Wolfspeed forecasts weak first-quarter revenue due to manufacturing issues

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

Shares of the chipmaker, however, jumped about 6% in extended trading as CEO Gregg Lowe said the company continues to see strong growth at its Mohawk Valley, New York-based chip manufacturing facility.

In June, Wolfspeed said it was experiencing equipment issues at its Durham-based 150mm chip fab, which could potentially impact its first-quarter revenue by about $20 million.

At the same time, Wolfspeed’s Mohawk Valley chip manufacturing facility is expected to reach 25% of its operating capacity in the first quarter, ahead of schedule.

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

The stock began to recover as the market recognized the cost advantages of Mohawk Valley’s new 200mm fab over the old 150mm, said Michael Ashley Schulman, chief investment officer of Running Point Capital.

The company counts General Motors and Mercedes-Benz among its customers and makes chips made of silicon carbide, 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 in the range of $185 million to $215 million, the midpoint of which is below the average analyst estimate of $211.7 million, according to LSEG data.

The company expects an adjusted loss per share of between $1.09 and $0.90, compared with an estimate of a loss of 84 cents per share.

Fourth-quarter revenue was $200.1 million, compared with an 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 Bangalore; Editing by Mohammed Safi Shamsi)