Wolfspeed Forecasts Revenue Below Estimates
(Reuters) – Wolfspeed (NYSE:WOLF) forecast quarterly revenue below estimates on Wednesday and announced it would incur $174 million in restructuring charges due to the planned closure of a facility. The chipmaker is grappling with sluggish demand from automotive customers.
Shares of the company, which counts General Motors (NYSE:GM) and Mercedes-Benz (OTC:MBGAF) among its clients, fell 15% in extended trading.
Impact of Electric Vehicle Sales
Slowing sales of electric vehicles have impacted the demand for chips made by Wolfspeed, which utilizes silicon carbide, a more energy-efficient material than standard silicon. The company had previously announced the cancellation of plans to build a factory in Ensdorf, Germany, citing the slower adoption of EVs in Europe.
In October, rival ON Semiconductor (NASDAQ:ON) also reported a forecast for fourth-quarter revenue and profit below market expectations.
Revenue Expectations
Wolfspeed anticipates second-quarter revenue from continuing operations to range between $160 million and $200 million, falling short of analysts' estimates of $214.6 million, according to LSEG-compiled data.
The company forecasts a quarterly adjusted loss per share between 89 cents and $1.14, compared to the expected 90 cent loss.
Rise in Costs and Restructuring
Wolfspeed has experienced a rise in costs as it shuts down its 150mm chip fabrication plant in Durham to concentrate on the more efficient 200mm chip plant located in Mohawk Valley. The company projects $174 million in restructuring-related costs for the current quarter, following $87.1 million in such costs recorded during its fiscal first quarter, which ended on September 29, including severance.
First-quarter revenue also fell below expectations, with the Mohawk Valley facility in New York contributing approximately $49 million in revenue, consistent with the previous quarter.
Last month, Wolfspeed announced it would receive up to $750 million in funding under the CHIPS and Science Act to support the expansion of its North Carolina-based chip factory and the Mohawk Valley plant.
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