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Wolfspeed in Three Words: Silicon Carbide Capacity

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Background

Wolfspeed is a pure-play manufacturer of silicon carbide – a wide bandgap synthetic material capable of power conversion at high voltages. That makes it an important enabler of the fledgling electric vehicle (EV) market.

Wolfspeed has an impressive “design-in” pipeline of $21.5 billion with the world’s automakers, which have spec’d in its materials and components into their next-gen EV programs. 90% of an EV’s silicon carbide content is the traction inverter, the necessary part of the automobile which converts the DC generated by the battery into the AC required for the motor.

Inverters built upon silicon carbide rather than silicon provide 10-15% longer range. Other applications for silicon carbide include power modules for solar panels, HVAC equipment, and battery charging stations.

To capitalize on the opportunity and to serve the upcoming flood of demand, Wolfspeed is in “investment mode” and is concurrently building three multibillion-dollar facilities. Its North Carolina facility will be the world’s largest silicon carbide materials factory and its Germany site will be the world’s largest device factory. Notable customers who are already lining up for Wolfspeed’s Assurance of Supply Program include Tesla, General Motors, Mercedes-Benz, and Lucid. The company estimates it will spend $6.5 billion in capital expenditures in the five years from 2023 to 2027.

As opposed to competitors like Onsemi (Nasdaq: ON) which have diversified product lines, Wolfspeed is a pure-play on silicon carbide. It sells to multiple points of the value chain – from the raw silicon carbide materials and wafers to the fabricated inverters and power modules.

Wolfspeed was originally founded as Cree in 1987 and initially sold to government and research organizations. It is now the global leader that commands an estimated 62% share of the world’s silicon carbide wafer market. It did $874 million in sales during fiscal 2023 and has around 4,000 employees.

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