Hi everyone. My name is François-Xavier Bouvignies from the Europe Summit team at UBS. Today we're happy to have CFO of Wolfspeed, Neill, and Tyler, head of investor relation, to discuss about, of course, silicon carbide and the future of the company. I will focus on four areas. First, top line margin. Mm-hmm. Market and balance sheets, if that's okay with you, and then, of course, if you want to ask a question in the audience, you have QR codes on the table, so you can take a picture and send a picture, and I will see a picture, a question, and I will see it on the iPad. So don't hesitate to ask if you have any, so maybe the first question, which is, you know, at the top of many people's minds, is, when are you expecting the business, you know, to have passed the bottom of the down cycle given the current dynamic that we see in autos and industrial? This is the very, very important question that everybody has. Yeah, it's a really good question. And clearly, I think from our perspective, being very much exposed to the EV markets and industrial energy markets for, you know, high power electronic applications, when we take a step back and look at things, you know, clearly, you know, you know, this year, and even looking at next year, has been a bit choppy, particularly from an EV perspective. You know, obviously, you know, a weaker backdrop from the EV side of things. However, when we also look at it from a longer-term perspective, you know, Yole is still projecting, you know, 24%-25% growth rate out to the end of the decade, even a higher growth rate for EVs. And you look at our performance, we have a very diverse set of design- ins that are starting to come into production right now. What that's resulted in is, you know, even in our last quarter was 2x the revenue from an EV perspective year- over- year. So we are seeing pretty strong growth in EVs, albeit at maybe a lower level and a weaker backdrop than we had initially anticipated. But that's really related to the breadth of the design-ins that we've seen start to come online over this time frame, where we've seen a lot of growth from an EV perspective year- over- year. And that's really bolstered by the number of models that Wolfspeed chip or die is in from a drive train perspective. Last year alone, that was up 4x. And in 2025, that'll go up 75%. So while the backdrop is a bit weaker, we are seeing some growth from an EV perspective, and we're growing fairly strongly there. From an Industrial and Energy perspective, you know, we talked about it earlier, you know, the visibility isn't great. We are starting to see some green shoots in some areas of performance, but it has been weak for quite a long time, and for us, what that's resulted in is a pretty big mixture from, you know, being heavier industrial energy revenue for our device business and that transitioning over to EVs. Mm-hmm. And when you look at 2025, then, in this backdrop, you mentioned this 75% increase, you know. Mm-hmm. How should we think about, you know, the recovery for you specifically, you know? Do you think you could grow in 2025, you know, is a possibility. Mm-hmm. Given this backdrop? Or how should you think about that? We should, you know, we're having a lot of customer conversations right now, both for 2025 and for 2026, and what I would say is, you know, this has clearly been, you know, a reset from an overall adoption rate perspective, or as you look out over the next couple of years. That's kinda made its way back, I think, through the supply chain. So from that perspective, things are starting to get, I think, a little bit calmer. Although we do see a lot of push-outs and pull-ins across various geographies, and that's happening kinda as we speak, you know, right now, but as you look into 2025, we do see growth going into 2025 from an EV perspective, again, albeit at a weaker backdrop. But I would say, though, that it's really related to our diverse, you know, set of design- ins that we have and the number of models that we're seeing come online. And what that'll mean for us is when the market does recover, and like I said, the long-term outlook for this market still remains very, very strong, we'll have, you know, ample supply to respond, to be ready to respond, you know, from a supply perspective, you know, start to be as we start to see that kinda diverse set of, you know, design ins start to, you know, transition into revenue. If we look at the automotive and industrial side, can you explain the content opportunity in terms of an application that you see, you know, very strong, separately, you know, autos, if you take like inverters, hybrid, you know, in an hybrid model car, or maybe a full EV, onboard charger, and then industrial, what is happening as well, what could drive a? Yeah, I'll hit a little bit on the EV, kind of if you think of share of wallet within, you know, an EV. And maybe Tyler can hit a little bit, just on the industrial energy, energy sectors. But from an EV perspective, a huge part of the BOM is really in the drive train. There's onboard charging, DC to DC conversion, and several other kinda smaller applications that are kind of emerging, in the vehicle. But the vast majority, 80%-90%, really comes from the drive train of an electric vehicle. And when you look at the overall market, you know, 60%-70% of the overall market is EV-driven, when you look at silicon carbide. So those are really the applications that we're focused on. And if you go back again over the last several years, you know, multiple years, we've really driven this very robust and diverse set of design -ins. And it's really about seeing them translate into revenue. Now, we've always thought that this kinda time frame, 2023, 2024, we start to see these come online just 'cause you got a long, you know, sight of visibility. And that is what we're seeing, albeit it's at lower levels of volume. But over time, what that'll mean is we'll have a lot of models on the, you know, a lot of new model car models, or EV models out there that'll be starting production with us over this time frame. And when those EV adoption rates come up, we'll just have a very diverse set of, you know, applications to go ship into. Yeah. And I think on the I& E front, just to remind everybody, you know, we've had about $11 billion of design -ins move to design wins. And about 30% of those are for industrial and energy applications. And what we're seeing are things like, you know, energy storage, AI, you know, data centers, and, you know, aviation. There's this really long tail as we move towards the electrification of everything. And really what's driving that is EV demand has brought down the cost of devices, which is opening up the aperture for all these other interesting applications. And, you know, we're winning our fair share, and we think, you know, there's some really great things on the horizon as it relates to I & E as that market starts to recover. Thank you, Tyler. So if we think about the move to 200mm, it seems to be an important shift as well for you guys, you know, and the shift from 150mm. Can you walk us through the transition of this, you know, when, you know, it's gonna happen, and when should we expect, you know, the revenues from 200 mm to come through? Yeah. So, from a device perspective, you know, we're going through a major simplification and restructuring to really move all of our device production to 200 mm. And that's really important because you get a very, very significant cost advantage as you shift from, you know, 150 mm to 200 mm. So we're going through a restructuring right now where we're closing our Durham 150mm wafer fab, and we're simplifying the company by pushing everything to 200 mm. That means our footprint from a manufacturing perspective will be much simpler. If you think about from a device, you know, support, as you look at the materials or the substrates that start filling the fab, we'll have a material site in Durham. We'll have the Siler City JP facility in Siler City, North Carolina. And then from a device perspective, we'll be doing 200mm wafers up at the Mohawk Valley fab. And that's already up and running. And I would say the performance at 200 mm at volume has been very, very good. The yield performance, both at the substrate and crystal level, has been very, very good on the Materials side. We're also seeing very, very strong yields in Mohawk Valley as well. So from a production perspective, much simpler, performing well. And really now it's about end market demand and responding to that and getting to volume. And I think, you know, as far as we know, we're the only device supplier fully moving, you know, to 200 mm at that point. And we're already, you know, ramping that at volume. Great. Thank you, Neill, so I have two questions from the audience. One is on balance sheet, so we'll talk about that later, if you don't mind. The other one is, in the most basic way possible, can you please tell me how design- ins and design wins translate into revenues over time? When does this show up on the income statement? Sure. So a design -in means we've won the business. It means you go out and a customer goes out and does a bid and says, "I'm gonna have a new model of a vehicle or something along those lines." They go out to the various suppliers and they do a bid. They do sampling. They look at, you know, a mosaic of different things, including the performance of the chip, the pricing, the supply, you know, et cetera, and you win that design in. Typically, in an automotive application, it can take three to five years from the time you win that award to the time it goes into production. And the reason for that is you're doing a lot of integration work with the customer. You're looking at, you know, performance in their system and ensuring that it, you know, it's working very well, so what that does is from a design in perspective, it gives you pretty good visibility out into the future that this design in is going to go into production on a certain date, and then once you get to start a production and that customer gives you 20% PO for 20% of the first year's volume, then you would move that to a design win category, and what that means is you're essentially, it's an indicator you're starting production, and that's what we're seeing right now, and that's why the EV revenue for us is growing pretty substantially year- over- year, because we're seeing this backlog of design ins start to transition to start of production now. We've seen a number of, you know, a pretty significant number of models and diversity in our design-ins going to design wins and start of production, and that's all, you know, and we see the vast majority of those already shipping out of Mohawk Valley, so we're starting to see that transition now. It gives us good visibility. We'll see that aperture open. We'll see even more diverse number of these models start to ramp as you get into next year. It gives us another 75% increase in the number of models going into 2025. We'll open up as well, which will position us, I think, extremely well for when the backdrop improves and we start to see more and faster adoption rates. Great. So moving on maybe to the margin side, you spoke previously about the cost of 200 mm to be 40% lower. I mean, is it still the case today, you know, is that assumption? And, you know, how is it gonna transfer your gross margin, you know, as you move to 200 mm? So it's a really important point. You know, a couple different things here. As you move to 200 mm, generally speaking, silicon carbide, you get a very, very good cost advantage at the die level. Now for us, we were at 150 mm in an older, you know, in an older fab that we've been running, you know, out of Durham. And the costs were, I would say, uncompetitive there. As you start to move from that Durham 150mm fab, you know, at lower, even negative margins on some parts, and move that to Mohawk Valley, where you get not just better die costs from the transition to 200 mm, but because you're running in a big automated, you know, factory that was purpose-built for this, you really start to see nice cost advantage. But even if you take a step back from all of that, you know, that's just us talking about like cost downs on, on a specific product. The biggest thing for us is just utilizing these factories. We've built Mohawk Valley. We're gonna finish construction on the JP in Siler City here, you know, as you get to the end of this calendar year into early next year. And it's really about driving volume through these factories. As we drive more volume for the factories, we'll start to see a nice margin pickup for both reasons. One is you get off the 150 mm platform, but also you just start utilizing these factories more, and they were purpose-built for scale. So if we can drive more volume through them, we'll see a sharp pickup in the margins, as you start to, you know, drive more revenue over that supply base. Mm-hmm. And one common question as well is on the pricing, you know, for 2025. Obviously, we are in another kind of oversupply environment for now, because of demand slowdown that you mentioned. How should we think about the pricing in 2025 and beyond? If you can elaborate your strategy here on the pricing, how you defend yourself? Yeah, so I think on the EV front, you know, these are long-term design ins where, you know, volumes and pricing are kinda, you know, built into the design in when you get it, and that's over a curve over, you know, a long period of time. Think of a model year being seven years, so that's kinda, you know, predetermined, so we don't see a lot of change from what we, you know, had initially negotiated and how we've been working on these things, from that perspective, so I think it's really just a matter of driving the volumes over, you know, into the facilities that we've built. And continue to see, you know, growth there as the backdrop from the market, you know, improves, you know, here out in 2025 and 2026. François, if I can just add, I think it's important when we go into discussions with an EV customer. It starts at quality. That, you know, pricing comes into the discussion, but it's not the first question. Because I think really right now where people are thinking about things, it's performance of the device, it's the quality and the reliability, and then you get into that pricing discussion. And that's where we always find ourselves. That's how the conversation starts. I think as people are migrating, you know, if you think about it, China's really trying to penetrate the market, so they wanna have high reliability. And the others, you know, in Europe and the US, as they transition from internal combustion engine to BEV, reliability's gonna be super important. And then moving on to the P&L, I mean, on the EBIT side, I mean, when should we expect Wolfspeed to be, you know, profitable again on EBIT? Yeah. So first of all, we announced restructuring plans on the earnings call recently, and we'll drive, you know, a significant amount of savings, you know, as we start to exit the you know, the Durham wafer fab. We've also announced some reduction in our administrative costs. We'll start to see the OpEx levels come down, as well, pretty significantly. So as you get to that more simplified model, you know, at reasonable levels of revenue, I would say, we talked about somewhere around a $1.1 billion run rate or even under that, depending on what the margins look like. You know, the business can perform at an EBITDA level, I think, you know, pretty nicely. Because when you look at Wolfspeed, you know, there's a significant amount of depreciation sitting in the business because we put a you know a huge amount of investment you know into these assets. So versus some of the other you know companies in the industry, the gap between our EBIT you know EBIT and our EBITDA is actually pretty big. What that means is that the cash cost of running the business is actually a lot lower than what that represents, and what we'll see over time is if you can get volume into the business, we should be able to see you know profitability emerge you know even at those lower levels of revenue. Moving to the market side of things, one of the key highlights recently is the China strengths, you know, in terms of market dynamics. Can you explain, you know, what is your opportunities there? You know, what is your market share in China? Obviously, a lot of the EV growth is coming from there, right? So do you have the same picture, you know, from your in terms of orders, backlog? China is still a big part of it? Yeah. You know, it's an interesting question. I think if you look at the overall EV backdrop, you know, clearly, you know, China's been a stronger spot than some of the other, you know, Western areas in terms of EV adoption rates, and it's been a strength, an area of strength. If you look, as I mentioned it before, if you look at where we are starting production, with various customers and what we're shipping into, it's very diverse and includes, you know, Chinese customers as well. And we have seen, you know, pretty significant growth there. But I would say as you look across all the geographies, we are seeing a pickup and growth. And like I said earlier, the longer-term kind of structural demand over time remains. In the interim period, we have seen sharper growth in China, than in some of the Western areas. But at the same, by the same token, if you look at the diversity of the design ins that we've had and the revenue growth that we're seeing, from an EV perspective year- over- year, that's been, I'd say, you know, fairly diverse. Now, with the caveat being that, you know, it has been a bit choppy with some customers pushing out and some pulling in. So I think there's still some, you know, variability as you think about visibility moving forward, just based on the, you know, the absorption of the change in terms of the demand rates for EVs. But like I said, we're having good customer conversations right now, and I think that will reflect in kind of a, you know, as time goes on here, a better understanding of what that outlook and the timeframe is for that, kind of rebound in revenue. Mm-hmm. Excuse me. I think it's important for, you know, for the audience and for those listening online, you know, as we think about the EV opportunity, you know, the industry experts are pegging it at a 30% CAGR between now and 2030, so we're gonna continue to see, you know, growth on the electric vehicle front in China, in Europe, in the U.S. Maybe it's not as quick as we originally thought, but I think the takeaway, and I think a lot of the conversations that we've had there this week with investors has really focused on the fact the migration path is gonna happen probably not as fast as we originally thought, but it's, we're gonna get there. Mm-hmm. And one driver, of course, in EV, our understanding is that China is mainly using IGBTs, you know, for now. And the shift to 800V could be like a trigger to the adoption of silicon carbide. Is there a scenario that you see a very significant acceleration in your China business in 2025? Because the Chinese are moving to silicon carbide and 800 V specifically. And if you could provide any data point on that. I think just generally speaking, the higher voltages are just making more sense for most customers, whether that be in China or outside of China. And that's just because you get the performance advantages. And clearly, as you get into that type of level, that type of voltage range, you know, it plays perfectly for silicon carbide, particularly in the drive trains you start to think about, you know, higher power levels. So I think all of those things are possible. We are seeing a shift to the 800V platform, in China, as you mentioned, which certainly could provide opportunity. But I would also say that, you know, if you look at the penetration rates for silicon carbide, you know, over time, I think it's probably in the low 30% range. We had anticipated that being a bit higher, you know, earlier, you know, as we look back or, you know, over time. But going forward, that's clearly gonna continue to, you know, transition, you know, out beyond the low 30s and start to move its way back up. And that'll be in China, and that'll be in other places as well. And that's just because of the, you know, as you shift to these higher voltage platforms, silicon carbide displays very, very well there. And what they get for that is the benefit of the increased range, the faster charging times, and really just a better product. And I think that's what most, you know, customers are focused on right now. Mm-hmm. And then on the, you know, competition side of things, China is also trying to build a lot of silicon carbide capabilities and capacity, both on the Substrate and Device. What's your view on the competition there in China at the moment? And if you could separate both Substrate and Device as well, would be helpful. Yeah. So on the Substrate side, as you know, we sell our Materials business is a 150mm, you know, Materials business right now. We have one customer who we plan to ship 200 mm substrates, but not out for a few years. So from a quality perspective, we are seeing the 150 mm in China make some progress from what we have seen. However, it's unclear at 200 mm where things stand. We understand there's some sampling out there that's going on. We haven't really seen anyone at the volume that we're doing and running at volume at 200 mm from that perspective. Now, what I will say is from a Materials perspective, we believe that, you know, the 200 mm platform is going to be the inevitable, you know, answer. It's because of what we just said for our own performance, excuse me, for our own performance. It's that you get that, you know, that cost per die benefit as you switch the diameters and start moving those larger wafers into the fab. And also you start to see you get a significant amount more of good die per wafer on those larger substrates. So from a supply perspective, you're able to respond a lot faster as well. So while we are seeing some improvement in the 150mm area as expected, a little unclear at 200mm, I think at this point. And on the device side, we continue to see, you know, primarily Western chips going into particularly EV applications. We have seen some Chinese chips at the lower end applications in industrial energy, but primarily Western chips providing the drive train solutions for, you know, for chips. Great. Now moving on to the balance sheet, because I have a few questions as well on that front. Can you talk a bit about your access to funding over the next few years, you know? What levers do you have to pull, you know, for liquidity and investment needs, basically? Yeah. First of all, you know, we finished the quarter with $1.7 billion of cash on the balance sheet, which didn't include a drawdown related to our CHIPS announcement of our secured lending facility for $250 million. So, in pretty good shape from that perspective. As you look forward, you know, our focus right now is on our $2.5 billion CHIPS funding package that we announced, you know, in October. What that consisted of was a $750 million CHIPS grant, an additional $750 million of secured lending. And maybe most importantly, the 48D tax credits for $1 billion. And as a reminder, these tax credits are for reimbursement for semiconductor assets that are put into service at a 25% level. So we've already accrued, you know, $700 million or so of these credits onto the balance sheet. And we anticipate that growing to $1 billion as you get to the end of the decade. So very significant amount of capital that's going to be coming in the business. So a huge focus for us right now is taking that preliminary agreement we have, you know, with the CHIPS grant and that full funding package and translating that into a final agreement here, you know, as soon as we can. And we're very motivated and confident working with the CHIPS office and accelerating and working to get that done. Great. And you don't see any risk of change with the change of administration and so forth? We have pretty high confidence. I think if you think about the purpose of Wolfspeed, and you think about how and why we got the CHIPS grant, you know, this is an important technology, you know, for supporting the automotive supply chain, you know, particularly in the United States. The view is that this is an important technology that needs to get funded. I think that's very much a bipartisan, you know, type of view, both from a national and economic security perspective. I think that will pass the test of time, you know, regardless of administration change. Yeah. 'Cause I think it's important, you know, the U.S. has had a considerable lead in silicon carbide technology. So the last thing that you wanna do is underinvest and not have that, like Neill said, from a national security perspective. So where we sit, we kind of feel that there is an opportunity to continue to build the capacity here in the United States and to ensure that there's an ample supply as the automotive industry, you know, transfers to EVs, but all these other Industrial and Energy applications that we talked about too. Mm-hmm. I have two questions on the, from the audience. Can you comment on balance sheet and efforts with customers and/or government CHIPS acts that are complicated by leverage? Look, I think from a customer perspective, we continue to make, you know, really good, you know, solid gains. You know, obviously, as we've worked with the, you know, the CHIPS office and the government perspective, they're very familiar with, you know, the financial due diligence they're doing. We talk with them, you know, regularly. So I don't think there's really any, you know, anything to report on that. And from a customer perspective, you know, we just had, you know, one, I think $1.5 billion of design -ins or so last quarter, so an additional amount. And we've transitioned, last quarter, I think to our third highest amount of design wins. So we've transitioned to production another $1.3 billion worth of business just in the last quarter. So I'd say as of now, particularly with the backdrop of the funding announcement with the CHIPS office, I think really all systems are around finalizing that agreement, you know, executing our restructuring plan, and simplifying the business, and then very, very much focused on just driving more revenue through the assets that we've built. The other question is that you have three convertible bonds outstanding, and the 2028 and 2029 are trading below $0.50 to the dollar. The outstanding amount of the 2026 convertible is $575 million. What kind of refinancing or restructuring plans do you have in mind? So as part of the CHIPS announcement that we talked about, there were a couple of financial milestones, and there are also operational milestones. From a financial milestone perspective, before receiving the first tranche of a grant, we'd have to do some work on the timing of the 2026 convertibles, and that's where we're focused. As it relates to the longer maturity convertibles, you know, those things right now, regardless of where they're trading, you know, sit at nice, I think, nice coupon rates for us in our capital structure right now, and with very, very minimal dilution risk on them. So I feel like those are in good shape. What we're really focused on is kind of that first tranche of a, you know, grant and finalizing things with the CHIPS office and then meeting the requirements to manage some of the, you know, the earlier convertibles, the 2026 convertible. So can you talk about the CapEx, you know, side of things? You know, with all the things going on, you know, how, where the CapEx, what should, where should we expect in terms of CapEx in the next, you know, two, three years? Yeah. How it's gonna shape out? So number one is we're very much moving now from, I would say, construction phase from a CapEx perspective, building the facilities, and now transitioning over to production phase, so more tool-based. What we're gonna see this year, at the end of this calendar year, moving into next year is a pretty sharp reduction in our CapEx. In fact, on the call, we talked about lowering our CapEx by about $100 million versus our previous forecast. And on top of that, I think you'll start to see a pretty steep decline in the CapEx levels as we shift away from building facilities and really just matching that up with tools and demand as we look forward. And we'll start to see that drop off here in that kind of March and June quarter, of next year, which is kind of what the, you know, what the plan was. After that, as you look out in time, it's really just a matchup of what do we think the backdrop is, what is the demand that's sitting out there on EVs and industrial energy applications, conversations with customers, and looking to, you know, invest and match up with what we think that revenue growth is gonna be. But again, Wolfspeed is gonna be a much simpler company from a production perspective. You know, we're not really building out. We're just gonna be really just matching up supply and demand and running that through our, you know, 200 mm platform. Mm-hmm. And, I mean, you have been getting as well some capacity plan on top of that. I mean, it's just not only the front end, you have also, you know, some change of capacity. How do you do the trade-off, of course, between, you know, free cash flow and also the long-term opportunity where it's something that requires a lot of investment ahead of time, if you see what I mean? But the ratio requirement for investing in CapEx now, which are being tools-based, is much, much lower than it was previously. So the return on the incremental amount of CapEx moving forward is very, very beneficial. You put that in conjunction with that you have these scaled facilities that require volume and a lot of capacity coming online. You know, get driving revenue through those assets is probably our best path, and it is our best path to generating cash flow. So I think the balance on that is actually pretty terrific. On top of that, if you add in the government incentives and start seeing the, you know, the 48D tax credit start to get paid off in some time and offsetting that CapEx, it puts you in a very nice, I think, you know, cash flow setup as you look out over the next, you know, you know, several years with the amount of funding that's coming in that will match up off of our, you know, the CapEx investments that will, that will match up versus what we're seeing from a demand perspective. Mm-hmm. And the free cash flow, I mean, if we think about the prospect, let's say in, in one year and in a two years' time, two, three years, what is the net, you know, gross free cash flow, you know, net of the, you know, the CHIPS Act and all the help and, you know, and the, and the gross, how should we think about the free cash flow of the company? From a cash flow perspective, I think it's important to step back and look at, you know, job one, which is, and we talked about it on the call, is getting to EBITDA positive. Like I said before, it's a relatively simple path. I think you had to put some revenue through the assets, and we'll start to see those benefits in conjunction with the restructuring actions that we're doing that will allow us to achieve EBITDA positive in the not too distant future. As you look out beyond that timeframe, then that will, as we generate more revenue, we have a great basis. These are terrific cash-generating vehicles at volume, that'll transition into operating cash flow. And then if you look at the, you know, the return on capital for those that incremental CapEx that goes into the business, that'll eventually turn into nice free cash flow returns as well, out over time. But it's really about how we've always talked about these assets. They've been built for scale. And as you do that, they'll generate a lot of cash flow and free cash flow over time. Great. On a note, we are running out of time. Thank you all for listening. Thank you, Neill. Thank you, Tyler. Thank you. For your time. Thank you. Appreciate it. Thank you.