Wolfspeed, Inc. (NYSE:WOLF) Q3 2023 Earnings Call Transcript

Pierre Ferragu: Okay. Excellent. And I have a much broader question. I hope it’s all right to ask that for you — to ask that today. You know that in March, Tesla talked about a new architecture for like their low-cost models that would make silicon carbide and silicon, and there has been an interesting debate in the industry and the investment community that that’s a negative because it’s not 100% silicon carbide, so it’s not great for silicon carbide. And the other you being, wow, if Tesla is innovating and creating like a way to make silicon carbide even more affordable by mixing it with silicon, it probably expands the addressable market. So, I’m sure you’ve been looking at that. You’ve had a lot of conversation on that. And so, I’d like to hear your perspective on the matter, this like innovation communicated by Tesla, do you see that as expanding the opportunity and the addressable market or potentially as a risk of like limiting the scope of silicon carbide?

Gregg Lowe: Yes. Thanks for the question. Essentially, what we understand by the situation is they’re focusing on an entry-level car that has a pretty significantly lower power point. When we look at the market for silicon carbide, we take an assumption that there’s going to be a certain penetration of electric vehicles in the market and a certain penetration of silicon carbide in the electric vehicle market. And obviously, as we look at entry-level cars, historically, we would say there would be no silicon carbide going into that. So, we view this as incrementally expanding the TAM for silicon carbide because it takes a silicon carbide down to a level where we weren’t anticipating it, being at this entry level, I think they mentioned $20,000 or $25,000 type vehicle.

So, this is a plus. It’s more silicon carbide going into lower power applications. And we have obviously spent a ton of time talking to our customers that are building vehicles that are more midrange in terms of cost perspective. And their view is silicon carbide all the way. So, no change from our customers that have been and are designing silicon carbide for sort of the midrange of vehicles. But we view this as a positive. This is silicon carbide now being used in an entry-level vehicle, which is incrementally positive to our assumption.

Operator: I’d like to hand it back to Gregg for any final remarks.

Gregg Lowe: Well, thanks a lot, everybody, for participating in today’s call, and we look forward to chatting with you next quarter. Thank you.

Operator: Thank you all for joining. This does conclude today’s call. You may now disconnect your lines, and have a lovely day.