Wolfspeed, Inc. Q4 FY2026 earnings call

Company Transformation & Strategic Alignment

• Leadership and capital structure have been substantially refreshed, with a new board member (Andy Mattis, former CEO of Coherence and Diebold Nixdorf) added in late July to bring decades of semiconductor and advanced technology leadership experience
• Recapitalization strengthened the balance sheet, and the sales organization was bolstered with seasoned industry veterans; go-to-market strategy was adjusted to refocus on technology leadership and a customer-centric approach
• Management remains confident in the company's path to profitability as it executes on strategic priorities, with improved strategic alignment and stronger positioning to capitalize on long-term industry trends

Technology Leadership Milestones

• Announced two major innovations at the PCIM power technology conference: 5th-generation (Gen 5) silicon carbide MOSFET technology, and commercially ready 10 kilovolt silicon carbide MOSFETs
• Gen 5 MOSFETs deliver industry-leading specific on-state resistance while maintaining excellent switching performance from Gen 4, offering a substantial efficiency leap over competitors; the technology enables smaller systems, higher power density, extended EV driving range, and improved charging infrastructure for automotive OEMs, and also supports AI data center power supplies, solid-state transformers, and renewable energy conversion applications
• Gen 5 is already being produced at the automated 200mm Mohawk Valley, NY fab, providing customers a low-risk path from design to volume production; the 10kV MOSFET won top innovation honors at PCIM
• Announced a technical partnership and MOU with GE Aerospace to accelerate adoption of high-voltage silicon carbide across industrial, aerospace, and defense markets, including supply of the industry's first commercially available 10kV silicon carbide MOSFET and co-development of standard power module formats

Revenue Diversification & Customer Traction

• AI data center revenue more than doubled in FY2026 compared to FY2025, and grew ~20% sequentially from Q3 to Q4; the transition to 800-volt architectures is increasing silicon carbide content across data center power ecosystems
• Secured design wins at leading power supply companies including LightOn and MacMeet that support multiple hyperscaler customers across established and emerging HVPC-AI architectures; new opportunities are emerging across battery backup units, supercapacitors, e-fuses, and high-voltage DC-DC conversion, expanding the long-term addressable market
• Secured a new first-time design win with a European Tier 1 supplier for onboard charging for a large German OEM, and maintains an ongoing partnership with Toyota for onboard charging systems for next-generation EV platforms
• In aerospace and defense, the 10kV MOSFET and GE Aerospace partnership positions the company to align with U.S. government priorities for critical technology supply chain resilience

Materials Business Updates

• The company continues to serve 150mm long-term agreement (LTA) materials customers, and provides technical support and samples to help customers transition to 200mm substrates
• First engineering samples of 200mm substrates have begun shipping to multiple customers for internal evaluation; 200mm substrates are viewed as a long-term growth opportunity

Operational & Financial Discipline

• Operational excellence initiatives are ongoing to improve earnings potential; improving factory utilization is the top lever for driving gross margin expansion, and the company is focused on generating more revenue per unit of consumed capacity

Total Q4 FY2026 revenue was $150 million. The Materials segment generated $43 million in revenue, accounting for 28.7% of total revenue. The Power segment generated $106 million in revenue, accounting for 70.7% of total revenue, and achieved 6% sequential revenue growth driven by strength in AI data center end markets. Non-GAAP adjusted gross margin for the quarter was -19.9%, a 70 basis point sequential improvement driven by favorable product mix (higher industrial/energy sales in Power and higher RF sales in Materials). Non-GAAP operating expenses totaled $62 million, flat sequentially from the prior quarter. Adjusted non-GAAP EBITDA was negative $62 million, comparable to the prior quarter. Gross capital expenditures were $5 million, down from $38 million in the prior quarter.

• For the first quarter of fiscal 2027, management targets total revenue in the range of $140 million to $160 million
• Non-GAAP gross margin is expected to remain negative in Q1 FY2027
• Newly added guidance for non-GAAP operating expenses projects a range of $62 million to $66 million for Q1 FY2027
• Management reaffirmed its long-term priority of reaching gross margin breakeven, which management estimates will occur at an approximate annual revenue run rate of $800 million, varying slightly based on product and end market mix

• End-market demand for automotive and industrial products is difficult to predict, as customers continue to navigate product mix changes, and soft automotive demand has offset some AI data center growth in the Power segment
• The company operates with high fixed costs, and gross margins will remain negative until sufficient revenue volume and factory utilization are achieved
• The 200mm substrate transition and AI data center silicon carbide adoption are both in early stages, and long-term market growth trajectory is uncertain
• The company has $630 million in outstanding first-lien debt carrying ~16% interest, which creates significant annual interest expense that contributes to ongoing operating cash burn

Q: The analyst asks about the near-term outlook for automotive and industrial end markets (both materials and devices), and whether June 2026 was the bottom for this segment. / A: Management notes that global diversification efforts are already paying off, with strong customer traction across both automotive and industrial/energy end markets, including the newly announced German OEM onboard charging design win. While overall end-demand remains hard to predict as automotive customers work through ongoing product mix changes, the broad global customer engagement is encouraging. (211 characters)

Q: The analyst asks for a timeline for when AI data center revenue will become meaningful, and how much growth is tied to 800-volt architecture adoption versus broader AI deployments. / A: Management confirms 800-volt architecture deployment is a key demand driver that is driving qualification activity across the entire data center power ecosystem. Deployment of solid-state transformers (requiring 2.3kV and 3.3kV devices) is a second major demand driver, and the company's completed 200mm transition and vertically integrated model at Mohawk Valley position it well to meet this growing demand. (299 characters)

Q: The analyst asks how much annual interest savings would result from retiring the 16% first-lien debt, and whether retiring this debt would unlock the option to split the materials and power businesses, as previously restricted by debt covenants. / A: Management confirms the first-lien debt carries 16% interest on $630 million outstanding, so refinancing or retiring it would deliver meaningful annual cash flow savings that would reduce operating cash burn. Management states it has no plans to split the business, as vertical integration is a core differentiator that enabled the performance leap of Gen 5 silicon carbide, so covenant changes are irrelevant to current strategy. (356 characters)

Q: The analyst asks for the trajectory of materials revenue as customers transition from 150mm to 200mm substrates, and when 200mm will contribute meaningfully to total materials revenue. / A: Management confirms the industry is in the middle of the 150mm to 200mm transition, with some 150mm LTAs still active while others expire, and some customers are currently working down existing inventory. All major customers are actively qualifying 200mm materials, and as the overall silicon carbide market grows, customers will fully transition to 200mm, and Wolfspeed's leading technology positions it to capture this growth. (323 characters)