Finance
Wolfspeed predicts weak sales in the first quarter due to production problems
(Reuters) – Wolfspeed on Wednesday forecast first-quarter revenue below estimates, anticipating production issues that could impact production capacity amid slowing electric vehicle sales.
However, the chipmaker’s shares rose about 6% in extended trading as CEO Gregg Lowe said the company continues to see strong growth at its Mohawk Valley, New York-based chip manufacturing facility.
In June, Wolfspeed had said it was experiencing equipment issues at its 150mm chip production plant in Durham, which could impact first-quarter revenue by about $20 million.
Meanwhile, Wolfspeed’s Mohawk Valley chip plant is scheduled to reach 25% of its operating capacity in the first quarter, ahead of schedule.
“Our production of 200mm devices is currently delivering solid results… This improved profitability gives us the confidence to accelerate the shift of our device manufacturing to Mohawk Valley,” Lowe said in a statement.
Stocks began to recover as the market recognized the cost benefits of the new 200mm Mohawk Valley manufacturing unit, compared to the old 150mm unit, said Michael Ashley Schulman, chief investment officer of Running Point Capital.
The company counts General Motors and Mercedes-Benz among its customers and makes chips from silicon carbide, a more energy-efficient material than standard silicon, for tasks such as transferring power from an electric car’s batteries to its engines.
Wolfspeed expects first-quarter revenue to be between $185 million and $215 million, with the midpoint below the average analyst estimate of $211.7 million, according to LSEG data.
It expects adjusted loss per share to be between $1.09 and $0.90, compared with an estimated loss of 84 cents per share.
Fourth-quarter revenue came in at $200.1 million, compared to an average estimate of $201.2 million.
Wolfspeed’s net loss per share was $1.39 per share, compared to a loss of $0.73 per share a year earlier.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Mohammed Safi Shamsi)