Everyone, welcome to day one of Citi Global Technology Conference. My name is Atif Malik. I cover U.S. semiconductors, semiconductor equipment, and communication equipment stocks here at Citi. It's my pleasure to welcome Gregg Lowe, CEO of Wolfspeed, as well as Tyler Gronbach, VP, Investor Relations. I'm gonna kick it off with my questions first, and then we'll open it up to the audience to ask your questions. If you have a question, please raise your hand, and the mic will come to you. Gregg, you have tremendous experience in semiconductors, autos, with your background in TI, Freescale. At the dinner last night, I thought you made some really powerful one-liner statements, and I wanted to kick it off with a couple of those.
Would ask you to expand on what you meant by that, these statements. The first, on power devices, you said, "Supply will chase demand for 10 years." Can you elaborate on your expectations on demand, and what makes you think that?
The demand for silicon carbide, of course, is being driven by the adoption of electric vehicles, and I think that is a trend that is not reversible. All the car companies have abandoned any development of internal combustion engine car and engines at all. Most of them have either made redundant or have repurposed those engineers for electric vehicles. I think that trend is kind of a non-reversible trend. Probably eight years ago, it could be reversible, but it's not reversible anymore. That's number one. Number two is, five, six years ago, there was a grand total of one company that was committed to use silicon carbide in an inverter for an electric car, and of course, that was Tesla.
Today, I can't think of a company, there probably is one, but I don't know of a company that is not committed to using silicon carbide in many, if not all, of their vehicles. It is a technology that does two really important things. It allows the car go further with the same battery, so fixing range anxiety, and it allows the car to charge faster. These are the two most important issues that need to be resolved for consumers, and silicon carbide is a trend that's happening pretty substantially. So you got electric vehicles, you know, kind of leading the charge, while other modes of transportation are doing the same thing. There are electric airplane companies. There are companies that are doing vertical take-off and landing, taxis, drone taxis, so to speak, that are using silicon carbide.
Silicon carbide is now being used in earth-moving equipment. Think of big, big trucks in the middle of forest, you know, not burning diesel, not leaking oil, and having substantially more torque for pulling things, and so forth. So pretty dramatic adoption there in personal watercraft, you know, so, boats, other modes of transportation are adopting silicon carbide. And finally, it's being adopted across a wide range of industrial applications. Last time I looked, we had over 4,000 design-ins, many of which are industrial applications. And the key is, it's a more efficient technology, which means it uses less energy. When you use a silicon carbide in a solar field, more of the sun's energy gets to the grid. You're not wasting it in the form of heat, and so forth.
When you use silicon carbide in an electric car, more of the battery energy pushes you going forward, and so forth. And bottom line is that most estimates are forecasting silicon carbide growth to be 40%-50% compounded for the foreseeable future, and I think even trying to catch up with that is gonna be a major challenge. And I do remind customers of that all the time, is that it's gonna be a challenge keeping up with, with the demand. What's gonna be different, though, certainly from a Wolfspeed perspective, is what you get this year is gonna be more than last year, and what you get next year is gonna be a lot more than the year before. That we're gonna be chasing it up, but it's always gonna be feeding more. So that's what, that's how I think of it.
It's a very tricky technology to master. You know, we were very fortunate to make an announcement in May of 2019, that we were gonna build this fab in Upstate New York, and then stick a shovel in the ground in March of 2020. If you recall, kind of week one of COVID, and we did not blink. All during COVID, all during supply chain issues, all during that stuff, we built a factory, and we're just beginning to ramp up that factory right now. It's got a, you know, it's got a tremendous amount of capacity. It's the world's largest silicon carbide fab. It's the world's only 200 mm silicon carbide fab. We're in the early stage of ramp on that. We had $1 million worth of revenue last quarter.
We'll get $2 million probably this quarter. And, you know, I think we're gonna be ramping, and customers' demand is doing nothing but, you know, increasing and, and being pulled in. Long answer to your question. Sorry about that.
No, that's great. And you guys are a leader on 200 mm silicon carbide. You talked about 70% more dies on a 200 mm substrate versus a 150 mm, 40% lower cost at 70% utilization. And the statement that you made is, Renesas is a big dog in autos, and they signed a $2 billion contract with Wolfspeed. So my question to you is, what makes a customer pick Wolfspeed?
... You know, from a device perspective, customers look at a lot of different things, and I'll get back to Renesas here in a second. They look at the performance of your part. And when they do that, we always end up in the top echelon. Most of the time with somebody else, but we're in that top tier. They look at your understanding of the underlying technology, silicon carbide. We're in the top tier alone. We have 35 years of experience building silicon carbide. They look at the company's experience in dealing with their industry, the auto industry. We are in the second tier in this area. ST, Infineon, ROHM, they are much bigger players in the automotive market than we are. So we're in the second tier of that.
What we're doing to fix that, by the way, is we're hiring people from the semiconductor industry that have worked in automotive to build up our credibility in that regard. Pricing is always, you know, part of the equation as well. It's hard to tell where you land there because I've never won business where the purchasing guy called and said, "Congratulations, you were the lowest bidder." You're always the worst. It's kinda hard to tell. We're probably in the middle of the mix, you know, on that. So they look at a mosaic of things, and I think that mosaic has turned into $19 billion worth of design-ins for our device business. On the materials side of it, it's a lot different because here you've got a technology which is really, really difficult to master.
Growing silicon carbide occurs at 2,500 degrees Celsius. That is half the temperature of the sun. So even the equipment that you build to—that you use to grow silicon carbide is very highly specific and engineered. You're not running to Home Depot if you need another screw. It's really engineered product that's, you know, living in an environment that's pretty harsh. When it grows, it can form into one of 200+ crystal structures. One of them works. So you gotta grow it in a very specific way, and if you don't get it that way, you got junk. Now that, now that you're able to do that, now you need to slice it into a wafer. It's the second hardest material on Earth, so even doing that is difficult.
And then you gotta grind it, which of course is difficult as well, and Epi is difficult. So all of that stuff is very, very difficult. We produce about 60% of the world's silicon carbide substrates. We sell these substrates to Infineon, ROHM, ST, Onsemi, through long-term agreements. And, we've used that experience to build up even more, you know, scale for our silicon carbide business. And so, with Renesas, you know, obviously, they're a new player into the silicon carbide MOSFET. They're a very, very, established player, both in power electronics and in automotive. They're one of the top, if not the, probably the number two automotive, semiconductor company.
In working with them, they obviously scouted the world looking for silicon carbide substrates and determined that we had such a substantial lead, that they put down what I believe is the largest deposit in the history of the semiconductor industry. $2 billion cash deposit to reserve capacity for our silicon carbide substrates. I'm unaware of a deposit that's higher. There might be, I don't know, but, it's pretty big. You know, and it's a 10-year deposit. So, you know, there's a lot of chatter about, you know, this company's gonna do this, and this company's gonna do that, and so forth. Maybe China is gonna come on board with silicon carbide substrates. And we pay attention to all of that, and. But I think this was a pretty significant vote of confidence.
That $2 billion and a ten-year agreement says we're probably ahead of everybody. Now, as part of our, as part of our business kind of thinking, many of our materials customers are trying to build their own materials business, and I think that makes a lot of sense. I would do the same thing if I were them. The substrate is a key aspect. It's a key part of the bill of materials for a silicon carbide MOSFET, so doing that makes a lot of sense. Many of them have announced very specific plans. You know, I might get this a little bit wrong, but I think ST is planning to do roughly 40% of their silicon carbide in-house by a few years from now, and then buy 60% of it from the market. So they've been very transparent about that.
We bake that into our plans, and we make the assumption that everybody who has made a plan like that and has articulated it to you is going to execute on that plan. And so that is part of our business plan, is that they are gonna be successful in doing that. I think they'll probably find it more difficult than they anticipate, but, you know, I think and I kinda come back to the Renesas, you know, deal. You know, it's a pretty, it's a pretty large endorsement of the leadership position that we have with the largest cash deposit in the history of semiconductors and a 10-year deal.
The third and the last statement, Gregg, all roads lead to Mohawk Valley Fab. You guys are obviously maxed out at Durham. You've had some manufacturing kind of missteps in terms of crystal growth at 200mm. Kind of walk us through, you know, what were some of these challenges and how are you going to learn from it to expand and scale out capacity?
Absolutely. But quickly before that, you'll hear me coughing a little bit. So when I came back from Japan, I brought two things. One is $2 billion, and the second is a bucket of COVID. So it was kind of worth it. But, so I've got this post-COVID viral bronchitis thing going on, so I apologize if you hear me hacking. I'm not sick, I don't have COVID now, but just a heads-up on that. You know, Mohawk Valley is the complete focus of our company right now, and getting it to 20% utilization by the June quarter of next year is where we're going after it. We've had tremendous amount of success getting Building 10 and the crystal growth operation functioning.
It is now, we've got greater than 75% of the intended crystal growers for that facility, that then would support 20% utilization in Mohawk Valley. Twenty, greater than 75% are currently functioning, growing crystals, and growing superb crystals. The defect quality that we see out of our 200 mm crystals is better than our 150 mm crystals, and that's an amazing accomplishment. Wafering is going well, epi is going well, so the feeding of Mohawk Valley is now happening and is pretty systematic at this point. So feel real good about that. What we're doing now is we're running wafers through the fab, and when you do that in a wafer fab, you're fine-tuning the processes. You don't just dump a bunch of wafers and start producing.
This is the first 200mm fab, so the tools need to be fine-tuned and tweaked, and that's the level of implant and different things with that we do with etch and things like that. It's all fine-tuning. We're making really good progress on getting the machines tuned into where we want, and as we do that, we'll have more wafers flying through. This past quarter, we did $1 million worth of revenue. This quarter, we'll do a couple more $1 million worth of revenue, and we'll see a steady ramp, you know, on that. As we dial in and tune, you know, the factory and it's humming at the rate that we really want, and, you know, then we'll obviously be loading more wafers into the fab.
I would tell you that we've been quite successful with qualification of devices in that fab. We've got customers really hankering for getting product out of that wafer fab, so they've done risk orders, and we have successfully completed qualification on a number of devices, including our largest CHIP, which is always, you know, kind of a challenge, and our most complicated automotive CHIP has qualified, which is also a challenge. One thing I'd note is that the qualification results are exceptional. When you do qualification, you do a characterization of the device, what are its parameters before you do all the stresses, and then you do the qualification stresses, and then you look at the parameters after that. You're looking for a very tight distribution, so not a big shift in the parameters.
The results that we're getting so far out of Mohawk Valley are better than what we got when we qualified the devices out of Durham. So 100% of the focus is on that, and you can bet, you know, that's what we're working on a day-to-day basis.
What is the status on the JP, Siler City, ramp, and the 20% utilization that's going to be supported by Building 10, and when do you expect the Siler City JP fab coming on?
The Siler City factory is also called the JP, named after our founder, John Palmer. The JP is currently under construction. It's gone vertical now, so if you go to the site, you'll actually see a pretty giant building. The square footage of Phase One is 2.1 million sq ft. So it's a very, very large footprint facility. We're building it out in stages, and we will fit it out in stages as well, you know, depending on the demand and the capacity ramp that we're gonna do, both in Mohawk Valley and our next fab in Saarland, Germany. So it's gone vertical right now.
It's currently on schedule to be in a position to accept first installations of crystal growers in the first half of calendar 2024, and in the July to October quarter of 2024, we would expect to be turning on and growing our first crystals out of there. While the JP is being built, we're building crystal growers, and we will have them ready for installation so that we're not kind of in a panic mode trying to build crystal growers at last minute. We feel very confident about that because once we were able to get the electrical substation work at Building 10 done, the ramp of crystal growth has gone actually quite good inside of Building 10. That will, you know... So we're excited about the JP right now. Everything's on schedule.
I'm sure there's gonna be a million challenges that we're gonna have in between now and then. And, so what we're doing is, with Building Ten, is we're pushing to get higher, utilization capability for Mohawk Valley out of our current footprint, just to give us a little bit of buffer. But right now, we're on schedule.
Great. And maybe, Tyler, this one for you. I've been getting, quite a few questions in terms of the timing of your RF divestiture and-
Yeah
... and the impact on your, financials.
Yeah, for those of you that don't know, we announced a deal with MACOM to sell our RF business. The timing is that we expect to close that between now and the end of the year. We think, you know, part of the reason why we did that was, you know, we had talked about RF remaining on four inch silicon carbide substrates, and that was going to put a little bit of drag on the gross margin, and also require some CapEx, because we were going to have to transition that to six inch. So really, the rationale and the thinking was management really wants to focus on the power device opportunity. MACOM was a terrific partner and it was a good fit for them, so we expect to have that kind of concluded between now and the end of this year.
And I hit a couple other things, just before we get into a couple more questions, 'cause one, that I was asked earlier today is, you know, demand for silicon carbide, there's talking about an auto strike in the U.S., what does that do, you know, and so forth. But basically, the demand for silicon carbide is pretty much up and to the right everywhere, with the exception of China Industrial. If you look at China Automotive, still up and to the right, the industrial business in China is down. And that's unlike what's happening in the silicon industry right now, where, you know, consumer went down, and then industrial is going down kind of worldwide and so forth. We're not seeing that.
We have one area of softness, and that's the industrial business in China, but the rest of it, the demand is up and to the right. A union strike or some strike against the car manufacturers in the U.S. would have limited amount of issue with us at all. We're in the early phase of they're ramping, they're putting early cars into production, you know, and so forth, and there's plenty of, you know, business outside the U.S. that we've won, where we could shift that product to different areas. So, again, China industrial, the only area where we're seeing softness, everything else is pretty strong. Okay.
Gregg, you touched on this earlier, but some of your device competitors, and one of them was here this morning, they talked about sourcing silicon carbide substrates from China. Is this viable, and why wouldn't they look to Wolfspeed for more supply?
I think, you know, the best thing I can say is I'm not invited to the Chinese silicon carbide company's program reviews, so best I can do is look from the outside. From the outside, both from actual observation plus industry feedback that we're getting, is there's still some distance that China needs to come in terms of getting quality of silicon carbide substrates at 150 mm to where it needs to be, and they're pretty far behind on 200 mm. I think Infineon is the boldest, you know, in terms of talking about silicon carbide supply from China. But they're also the only silicon carbide MOSFET producer that doesn't have an internal capability to produce silicon carbide substrates. ON has their own capability, ROHM has their own capability.
ST bought Norstel a couple of years ago. So it might be a case where they have no choice but to service from, from, China, if that's what they want to do. We, we supply silicon carbide to the industry vis-à-vis long-term agreements. We don't do. And these are long-term agreements where they agree to buy a certain amount, and we agree to sell them a certain amount, and there's some pricing associated with that, and so forth. But, what we don't do is we don't do the spot market business. We don't have reverse auctions for our supply this month. I think we could make a lot more money short term on that, but it would kill our business long term.
And so what that translates to is, if a company is relying on either their own capability or the China capability, and they don't have a supply agreement with us, we're not going to be a backstop. We're very interested in having long-term agreements. We engage with all kinds of customers. We have no allergic reaction to that, even today. We signed our first long-term agreement on 200 mm with Renesas, you know, in response to the $2 billion capacity reservation, and so we have no problem with that. It's in our interest to continue feeding the industry and continuing this conversion from silicon to silicon carbide. And I think our strategy has done exactly that.
If you do a word count on silicon carbide by most of the people in power electronics, and you look at it three years ago, you know, it was hardly said, except by Wolfspeed. You know, today, everybody's talking about silicon carbide because the industry is converting. So I think helping convert the industry from silicon to silicon carbide when we started doing these supply agreements, actually grew the market substantially. Most people are looking at a $20 billion market by 2027, I think is the number.
Yeah, that's right.
You know, if you look at that five years ago, it was, you know, tiny. So I think it's a strategy that works, and it's a strategy that I communicate to all of our substrate customers. We've done three agreements with ST. They've been a really strong partner with us. They've been very transparent that they're trying to build their own internal capability, but they want us there for that other 60%. That's fine. No issue with that. We're happy to engage with them on long-term agreements.
Where are you guys on your financing requirements to support your capital plans? And I thought you made a good point last night, that the U.S. is in a position of strength in terms of silicon carbide, where you and Coherent are hitting 90% of the market share, versus semiconductors, where the U.S. is trying to catch up?
Yeah, I think of it this way: We've raised $5 billion in roughly the last nine-10 months, so we're kind of fit for purpose. We've got the treasure chest of cash that we need to kind of fund the capital program. And as we were talking about, though, last night, you know, but there's an opportunity for us to continue to optimize the capital structure. And so, you know, we did the deal with Apollo. Good way to think about that is that's really kind of a bridging strategy for us, 'cause we still see opportunity through the U.S. CHIPS Act, European CHIPS Act, possible customer deposits from, you know, future deals. So I think we'll continue to look for ways to optimize the cap structure.
At the same time, we're gonna continue to build out the footprint. I think one of the things that we also talked about last night is we've got to see more capital being invested by others, because as Gregg talked about, demand is outstripping supply between now and the end of the decade. So really, you know, we really like our greenfield approach. We think it's innovative. We think it has really strong economics. I mean, think about it. Mohawk Valley, at full capacity, is a $2 billion annual revenue-generating fab that will throw off $1.2 billion of cash. So we really think that we can take that model and repeat it again, and we think that Siler offers really strong economics, too.
As we sit today, you know, we've got the cash that we need to support the capital program, and we'll continue to optimize the cap structure as we go along.
And just to add to that, two quarters ago, there was a lot of questioning of: How are you gonna get this funding? And are you gonna, you know, issue stock and dilutive, et cetera? And so we were very specific two quarters ago on our earnings call. We said, "You know, we're gonna be focusing on non-dilutive measures, private financing, government funding, and customer funding." And that's what we've delivered. So I think we can take credit for basically doing just that. We've, you know, we're engaged with the CHIPS Act folks and the people there. We met with them this week. We're engaged with the government of Germany for the Saarland fab. That's feeling really good.
We're probably gonna have an announcement sometime before the end of this year on the amount of funding that we'll be getting for that. So, you know, we basically did what we were gonna say when there was a big question of: Could you even get this funded? I think it's mission accomplished, and I think nobody was expecting a $2 billion capacity reservation deposit. I think that speaks a lot towards the value of what we have.
Great. Let me pause here and see if there are any questions in the audience. Yeah, just wait for the mic to come. Can we have a mic up here?
Hey, thanks, Gregg. Quick question on the Siler one. First, oh, sorry, on Building 10. Are you still growing the longer boule or are you back to the original one, that-
Oh, we're not gonna go back to the original one.
So the longer-
The longer boule is good.
It's good now.
Yeah, sure. And that was largely on our 150 mm, which is technically not Building Ten, so it's in our current facility. But the larger boules are really great. The issue we had was how to handle them. We've now fixed that. So the larger boules are on 150 mm, and we're taking the learning on how we got larger boules to apply to 200 mm in Building Ten.
Great. And then on the, you know, the 20% utilization, will you be yielding, like, 70% on that? I mean, will the cost be, like, still 40%? Will the yield be good enough to support it? I'm just curious, because will there be a cost related to it? Like, will the line, can the line be run independently, like you're running 20% of the facility while the 80% is idle, and then you're creating, the wafer is flowing through that? How does the line work?
Yeah.
I just want any cost of, like, you know, underutilization that you should-
Sorry for the coughing, but it only hurts when I talk, is kind of the issue. So obviously, as we're ramping up the fab, we're turning on the line, and it's substantially less than 20% utilized right now. But that's the path we'll be going down, and I think, as again, as we move product through the fab, and we tune up all the machines in the process and get the yield where we want it to be, it's gonna be a great fab. It's a highly automated fab. It's probably... I haven't done the actual analysis, but I would say it's probably the most automated 200mm fab on Earth because it's the newest one using 300mm automation equipment.
It's probably the cleanest 200 mm fab on Earth because the, the clean room is a certain class, but we've all the material is in a sub-clean room in what's called a SMIF pod. And, you know, the class of cleanliness of that is an order of magnitude lower, which is great. So I think we're really excited about the fab. It's gonna be a substantial improvement from where we were and where we are in our North Carolina fabs. These are 150 mm fabs. I don't know the exact date, but I would say most 150 mm fabs are more than 30 years old.
Mm-hmm.
So you can forget about automation because no one thought of overhead transport, and if you didn't build the ceiling height waiting for that, you can't automate it. So it's gonna be a difficult challenge.
Last one, so is it fair to assume that once, like, a particular line is at, you know, you get the yield that you want, the ramp-up for the rest of the 80% of that capacity could—will be much faster than—
You know, there is. We've got tools on order that are coming in for, you know, filling out further expansions of it. But what I would say is, once we're at 20%, we've got a fab that's humming, and going from 20 to 40 will be faster than going from 0 to 20, and going from 40 to 60 will be faster than that. So it'll, it'll have a smooth ramp or, smooth ramp isn't the right word. It'll have an acceleration effect as you get through it. What's really important was we, we actually have inventory, we have plenty of inventory of wafers now in the fab because Building Ten is doing great right now for the supply up there. It's really tuning that fab.
We don't want to just throw a bunch of wafers at it and then have a low-yielding fab, low-yielding wafers. That wouldn't be helpful. But I'm super excited about the qualification, you know, that's happened with our MOSFET so far. The reliability that's coming out is super solid. Customers are, you know, excited about it. They're, they're very much pulling us for more output out of Mohawk Valley. A lot of times, when you change a fab, they're kind of wanting to slow you down because they have to do this work, and there's none of that going on.
I think the question's a good one in the for, for those of you in the room, as you start to look for milestones, it's, you know, probably this quarter is probably the low point for, for non-GAAP gross margin. And what you should see is, you know, we should be moving from 14 to something, you know, Neil talked about in the low 20s by you know, the June quarter of next year. So it's really a function of putting more load or, or more volume in the Mohawk, and you're going to continue to see that gross margin trajectory continue to improve over, over time.
Just as a reminder, Neil mentioned it in the earnings call as well, 20% utilization in the June quarter means revenue probably in the fourth quarter of calendar 2024, 'cause you got to get it to test dice and inspect, and-
Yeah
... and then through packaging, and then the customer has to buy it, you know, and so forth. But, that'll there'll be a lag between when we're producing it and when it goes out for sale.
Gotcha.
Yes.
Is there a revenue level, threshold at which the company can be self-funding-
Yeah
- to still provide for-
Yeah, if well, what we've talked about is that at the end of fiscal 2025, you know, we'll be generating operating cash flow, okay? And, and that and what we've said is that you should see free cash flow generation, you know, end of 2026, early 2027. You know, and that's a couple hundred million that we're talking about there. But that's kind of the trajectory, and it's a function of a turn-up of the facilities and being able to get Siler up and running at the same time.
Well, you've got to think of it this way: That's the current snapshot in time in how we think about it, but, you know, depending upon what happens with CHIPS Act funding, and there's other activities that could lead us to building more capacity. But right now, that's a snapshot in time.
I can guess. I guess, it seems like it's clear, demand is outstripping supply for demand is outstripping supply for the next 10 years or so. So I guess one of the question I have is: How are you thinking about material allocation internally versus, to clients as well? Because I'm thinking you're trying to, kind of gain share on the device side, but at the same time, you are providing material when demand is so much more than supply. How are you finding the right balance there?
Well, we have agreements with a number of different companies, and all of the material that is shipping to those companies today is 150 mm. And our 150 mm fab in Durham is capped at $100 million per year. So we can't allocate more to that because it's, you know, there's no more space to put fab equipment and so forth. So it's all about getting that material to our customers, that, you know, that doesn't go to our internal factory. And then, in terms of Mohawk Valley, that is a 200 mm fab. And between now and 2027, all of the 200 mm wafers will be filling our own needs because our first agreement that we've signed is with Renesas, and that starts in 2027 for 200 mm.
So there's not really an allocation issue per se, because we're not ramping up the Durham fab higher than it is right now. It's running at full capacity, and it's just a matter of getting that material to our customers. And so not really an issue.
Yeah. And maybe a quick one. On, I believe you mentioned moving you are looking to move your auto customers away from Durham to Mohawk moving forward, and I think you mentioned a 75-25 ratio long term. I guess, where are you on that ratio, and how are you thinking about that transition?
The beauty of it is all of our customers are excited to be in Mohawk. It's a better fab, it's an automated fab, it's a cleaner fab, it's a newer fab, and it has a ton more capacity. So there's a pull for customers, you know, to do that. So that's really good. The delay in starting Mohawk, though, made us build more of our capacity. It made us utilize more of our capacity in Durham for those automotive customers, and that's a drag on margin, and it's, you know, because they're bigger devices, and they're more complicated devices in an older fab, you know, and so forth. So it gives us a challenge on that, but that's a decision we made because it's in the best interest of our customers.
I think as soon as, as soon as we get Mohawk Valley open, customers are going to be clamoring to get material out of Mohawk Valley because it will be a much more reliable fab since it's automated. You know, the number of human interactions with a wafer in Durham is 10,000 per day, and the number of human interactions with the wafer in Mohawk Valley is 0. So human error, dropping wafers, mishandling them, breaking them, losing them, is just, you know, people are wafer runners who work 12-hour shifts, moving material. They're going miles and miles a night, you know, leaving something in the wrong place. It's just human error happens in a non-automated fab.
When we get the fab in Mohawk dialed in, you know, it's all automated with, you know, you know, none of that human error intervention kind of stuff. So that's what the automotive guys are really interested in, is reliability, and the cleanliness of the fab is just dramatically better.
Go ahead.
Yes?
Hi. Can you share your perspective on some of these technological innovations that slice the wafers? And is this something that the industry will have at their disposal to increase the supply of silicon carbide?
We're at the early stage of the adoption of silicon carbide, and you're seeing it go from a, you know, a $1 billion business a few years ago to a $20 billion. I think we're in the early phase of massive improvement and adoption of new ways of utilizing silicon carbide more efficiently in an application. We've teamed up with Arrow to help customers really learn how to use, you know, silicon carbide in an application, and we've done that through a evaluation board that we call SpeedVal, which obviously connotes you're quickly evaluating how to use silicon carbide. Arrow's been a great partner to work with on that. There is gonna be innovations in how to grow the crystals, turning into taller crystals, which is more wafers per crystal, which is lower cost crystals.
There's gonna be innovation in how to separate the wafers from the boules. We're already doing that in a highly automated way in our 150 mm, you know, facility, and it'll be more automated in the 200 mm facility. These are all things that are gonna be driving down cost and driving up efficiency and so forth, and so I think we're at the early phase of adoption of all of this kind of stuff.
Okay. We're almost out of time. Greg and Tyler, thank you for coming to the Citi Conference.
Thank you.
Thank you.