads lead to Mohawk Valley for many, for many reasons, and another one of them is gross margin. As we make the transition to a competitive fab with competitive processing costs, as we start to see the benefit of a larger diameter, we should see our cost improvement move dramatically. So as we run more revenue through the fab, we'll get a couple of benefits. We'll get the benefit of the fab itself being more productive than the current fab that we're running in. We'll see the benefit off of the lower die cost based on the, on the larger, substrate.
And then we also are taking, as you mentioned, the utilization charge right now—underutilization charge, sorry, right now, just because the fab is just in its infancy in terms of driving capacity. So as we start to bring more volume to the fab, we'll get a third tailwind there as well. So as we drive more volume through Mohawk Valley, we'll get advantage of the scale, the cost benefits for those various reasons, and you'll see the margins improve, you know, with that over time, which has always been the strategy from a margin expansion perspective.
Okay. You guys, as we've highlighted numerous times, very capital intensive right now. You've got a lot of plans to add, you know, multiple, capacity of multiple points in the supply chain. Maybe if you can talk about the capital intensity for the next few years, where you stand with funding that capital intensity.
Yeah. So first of all, from a balance sheet perspective, I think we're in very good shape. We ended last quarter with over $3 billion of cash on the balance sheet, and that does not include the second drawdown on our $2 billion Renesas capacity reservation deposit. So there's another $1 billion that we would likely take in tranches in the first half of next calendar year. So that's what we'll kind of work through there. That puts us in very good position to have about $2 billion of CapEx this year, in fiscal 2024, primarily focused on the JP facility and building that facility out. And as you work into twen...
The following year, what we'll see is a step down in the CapEx as you think about 2025. And then as you get below, outside of that period, then you get back to some of these, you know, tax credits and things we'll be working through the CHIPS Act and other things. We'll start to see reimbursements out in that timeframe. So not only will our facilities that have been built, we'll start to come down that curve as you get out into, you know, 2026, and beyond. You'll also start to see reimbursements. So there'll be a natural reduction in the requirement for CapEx, and we'll also see an influx of more, of the, you know, the government incentives. This is very, this, this will mirror what we just did with Mohawk Valley on a larger basis.
In Mohawk Valley, we funded the upfront investment and then came back down the other side as we started seeing reimbursements. That's exactly what we've seen. We anticipate seeing the same thing as we start to do the, the further build out of the company, just at a larger scale.
... I know the first draft of the CHIPS Act did not include silicon carbide as a, as a, as a target for subsidization, but I think, I think there's been requests for comment period, and maybe the second draft, there's an opportunity for silicon carbide to be included. Where does that stand, and, and, and what's potentially, you know, beneficial to you if it's included?
Yeah, we've worked very closely with both Treasury and Commerce, on the point that Gary just identified. We've submitted some language that provides some guardrails on how to include silicon carbide, and they've indicated that it's they like the structure of what we put together. We've also met with the CHIPS Program Office and Todd Fisher to kinda outline a few things. As you know, earlier this year, silicon carbide was identified as a critical mineral, by the U.S. Geological Survey, so there's national security interests here. So we feel very good about where things stand, and I think it's gonna be opportunities of funding across CHIPS Act or the IRA.
So where we sit now, you know, there's optimism that we'll get our applications in between now and the end of this year and have some kind of indication next year of what the funding structure looks like with the U.S. government.
Okay, so it sounds like you're well-funded for the current capital intensity plans, but a potential wrinkle from the investor concerns that I hear is if you build a German facility. So, you know, what's the driving force behind that? What would be the driving force behind that? What sort of guarantees would you need from potential customers and from the German government? How should we think about maybe a need for more capital to fund that?
First of all, Gary, let me be, like, really clear. Our number one priority is driving Mohawk Valley to 20% utilization. I think that we've got to go execute that plan, and I think that will underpin, you know, our capability as a company to drive, you know, a profitable cash flow generating enterprise over time. So that's absolutely our number one priority right now, and everyone who walks in the door every day at Wolfspeed is laser focused on this, from Gregg down out through the organization. So step—that is step one for pretty much anything we want to think about doing. As it relates to a second fab, Saarland, such as Saarland, it really depends on the funding structure. We'd have to see the funding structure.
We haven't seen the funding yet, and when we do see the funding come back, we'd expect it to be similar to what we've seen for Mohawk Valley. If that funding comes in, we can talk about that then, and we'll give an update, you know, later on that.
Okay. All right, well, we don't have a whole lot of time left, so this is probably a good stopping point. I appreciate you guys joining us today. I appreciate everybody in the room joining us, and I appreciate everybody online joining us. And so with that, thanks again, guys. Great-