Wolfspeed forecasts weak first-quarter revenue from production issues

(Reuters) – Wolfspeed reported first-quarter revenue below estimates on Wednesday, anticipating production issues that could hurt its production capacity amid slowing sales of electric vehicles.

The chipmaker’s shares, however, rose about 6 percent in extended trading as CEO Gregg Lowe said the company continued to see strong growth from its Mohawk Valley, New York, chip manufacturing facility.

In June, Wolfspeed said it was experiencing equipment problems at its 150mm chip manufacturing plant in Durham that could hurt first-quarter revenue by about $20 million.

Meanwhile, Wolfspeed’s Mohawk Valley chip manufacturing plant is on target to reach 25 percent of its operating capacity in the first quarter, ahead of schedule.

“Our 200mm device plant is currently producing solid results … This improved profitability gives us the confidence to accelerate the shift of our device manufacturing to the Mohawk Valley,” Lowe said in a statement.

Shares began to recover as the market recognized the cost advantages of the new 200mm Mohawk Valley manufacturing facility compared to the old 150mm, said Michael Ashley Schulman, chief investment officer, Running Point Capital.

The company counts General Motors and Mercedes-Benz among its customers and makes chips using silicon carbide, which is a more energy-efficient material than standard silicon, for tasks such as transmitting power from an electric car’s batteries to its motors.

Wolfspeed expects first-quarter revenue to be between $185 million and $215 million, the midpoint of which is below the average analyst estimate of $211.7 million, according to LSEG data.

Adjusted loss per share is expected to be between $1.09 and $0.90, compared with the expected loss of 84 cents per share.

Fourth-quarter revenue was $200.1 million, compared to the average estimate of $201.2 million.

Wolfspeed’s net loss per share was $1.39 per share, compared with a loss of $0.73 per share a year earlier.

(Reporting by Jaspreet Singh in Bengaluru; Editing by Mohammed Safi Shamsi)