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   Technology StocksCree Inc.


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To: slacker711 who wrote (10432)8/31/2021 7:12:24 AM
From: slacker711
   of 10478
 
Cree Q2 2021 Earnings 1/27/21

- Starting MVF at 200mm
- Capex from $400m to $550m
- Greater percentage completion of MVF as well as 200mm and epi capacity
- Wolfspeed revs $127m
- In power, momentum continues.
- RF “performance was better”, backlog increasing
- Materials “modest uptick”
- GM was 38.5%
- Guidance of $127-$133m
- GM guidance of 34.5% to 36.5%
- $600m in design ins
- Extension of previous material agreement, now worth $250m.

Q&A

- No intention of selling 200mm wafers in ‘22.
- Expanding wafer fab in Durham. Will remain 150mm
- Industrial ramps 2-4 years after design-in
- of $600m in design-ins, little more than half were auto and a quarter were industrial
- Revenue from June lows ($108m) to today driven by devices. Modest increase in RF.
- Durham issues are independent of substrate.

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To: slacker711 who wrote (10433)8/31/2021 7:13:01 AM
From: slacker711
   of 10478
 
Cree Q3 2021 Earnings call

Revs were $137m

RF “improving trends”

Strong demand across devices, up “more than” 50% YoY revs

Modest uptick in materials

Guidance of $142 to $148m supported by momentum in devices and modest improvements in materials

$580m in design ins


Q&A

Pilot line yields very very positive.

Significant increase in activity around “directed buys”.

Engagement in base stations in China is extremely limited. Huawei cant use and others (ZTE) are biased against.

Incrementally better outside of China

4 new RF products sampling. New products generally accretive to margins.

A question about the slow pace of rev growth with materials. Says that most material revs are under LTA’s. Going as planned. Says 60% of merchant material market and expect to keep that going forward.


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To: slacker711 who wrote (10434)8/31/2021 7:13:37 AM
From: slacker711
1 Recommendation   of 10478
 
Cree Q4 2021 Earnings

Revs of $146m

Power saw strong growth constrained by COVID shutdown in Malaysia

Power device revs up 46% YoY

RF rev increased

Materials saw “better order flow”

Fiscal ‘21 rev of $526m, 12% up Yoy

Fiscal rev growth driven by growth in device business while materials were down

$475m in capex net of reimbursements

Guidance of $144 to $154m

GM of 31.5% to 33.5% Modest improvements in Durham offset by Malaysia

$80m in startup costs at MVF $60m in cash costs

Slightly more than $1 billion in design-ins

Materials expansion to 2nd building

$800m agreement with STM runs into the 2nd half of the decade (2026?)

LTA for 150mm total $1.3 billion


Q&A

$1 billion design ins with ? automotive. Doesnt include materials

Automotive customers ramping right now and ramping in ‘23

Malaysia cost 1 point of GM in this and next quarter



Durham to MVF

- Wafer cost 50% lower (doesnt include all benefits of 150 to 200mm transition)

- Cycle times will be >50% greater

- Yields will be higher than 20 to 30% higher than Durham

- Devices will grow faster than materials through ‘24 and even faster after that as the $1 billion in designs ins this quarter ramp.

- $5-$7 million impact from Malaysia, $3-$5m last quarter

- inflection point used to be ‘23/’24, now in FY‘22

- Need to drive more capacity out of Durham to serve demand.

- Pulling in about $100m in capex from ‘23/’24

- Put in 100 tools into Durham

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To: slacker711 who wrote (10435)8/31/2021 7:21:48 AM
From: slacker711
   of 10478
 
One more comment that I thought was important.
Sixteen months ago (April 29th 2020), Lowe said that they were targeting margins higher than 50% in all three businesses (RF, power, materials).

Maybe that is no longer true, but if it is, then the market certainly doesn't believe that is the case.

Also, in Nov '19, Lowe said that they would shut the Durham fab down after they ramped up Mohawk.

Brian

K. Lee

• Goldman Sachs Group Inc., Research Division
• VP & Senior Clean Energy Analyst

Okay. Yes, fair enough. That's all very helpful. Maybe moving to more of a longer-term question, because hopefully, all of this does normalize sooner rather than later. But as we think about the longer-term margin targets, I would assume they're not changed here. But how should we think about some of the mix implications? So as the $9 billion device pipeline as you start to see more of the mix of power devices in sales, what are the margins -- or I guess, the implications on margins from that increasing mix?

The reason I ask being, if you look at other power semis categories, those peers tend to have margins that are more in the 30s and 40s, and you guys are obviously targeting a much higher margin profile in the long-term time frame. So just wondering how the increasing mix of silicon carbide power devices should impact the Wolfspeed gross margins and why they'd be higher than traditional power semis, if that's your view?

Gregg A. Lowe
• Cree, Inc.
• President, CEO & Director

Yes. Maybe I'll kick it off and then turn it over to Neill for some additional color and so forth. I guess what I would say is, number one, our long-term view and the goal that we have of running this business north of 50% hasn't changed at all. I think we've got pretty good line of sight to get there, and we've got a pretty good -- I think we have got a pretty solid plan in place, that is, I don't want to say mix independent, but all 3 of the businesses are targeting at that or higher margins. So the mix over a longer period of time shouldn't be an issue. Obviously, in the near term, we've got all of these issues that we're dealing with, but it really hasn't changed the longer-term target. Maybe I'll hand it over to Neill for a little bit more color.

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To: slacker711 who wrote (10436)8/31/2021 9:01:59 AM
From: OldAIMGuy
   of 10478
 
Hi S, Re: summaries of calls...................

Thanks for composing all of these summaries. This does help.

Best wishes,
OAG

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To: OldAIMGuy who wrote (10437)8/31/2021 9:49:40 AM
From: Lou Weed
   of 10478
 
I second that! Thx for all the time you put into this. Much appreciated slacker :-)

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To: slacker711 who wrote (10429)9/1/2021 8:11:10 PM
From: EvanG
1 Recommendation   of 10478
 
Revenue from STM barely grew in FY '21 ($89.3m to $94.6m) STM signed a deal with SiCrystal (Rohm) in Jan. 2020 so perhaps we are seeing the impact of that in FY '21?

STM financial quarters line up with the calendar year. So it takes some effort to try and align with Cree. Their SiC revenue has been:

Year Revenue
2018 $100 million for the year
2019 $200 million for the year
2020 Missed $300 million goal for year but made $300 million run rate for Q4
2021 Estimating $550 million for year (still 2 quarters to go)

With that revenue spread with constant quarterly growth within their financial years it looks something like this.



Cree's STM revenue can also be spread at a constant quarterly growth within the Cree financial years and then converted into a percent of STM's revenue.
  • If the 2021 STM ramp is completely 2nd half, the circled portion isn't real. But that would mean the 2nd half of 2021 would be around a $800 million run rate.
  • Perhaps ROHM took some share or there are yearly discounts. Up until calendar end 2020 there hadn't been a sizable shift.
  • The biggest factor could be that STM is now selling its 3rd Gen which is a sizable die size shrinkage. If that is a sizeable portion of the revenue and they can maintain good pricing then the percentage could have a large drop without Cree losing share.



Here is the die size shrinkage with the 3rd Gen from STM.


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From: Lou Weed9/6/2021 10:54:36 AM
2 Recommendations   of 10478
 
seekingalpha.com

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To: EvanG who wrote (10408)9/9/2021 8:42:11 PM
From: EvanG
   of 10478
 
II-VI said in a webcast today that they are working with an outsource wafer fab partner for SiC. Thought there is just X-FAB which is small with $24.8 million in SiC revenue the last 12 months. Is someone else besides X-FAB moving into the SiC foundry business?

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To: EvanG who wrote (10441)9/10/2021 7:47:26 AM
From: slacker711
1 Recommendation   of 10478
 
I think it's the first time I also have heard them mention using a foundry for their device strategy. I haven't heard of another SiC foundry and X-fab certainly doesn't believe that there is any real competition as they are projecting 90% SiC foundry share in '25.

Maybe an opportunity here if IIVI has any success with their fabless model.


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