Good afternoon, everyone. Welcome to day one of Citi Global TMT Conference. My name is Atif Malik. I cover US semiconductors, semiconductor equipment, and networking equipment stocks here at Citi. It's my pleasure to welcome Gregg Lowe, CEO of Wolfspeed, as well as Neill Reynolds, CFO. We also have Tyler Gronbach, a friendly neighborhood IR, in the back. I'm going to kick it off with my questions first, and then open it up to audience questions. If you have a question, please raise your hand and the mic will come to you, and you can ask your question. Welcome, guys. Gregg, if I can start with the big question investors have: Why do you think your stock price has underperformed by so much this year? What are the investors missing?
A couple of things I would say. You know, obviously, one of the things we've been working on over the last six quarters is getting the operations in better shape. That's been a very, very key focus of me. I've been in Mohawk Valley. I've been in our materials factories pretty consistently during this time, and I think. Not one thing, but several things have happened. Number one, Mohawk Valley has now turned into a very good asset for us in terms of production quality, yield, you know, et cetera. Feeding Mohawk Valley out of Building 10 has also substantially increased. We announced that we hit 20% utilization in Mohawk Valley, and that's because Building 10 was able to deliver the material to them.
We also announced on our last earnings call that Building 10 will actually be able to support 30% utilization in Mohawk Valley, which is a 50% increase off the same number of growers. Which, you know, maybe it's not that obvious, but that means our yield out of those growers is 50% better than anticipated. The yields in Mohawk Valley are now ahead of where we intended, not intended, where we expected them to be at this point, and we still have quite a ways to go to get to what we call entitlement yield. Then finally, I think something that should not be lost on investors is that our cost out of Mohawk Valley is substantially better than our cost out of Durham.
All of this confidence that we have now in our 200 mm entire supply chain, Building 10, Mohawk Valley, you know, et cetera, has given us the confidence to announce that we would be shutting down our 150 mm line in the Durham facility. We don't have more details right now to give on that. We will give you a detailed plan on that at our next earnings call. But that process is underway, you know, I think. So I think for the last two years, there's been a question of: Can we get 200 mm going? And I think that answer, you know, has been that question has been answered pretty substantially. And now it's a matter of funding, and CHIPS Act funding, and there's a lot of question around that.
As we said in our earnings call and as we've detailed in our 10-K, we are actively engaged with the CHIPS office. We've got an ongoing conversation with them. It's a positive conversation with them, and we're now down to a few remaining items in terms of terms for the grant. We're continuing to work with them on that. It's a very good process. I think in hindsight, we were probably a little ambitious as to how fast we could get this thing over the transom, but we're definitely, every time we meet with them, we're moving forward, and I feel confident that we'll be able to get this thing over the goal line. Now, that being said, there's a question of what happens if it doesn't get over the goal line?
What other levers do you have? And I think that's something that, maybe, Neill, if you want to talk a little bit about that, would be good.
Yeah, well, certainly from a funding perspective, you know, plan A is, you know, continue to work with the CHIPS office. And I think, as I've always said, you know, that will inform kind of what our next decision is. You know, one thing with our current lending agreements is that we have about a $1.5 billion carve-out for secured financing from our JP Siler City facility. So I think tapping into that, you know, would be, you know, would be an option there. The most obvious one would be to work with our current lenders and, you know, leveraging an accordion feature that we've got in that facility moving forward.
So there's some leverage, there are some opportunities and some levers we can pull from that perspective, kind of as a plan B. But plan A continues to be: Let's work with the CHIPS office. I think that's the best solution for all parties involved, and that's what we'll continue to focus on.
Then in terms of personal focus, so over the last six quarters, a lot of personal time focused on operations and getting Building 10 and moving, you know, the Mohawk Valley, you know, and so forth, eliminating roadblocks and issues and so forth. Sometimes that meant working with CEOs of some of our suppliers to help with some various different things. I think that's it, the work isn't done but, you know, we really have come a long way. Now the my personal focus is going to really be on two things. One is obviously getting CHIPS over the transom, and the second is the path to profitability. And, you know, that's those are the two key focuses, you know, going forward.
Great, and let's just unpack a little bit. You guys mentioned Mohawk Valley, Durham, CapEx. Let's start with the Mohawk Valley fab. Gregg, you're expecting Mohawk Valley fab to reach 25% utilization September quarter, which is one quarter ahead of the original plan. What gives you the confidence that you're going to remain on this trajectory of, you know, getting to higher utilizations? If you can just take us to the ground and talk about what changes and improvements have you made where the yields are tracking better and everything?
There are lots of different angles on this, so and I don't have the exact numbers, but the number of tools that have a second tool in the factory is substantially higher than we were certainly a year ago. I believe we're on track to be fully second-of-a-kind tool by the end of this calendar year. I don't remember where we're at right now. It's pretty high. That used to be pretty substantially low, like 25%. Anytime one of the tools that only had one-of-a-kind tools went down, it just stopped production. We now have multiple tools across the fab, which is good.
I think our ability to understand how the tools are going to respond to 200 mm silicon carbide has gone substantially up, and that means our maintenance and, you know, R&M processes and things like that have gotten a lot better. Just recall, this is the first 200 mm silicon carbide factory. So every single one of those pieces of equipment in this factory saw silicon carbide for the first time, and we had to kind of fine-tune that, and I think that's gone very, very well. If you look at the yields across the products that are going through Mohawk Valley, we've got a very strong, you know, kind of up and to the right trajectory, and as I said, we're currently ahead of our planned yield on the device in Mohawk Valley.
Then the second thing, and it's really important, is the output out of Building 10. The JP is coming along very well. It's on time, it's on track, but anytime you bring on a new facility, there could be some kind of problem. Basically, that hasn't happened, but Building 10 being able to do 30% versus 20% is a huge relief in terms of time that we need to get the JP, you know, on board. The JP has initiated first crystal growth. I personally did it on the first machine. The parts are coming out looking great. They're matching the quality that we're seeing out of Building 10. We fully expected that because the physical facilities are not too far away from each other, about 45 minutes, plus or minus a little bit.
The team that started up Building 10 is the exact same team that started up the JP. Recall that Building 10 was, you know, a squash court, a basketball court, office space, and we turned that into a crystal growth factory. We certainly expect a ground-up, purpose-built facility at the JP to be a lot easier to bring up because we're not dealing with what used to be a, you know, a squash court that's now trying to be a factory. We feel real good about that. We are quite confident in that, and again, the confidence should be heard loud and clear 'cause we are cutting the cord to 150, and we're very, very confident in the 200 mm
Right. Neill, over to you. When you had your Investor Day, I remember maybe three years ago or something, you guys talked about for the cost to be 40% lower.
Mm-hmm
O n the millimeter, maybe utilization rates have to be at 80% or so for the Mohawk Valley fab, and correct me if I'm wrong. But so how do we look at, kind of the cost improvements from here, as the utilization improves? You know, is it kind of a linear function, or is it more of a step function in terms of how we should expect the margin profile, and in a September quarter, really, the trough in your gross margins?
Yeah, I think so. I think from a. And this, I think that we're following the same path that we've always talked about. You know, you get that 40% cost advantage at the die level when you move from a 150mm substrate to 200mm when you put it in the fab. Now, we're still at early days, you know, early days of yields and cycle times in the fab, and we're already seeing you know, pretty terrific results in terms of this kind of breakthrough we've talked about and the performance that Gregg is talking about. So we anticipate seeing improvement over time, but even at this early stage, we're seeing significantly lower costs at the die level from our 200mm platform. And we'll continue to see improvement over time.
So I think that's essentially what you'll see is, as utilization rates improve, as yields continue to improve over time, we'll continue to see that cost curve come down, for 200 mm, which really is what gives us confidence, you know, to move over to that platform. So if you think about it, Gregg talked about, you know, the path to profitability. That's really what our focus is, and where we're headed is to, you know, dramatically simplify our manufacturing footprint and really pushing it to, you know, our new facilities and really get the, you know, the leverage off of those facilities with that lower cost footprint. And of course, the more we utilize them, the more we leverage that better cost basis, that should improve our cost structure, and then margins should, you know, should come along with that.
Okay. Then moving on to the Durham 150mm fab, you guys talked about, you know, closing that down. Like, to Gregg's point, that shows your confidence in the Mohawk Valley fab. But in terms of the handoff between the two, you know, how do you guys kind of ensure a smooth kind of handoff? And just historically, what was the sales level, or the margin level of the Durham fab that we should, you know, kind of account for in the model?
Yeah, maybe I'll start.
Mm-hmm. Yeah
And follow up. So first off, all of the automotive powertrain parts that we work with and sell to customers are qualified in Mohawk Valley. That's a really important piece because they're going to be a strong, you know, growth component of that. And we will be giving a broader amount of detail, you know, in terms of how we're going to transition the rest of the revenue potential up to Mohawk Valley. We'll do that during the earnings call. I would add, though, an important little factoid: nearly all, in fact, all except one of the automotive parts that we attempted to qualify in Mohawk Valley passed qualification on its first pass.
The only one that didn't pass on its second pass, and that is not normal for a new fab. And it's certainly not normal for a new fab with a new substrate, with a new technology, you know, and so forth. So I think that gives us very high confidence in our ability to qualify the industrial parts up there as well. Industrial parts tend to be less complex. They are definitely less complex than automotive parts. They're simpler, and I think the impact on margin for our industrial business should be very positive as well. The wafer diameter is gonna give us 70% more die per wafer. There's gonna be an increasing yield, you know, as well as we move up to Mohawk Valley as well.
And then from a capacity perspective, the Durham fab was achieving roughly about $100 million of revenue per quarter as early as last year. Primarily industrial and energy revenue that's been running through that fab. We had to run some more automotive revenue or EV revenue through that over a period of time. But as Gregg said, now with all of this qualification work that's been done at Mohawk Valley, we can transition a lot of that over to, you know, over to the 200 mm, you know, Mohawk Valley fab. What that leaves us with then is that the industrial energy markets are weaker right now, and the Durham fab has been primarily an industrial energy facility, and that's really what it was planned for.
This also gives us a good opportunity to close the fab, to bring at a lower level of utilization where it's already at, and make this transition now and really leverage the benefit of 200 mm. That's really what it's about. You know, if we're seeing lower levels of utilization now, that makes a good time to transition, you know, the factory footprint and simplify things, and then move everything over to 200 mm. And we believe that, you know, the new fab in Mohawk Valley should be able to absorb most of that capacity just because, as Gregg said, the trade-off, if you think about the incremental amount of revenue per wafer that you get going to 200 mm is so much more beneficial.
It should be able to absorb that nicely over time, not just bring more capacity online and absorb the revenue side, but do it at better margins.
But I&E will remain a focus for you guys, or are you guys even looking at exiting?
No, we're not looking. We definitely will keep it as a focus. We're winning a lot of industrial business. It's down right now. It'll come back, and it'll be a good business for us, and the industrial businesses tend to be quite fragmented, and fragmentation is really good in the semiconductor industry because you typically are selling a smaller number of units to a customer that tends to drive the price up, and so margin profile tends to be always better in a fragmented industrial-type market, so absolutely continued to focus on that market, and but it's just, it's down right now, and I think what happened was a classical semiconductor cycle where the demand for industrial products was higher than the supply.
That amplified the amount of purchasing that was going on in the industrial side of the business. The market went down, then there was a big gap between inventory and how much product they needed. So I think we're going through an inventory correction right now. It's hard to say when it's gonna come back. I would say our thinking is, we're not anticipating it coming back in this calendar year.
Okay. So that kind of helps on the supply side of the equation. You guys are starting to get your stride in Mohawk Valley fab and transitioning in Durham. And so on the demand side, the EV market growth appears to be slowing down, and you guys are optimistic that the market will at least continue to grow for you, for you guys, maybe a bit slower than before, and very strong design activity still. Can you talk about your outlook on the EV market broadly, in next year and in three years out?
Yeah. So there's no question there's a slowing of the growth in EVs, and that's, you know, especially true in the Western economies. There still is growth, but the expectation that were there before are lowered. And what I would say is a couple of different things. Most of the design-ins that we've had over the last couple of years have yet really to enter into production, so we're still gonna see that. The second thing that I would say is the adoption of silicon carbide is still very, very strong. There's no going back, you know, and that kind of thing. So you're gonna see an increasing number of cars on the road that have silicon carbide in them, which will drive longer ranges, and, you know, obviously, that's a, that's a huge carrot.
But there's definitely a slowing of the adoption, you know, of electric cars. There are a couple other points that I would make, though, is that there's some talk about plug-in hybrids as being kind of a bridge between the two. And we've seen some of that, and we're also seeing adoption of silicon carbide in plug-in hybrids. And so it's certainly not the same amount of dollar content because the power is substantially less, but it's another good opportunity for us. So. And to be honest with you, I think previously we would not have anticipated silicon carbide being used in a hybrid or a plug-in hybrid. So that's that'll be something that continues.
I think this transition, I've said it many, many times, from internal combustion engine to electric, is the most disruptive change in the history of the automobile, and there's gonna be a lot of pushes and pulls and changes, you know, and so forth. We've said that we have 120 different car models being introduced to the market across 30 different OEMs in the next couple of years, and I can guarantee you the ramps of every single one of those car platforms will not be the way it's currently planned. S ome will be faster, some will be slower. Some cars will have great success, and people like them, and they're going to buy them a lot. Some will not. Some will be completely unsuccessful.
Some car companies will push out their introduction because of a software issue, some other supply chain thing. There's going to be a lot of puts and takes on this ramp. What I'm very convinced of, it's still going to be moving, you know, up and to the right. Maybe not exactly at the rate that was anticipated before, but nearly all, not nearly all the analyst reports that I've seen show both plug-in hybrids and electric vehicles eating into the internal combustion, and I think that's going to continue.
Then, one of the concerns investors have on China competition, to your knowledge, are there projects in China that are doing 200 mm substrates? When we talk to the equipment makers that are supplying equipment to China, they talk about maybe 20 to 25 different projects on the silicon carbide side, but we're not sure if how many of them are 200 mm. But can you just talk about the threat of China, and are you seeing any kind of pricing pressure in the market in China?
I'll start with our knowledge and visibility and accuracy, you know, is clouded, you know, on this. You hear a lot of different things on China and silicon carbide. You know, I would say the growing consensus is that at 150 mm, China's quality has gotten better. There is a question as to how much volume and what their yields are of automotive-grade wafers. I've heard it's good, I've heard it's not good, and it's hard to say. But for sure, the consensus is they've done a pretty good job of improving quality. And again, on what that means from a capacity standpoint is a little bit cloudy. That's less, there's less enthusiasm on 200 mm.
I would say that there, you know, people have seen 200 mm wafers that look good, but there's more of a doubt on their capacity, and you know, is this, you know, the quote "golden wafer," what have you? There's more of a doubt on that. There's not much we can do about that, so, you know, we have to, we have to basically have an attitude that says: They're going to eventually be successful, so what do we need to do? We need. You know, we're not standing still. We're driving operational, you know, improvements in 200 mm.
You know, the fact that we've gone from a 50% increase in output per crystal grower is a huge deal, and we have lots of other projects driving our cost down, our utilization, our output per crystal grower up, and so forth, and that's across the entire platform of 200 mm. So that's what we can do about it. I think it's clear that the Chinese government is intending to try to be independent from the West across everything semiconductor related, so they're investing in these things, no question about it. They'll be successful in some areas. They'll be unsuccessful in other areas. Our attitude has to be they're you know going to eventually be successful. The only thing we can do about that is drive our operations you know faster and better.
Great. Let me pause here and see if there are any questions in the audience.
Thank you for taking my question. So on the CHIPS Act funding, if it comes through, is it going to be one installment, or is it going to be, milestone based, and how does it actually flow through?
Yeah, I'll stay at a high level on it because I don't want to divulge any, you know, details. Generally speaking, you can kind of think of it as milestone, you know, based, and I don't want to get into any detail on that. And I think it's just the government wants to make sure that if they put in money, it's going to get a result, you know, and so forth. So, you know, and we feel comfortable with that. Yeah, we're engaged with them, you know, pretty heavily, you know, in that area.
Different question. In terms of if I try and bridge your year-end cash balance of $2.2 billion to your desired cash balance of $1 billion, there is, if I take your midpoint of a CapEx and cash interest expense, that's about $1.6 billion of cash usage for fiscal 2025. How are we going to. What's the bridge to get to $1 billion? You need some cash sources.
Yeah
If the CHIPS Act doesn't come through. I think you've talked about plan B. Is that how you bridge it?
Yeah, I think step one here is work with the CHIPS office and continue to work down that path. I think that's a good outcome. We're optimistic that we can get something done there. We'll continue to work with them. As Gregg mentioned, that's been in our filings, and we've, you know, talked about that, I think, pretty clearly. You know, in the event that there is, you know, a need for additional funding, there's a couple of avenues that we could go down. In the short term, as I mentioned earlier, there's a $1.5 billion carve-out for secured financing in our JP Siler City facilities, so we could leverage that as part of our deal.
So currently, we have, you know, senior secured, you know, first, you know, you know, your first lien lending on the current facility that we've got, but with carve-outs, with flexibility. So there is a lot of flexibility within that arrangement to do various things. I think if you look at the current lending group, we're actively talking with them, both in terms of how we're thinking about the CHIPS grant, potentially, but also in alternative cases about how that would work, and we're in advanced discussions with them. So we're, I think, well prepared for a lot of different outcomes right now. I think the second thing to remember is this is not really a chronic challenge we have.
If you go out beyond this kind of time frame you just mentioned, out beyond fiscal year 2025, and you look out beyond that, we have over $640 million or roughly $640 million of 48D tax credits, that will be, you know, are receivables for us out in time. That could grow to $1 billion. So there's roughly, our estimate is about $1 billion of funding coming back from tax credits out in time, a substantial amount of which could come in 2026. In addition to that, we're looking at other government and tax, you know, government lending and tax programs, which are opportunities for us, and we're out right now sampling 200 mm substrates with various customers. We've looked at this before.
Obviously, our supply agreement with Renesas came with a, you know, $2 billion capacity reservation deposit, so that would be another option for us down the line as well. So I don't think of this as like a chronic funding challenge, more about kind of a short-term what are the short-term levers that we have to pull, depending on how CHIPS plays out? Now, as you pointed out, we ended the last fiscal year in June with $2.2 billion of cash. This is not something we have to deal with today or this month, but I think it's important that we continue to move forward with the CHIPS Office. In the event that doesn't work out, then we've got kind of other opportunities kind of set forth before us.
Thank you. One last question: so roll forward to fiscal 2026, when the convertible becomes due. Is there any restrictions in your lending facilities that prevent you from addressing the convert in cash, or can you talk a little bit about that?
Yeah, clearly, we'd have to work with our lenders in terms of paying off debt ahead of different lenders and whatnot, and that's all in the agreements, but again, I would say that our partnership with our lending group has been very positive, very active. You're talking about, you know, corporate lending group, who sees, you know, the Wolfspeed investment as an important part of their, you know, strategic structure. We partner with them very well. They've been very strong advocates for the company in partnering with us, and they understand the importance of the investment levels required to get to the other side of some of these investments and see the true strategic value in, you know, the assets that we're building out right now.
Yeah, thank you. Just to, you know, drill a bit more on that. The credit agreement also has a minimum cash balance, you know, covenant.
Mm-hmm.
Is it like, does it go away if you reach a yield, or is it still there if it-
Yeah, it actually declines over time as utilization levels at Mohawk Valley start to come to fruition. So all, you know, I think as you think about the structure of that, it was really, really about a belief in our ability to build out this infrastructure, to build 200mm capacity over time. Obviously, deep research went into, you know, working with these lenders over time. And as we start to build up to 30% plus utilization and achieve certain revenue levels over time, the minimum cash balances would start to decline. That's correct.
In that case, I mean, how are we looking at the timeline? I mean, when do you hit the minimum cash level? Will it be when does the CHIPS Act, you think, would come or the $640 million credit receivable? I mean, how are you, you know, trying to adjust that? Is it a possibility that it can trigger a covenant before as you spend-
I don't think that there's a, y ou know, as I talked to the lending group, I think they said they're supportive here. There's been a whole lot of discussion around, you know, timing of hitting covenants. This is really about investing into these assets over time to ensure we see what's on the other side. The 48D tax credits, you know, once we get some of these bigger assets into service, which we anticipate doing within the fiscal year, that starts to trigger the capability to start to, you know, put those into our tax return and collect on them down the line, even within 2026. So, I think there's a, you know, a number of levers to get there, and I think that's what we're actively working together on.
Gregg, just a quick one. On the ASP side, have you guys seen any, like, decline on the ASP in the market or for you yourself?
For the design-ins that we have, predominantly with the automotive, you know, customers, there is a kind of a matrix of, here's the volume, here's the price, here's the year, and then as the year goes on and the volume goes up and so forth, so that's pretty set and not really, you know, negotiable. I would say there is more of that right now with China industrial, where the market has basically gone away, so it's a little more aggressive in terms of people trying to pick up business, but from the automotive perspective, I would say no, and from the non-China industrial business, you know, I don't see a whole lot there either.
Just on the operational side, you mentioned, you know, the design-ins. You know, I defer to you how much you can share, but in terms of when we can see those really start throwing, flowing through P&L, how do you think about that in terms of, you know, 2025, 2026, 2027? Obviously, it'll be spread out, but in terms of, you know, whatever you can share in terms of when those vehicles really start hitting production.
Yeah, so a couple of things, and it was a little bit hard for me to hear, and I'm deaf in one ear, so sorry about that, but so if I don't get it exactly, just let me know. But basically, design-ins that we've gotten over the last couple of years are beginning to go into production right now, and there some of them are pushing out. We had that happen last quarter. Some of them are pulling in. We had that happen last quarter as well, where we were trying to shift as much as we could, focusing on a CHIP for that customer to moving over to this customer, and we had some pretty good success on that, not total success on that. I anticipate that that's going to be happening quite a bit over the next couple of years.
You know, the rollout of EVs, as I said, is gonna be very, very disruptive, and it could be because of demand for the EV more than they expected, less than they expected. It could be a software issue, et cetera. There's just gonna be a lot of, you know, moving around. Now, it'll end up being a positive up and to the right type thing, but it won't be a smooth curve, it. I don't think. For the designs that we won this past quarter, and it was $2 billion worth of design wins this past quarter, 70% of those were automotive 800 volt, you know, type applications, and we're seeing much more of the 800 volt type applications for EVs happening.
Those will ramp in three or four years, you know, so which is pretty traditional. I'm very, very much anticipating what happens with these 120-plus models that were designed into over 30 different OEMs. And like I said, I'm positive they're not gonna ramp the way they're currently planned, but there's gonna be a lot of new vehicles into the market. I've talked to one customer that said there's multiple different price points, you know, that there's gonna be entry level, there's gonna be high-end, you know, and so forth. And then we just finished the quarter where we doubled our automotive business year over year, and we're anticipating that we'll triple it this quarter. And so, you know, we're actually seeing these things starting to play out.
One small follow-up on the liquidity side. You know, a lot of talk on CHIPS Act. Anything on the DOE, Department of Energy, and, you know, what. You know, to the extent you can talk about, you know, quantum, timeline, form, you know, high level, whatever you can, you can divulge.
You know, I think, I think from a government perspective, I think we were maybe a little overambitious in how long it would take to be working with the CHIPS office. We keep working with them. We are actively working on other applications. You mentioned one of them, you know, one of them there, and some other programs as well. You know, I think from a technology perspective, we rank, you know, very, very highly from economic security perspective, national security perspective, as a kind of a critical technology and from a Department of Energy perspective, we're on the critical, you know, minerals list, so I think we rank very, very highly from that perspective, so we'll continue to work down the path, you know, on those things.
I said earlier, as you think out beyond this fiscal year, there's a lot of different opportunities, you know, that could be, you know, that could be worked out, from a perspective of things that, you know, different levers that we could pull as we think about those funding opportunities out in time, both from government lending and tax programs, but also from, you know, leveraging, you know, our 200 mm you know, technology to do, potentially do some additional, you know, substrate sales at 200 mm down the line, which would generate, you know, some additional funding. Those are all things that we keep in mind from a bigger picture, I guess I would say.
But as Greg said, you know, right now our clear focus is on funding through CHIPS and driving, you know, a path to profitability, and that's where our major, you know, focus is right now, both from a profitability standpoint, but also from a liquidity standpoint.
There's a question in the
front. Okay.
Hi, thank you for taking the question. The first question, I guess, on utilization. You guys are talking about 25% next quarter, and then from your earnings call, you talked about 40% sometime mid-next year. The trajectory seems a little slow compared to what we've seen on some other silicon fabs, and understand it's silicon carbide. Are you essentially limited by Siler City ramping up, or you're doing a slower ramp for some other reason?
A couple of things. First off, we made the announcement that Building 10 can support 30% utilization, and at the same time, we said we're starting to grow crystals in Siler City, and that project's on time. I think those two things are actually very positive for our ability to ramp, you know, the fab. We've mentioned that our fab yields are ahead of what our plan is, but we still have a ways to go from an entitlement perspective. Having a more modest, you know, ramp is gonna be helpful in terms of we'll get more out of the CHIPS as our yields continue to, you know, improve.
You know, I think we've got a good ramp plan, and I think that plan has been successful over the last six quarters, where, you know, we went from essentially no revenue. I think it was $1 million.
Mm-hmm
A year ago last quarter, to basically $40-plus million. So I think the ramp has been a very good ramp for us, and I think the plan that we have going forward is good as well.
Got it. Just a quick follow-up on that. How should investors think about risk on utilization ramp? Like, for example, going from zero to 20 versus 20 to, let's say, 60%.
Yeah. So in terms of the things you need to deal with, zero to 20 is a lot harder than 20- 40. There's no question about it, especially if it's never been done before, and that's what we faced. So all of those machines, as I said, we're seeing silicon carbide for the first time, so we anticipate that it'll be a smoother ramp from 20- 40. And again, we're in the process of improving yields, improving cycle time, so you know, I think we'll. I think it'll be a good. I think we've got a good plan.
Got it. Just on the CHIPS Act, there are two parts from what I understand. There's a grant, potentially, and a loan. When it comes to the loan part, is that gonna have some sort of a lien, a secured type debt, or is that TBD, or how's that shaping up?
You know, we're not allowed to give, you know, details on that, so I'll just hold off on that. I can just say we're very satisfied with our engagement with the CHIPS Program Office. We're satisfied with, you know, the scope of what we think we're gonna get. We, you know, we obviously can't guarantee that we'll get over these last couple of things, but that we're focused on those. And I think from my perspective, every time that we've met, we're making progress. There's, you know, how about this, and so forth. So we're down to a couple of terms, you know, right now, and that's what we're focused on getting over.
Got it. One last thing. Seems like next year, you need funding, which can come from CHIPS Act or the plan B you guys talked about, and then year 2026, you have potentially 60 to 40 million to a billion of potential credits that could come in. Is there opportunities to bridge some of this stuff with revenue, pre-sale revenue from forward revenues or something like that, what you did with Renesas or something like that?
We're looking across all those options. Obviously, you know, with the program is new, from that perspective.
Good.
So there's a lot of different opportunities out there, so those are things that could be possibilities out in time. There are various different types of tax credits that you have to think about. Some are, like, tradable, and some aren't. I think in the 48D category, they're not necessarily tradable, but there could be other programs you could look at that are emerging, you know, to pull some of that forward. But I call that. I would call that emerging kind of capability in terms of the capital markets around some of those things, and we're exploring all those opportunities.
Thank you for the presentation. Quick question on competitive dynamics. My concern is that there are two sources: There's China, and there's non-China. On China, where I'm framing that there's no clarity whether they will be successful or not. The way I see it, they don't have to be successful to make your life very difficult, and the way China, the trajectory of the capacity ramp, they don't have to get, like, high profitability or high yield. Even if they are, just sheer presence of them can make it really, really painful for the rest of the industry. What Infineon is building in Kulim, again, the scale is even larger, and because of the lower-cost geography, it seems like Wolfspeed would be really at structural disadvantage on that dimension as well.
Yeah, you know, I don't know the details of. I don't sit in their program reviews on what they're doing. What I would say is, we've been at this for a while, and we haven't been standing still from a yield perspective, from a cost perspective, from a quality of substrate perspective. We feel like we have the lead, and we are the first company that's gone into production with 200 mm, and we're heading into high volume as we speak. And I don't think there's anybody in our company that's resting and just saying: No one's gonna catch up with us. We've got dozens of different programs to continue getting output up per crystal grower. Again, this 50% improvement that we've seen, you know, just out of Building 10 is an amazing accomplishment.
And, like I said, we're seeing yields right now in the fab that are better. Our yield of automotive-grade products, crystal, wafers, out of our Building 10 facility and 200mm is very, very, very high. And so, that not only lowers our cost, but it helps our CapEx, you know, as well, because we're not needing more machines for the same thing. And I think, with the yield at automotive grade being high, that means what we add value in putting epi on and doing back grind, and then running through the wafer fab will yield higher out of the wafer fab itself.
So that's what we're focused on, and we have to be worried about, you know, the Chinese competition like you should be, but we can't stop them from trying to do whatever it is they're trying to do. All we can do is control what's in our own, you know, sandbox, and I feel like we've gotten a good handle on that.
Great. We're almost, we're out of time. On that optimistic note, we can wrap up our fireside chat. Neill and Gregg, thank you for coming to the Citi Conference.
Thank you.
Thank you.
Appreciate it. Thank you.