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| Statement |
|---|
| Outperformance was driven largely by improved materials manufacturing performance, resulting in better-than-expected 150-millimeter materials costs and yields |
| So having that strength really underpins their belief in our ability to ramp this technology |
| We are uniquely positioned to drive the industry transition from silicon to silicon carbide from both a materials and a device perspective |
| We are also prudently confident that we'll be able to get these tools with operating the way that they are supposed to and we'll be able to ramp that fab to 20% utilization in the June quarter |
| First, we've demonstrated the capability to consistently produce enough high-quality, high-yielding 200-millimeter wafers in Building 10, ahead of the needs of the Mohawk Valley fab |
| I think we've made a lot of really good progress, obviously, Building 10 has been very, very successful |
| We've seen really good performance out of our operations manufacturing team |
| In addition, we've also posted record revenue for our 150-millimeter substrates in the first quarter, which is an indication that demand remains robust for our high-quality substrates |
| So we feel good about right there |
| One, demand remains very strong for silicon carbide |
| So it really will just depend on not how things play out from a uptime perspective and a throughput perspective in the fab, but we feel that we've got good confidence right now based on when the teams are working through the fab and throughput ramp |
| And the third piece to that is our material side, as Gregg mentioned, we're still seeing very strong demand for 150-millimeter wafers as well |
| We've worked closely with them to develop optimal operating protocols and as a result, we're seeing good improvement in the fab |
| We've now doubled the number of products qualified in the last 90 days and all of those MOSFETs achieve qualifications on the first pass through the fab, which is a strong indication of the underlying capability of the fab |
| So the demand that we're seeing both near term and long term is very, very solid |
| And as soon as that happens, our ability to transition from relatively low utilization to towards this 20% should be a very, very good snap as we fix that |
| As material goes through these tools in the factory, we're seeing great results as they go through the tool |
| So what that means is we're seeing solid performance from a substrate perspective to meet that goal |
| They are also extremely confident that this is a normal process that's going through as you ramp and we will resolve this and we are on track to 20% utilization in the June quarter |
| And so, we're working very closely with our tool vendor to ensure we have better uptime where their machine -- one particular machine is seeing downtime more than we would -- than it should |
| Our design win record for the first quarter represents more than 230 projects, many of which are converting sooner than our original expectations |
| We remain confident that the demand from automotive customers will remain strong |
| Additionally, we had a record quarter for 150-millimeter wafer revenue, a strong signal that the demand for materials remains solid |
| So obviously in 1Q, we had a good quarter from a gross margin perspective at the high end of the guidance range |
| As a result, we are well positioned to be the only company producing 200-millimeter at scale for the next few years and believe this competitive advantage will further extend our leadership position well into the future |
| All of those MOSFETs have qualified our first half success and we've actually qualified two modules as well that have come through on 200-millimeter, which I think is a really good sign for the quality of our backend operations |
| Demand for our materials remained strong and we have extended some of our agreements with existing wafer customers and added new agreements, like the one with Renesas |
| So that's in really great shape |
| This is really driven by strong performance from a materials operations team and just very, very good cost-yield and outperformance both on 150-millimeter and 200-millimeter substrates |
| Demand remained strong across the business outside of the industrial and energy markets, particularly in China and Asia |
| Statement |
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| While I've always said, we are taking our competitors at their word regarding their stated capability to produce silicon carbide materials internally, it is highly unlikely that every competitor will be successful |
| While we are seeing some softness in the industrial and energy space, primarily in China and Asia |
| Free cash flow during the quarter was negative $517 million comprised of $113 million of operating cash flow and $404 million of capital expenditures |
| Gregg, I just wanted to get your perspective on the next one to two years, there is just a lot of concern about more capacity coming online |
| We are seeing some softness in industrial and energy areas, particularly in China and Asia, bring out China represents about 20% of our total revenue, again primarily in industrial and energy space |
| Power device revenue was impacted by slower industrial and energy demand, primarily in China and the broader Asian market, partially offset by the revenue ramp in Mohawk Valley |
| This increase in Mohawk Valley revenue will be partially offset by continued softer demand for the industrial and energy products, primarily in the China and broader Asia markets |
| But we think are very soluble challenges in the fab right now, to try and get more throughput and through the system, through the up times and cycle times and start getting material on the path |
| The RF business was about a 200 basis point drag |
| The only area of softness that we see is industrial and energy basic that primarily has China and Asia |
| So we're not satisfied with the situation |
| We generated adjusted loss per share of $0.53 from continuing operations in the fiscal first quarter compared to a loss of $0.36 last quarter and a loss of $0.24 in the same period last year |
| It's taken us 35 years to master this technology, which we know first-hand can be incredibly difficult to work with, let alone scale and produce at the highest quality possible |
| As we indicated on our last call, there will be a lag between 20% utilization and $100 million of quarterly revenue due to the time between fab starts and shipments to our customers |
| Little bit of softness in industrial and energy perspective, but we're just looking to match up supply and demand there right now |
| Our press release today and the SEC filings noted in the release mentioned important factors that could cause actual results to differ materially |
| At the midpoint, this includes approximately $35 million or negative 1,700 basis points of underutilization costs as we ramp up revenue at the Mohawk Valley fab |
| I guess today a competitor talked about a fairly large downtick in [indiscernible] for them |
| Fiscal 2023 was not without its challenges, but those challenges come with being the first pursue next-generation 200-millimeter technology in silicon carbide |
| Secondly, while there have been several new entrants to the materials market Chinese and others, the significant ramp required to create high-quality materials it's still in front of them |
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