Wolfspeed’s Earnings Call: Navigating Silicon Carbide’s Stormy Seas Toward Dominance

Wolfspeed, Inc. (NYSE: WOLF) has set May 8, 2025, as the date for its fiscal third-quarter earnings call, a critical moment for investors to assess the company’s progress in stabilizing its finances and capitalizing on the booming silicon carbide (SiC) market. While recent financials reveal short-term struggles, the company’s strategic moves—including operational restructuring, government funding pursuits, and advancements in next-gen SiC technologies—position it as a pivotal player in the EV and semiconductor revolution. Let’s dissect the data and risks to determine if this is a buy, hold, or sell.

The Financial Crossroads: Costs, Cash, and a Path to Profitability

Wolfspeed’s Q2 2025 results painted a mixed picture. Revenue fell 13% year-over-year to $181 million, driven by underutilization at its Mohawk Valley Fab and restructuring costs tied to transitioning from 150mm to 200mm wafer production. GAAP net loss widened to -21% gross margin, while non-GAAP losses narrowed slightly to 2%, though still far below 2024’s 16%.

However, the company’s cash position remains robust, projected to hit $1.3 billion by Q3 2025, thanks to a $200M ATM equity offering and $192M in IRS tax refunds. This liquidity is critical as it executes a $260M restructuring plan (Q2/Q3 combined) to close older 150mm facilities, aiming to lower its adjusted EBITDA breakeven point to $800M annual revenue by 2026.

The Silicon Carbide Tsunami: Why Wolfspeed’s Long-Term Bet Makes Sense

The EV revolution is the engine behind SiC demand. By 2030, EV sales could hit 64 million units annually, with 75% being battery electric vehicles (BEVs). These BEVs rely on SiC’s ability to boost efficiency, extend range, and reduce battery costs—a market Wolfspeed is poised to dominate.

• EV Revenue Surge: Wolfspeed’s EV revenue jumped 92% YoY, fueled by ramp-ups of existing design wins, particularly with General Motors.
• Gen 4 MOSFET Platform: Its next-gen SiC MOSFET, optimized for high-voltage systems, offers 5–10% efficiency gains over prior generations, making it a sought-after solution for automakers.
• 200mm Wafer Advantage: Wolfspeed is the first to commercialize 200mm SiC wafers, enabling 50% higher yields and cost efficiencies critical for scaling to meet EV demand.

Government Backing and Geopolitical Tailwinds

Wolfspeed’s strategy aligns with U.S. industrial policy, as it seeks $1B in CHIPS Act funding to secure its domestic SiC manufacturing. With China aiming to localize 60% of SiC supply by 2030, Wolfspeed’s U.S. facilities—particularly the Mohawk Valley Fab—position it as a geopolitical beneficiary.

Risks and Challenges

• Underutilization Costs: Q3 projections show $62M in combined start-up and underutilization costs, a drag on near-term margins.
• Dependence on EV Adoption: A slowdown in EV demand (e.g., due to economic recession) could delay breakeven timelines.
• Competitor Pressure: Players like STMicroelectronics and Infineon are scaling 200mm SiC production, intensifying competition.

Conclusion: A High-Risk, High-Reward Play for EV Bulls

Wolfspeed’s valuation hinges on its ability to execute restructuring, secure CHIPS Act funding, and scale 200mm wafer production. While near-term losses and costs are daunting, its $1.3B cash buffer and strategic moves (e.g., Gen 4 MOSFET, IRS tax refunds) provide a runway to profitability.

The numbers tell the story:
- Long-Term Profitability: Wolfspeed targets $200M unlevered operating cash flow in 2026 and positive free cash flow by 2027, aligning with EV market growth.
- Market Leadership: With 200mm wafers and Gen 4 tech, Wolfspeed holds a 60–65% share of the EV SiC market, a position few rivals can match.

For investors willing to endure volatility, Wolfspeed’s deep ties to the EV revolution and government support make it a compelling long-term bet. However, short-term traders may want to wait for clearer revenue visibility post-May earnings.

Final Take: Hold for now, but consider a strategic buy if Q3 results show margin stabilization and CHIPS funding progress. The road is bumpy, but Wolfspeed’s destination—dominance in the $11.7B SiC market—is worth the ride.