Wolfspeed, Inc. (WOLF) Earnings Call Transcript & Summary

Everyone. Welcome to day 1 of Citi Global Technology Conference. My name is Atif Malik. I cover U.S. semiconductors, semiconductor equipment and communication equipment stocks here at Citi. It's my pleasure to welcome Gregg Lowe, CEO, Wolfspeed; as well as Tyler Gronbach, VP Investor Relations. I'm going to kick it off with my questions first, and then I will open up to the audience to ask your questions. You have a question, please raise your hand and the mic will come to you.

Gregg, you have tremendous experience in semiconductors, autos with your background in TI, Freescale. At the dinner last night, I thought you made some really powerful 1-liner statements. And I wanted to kick it off with a couple of those and would ask you to expand on what you mean -- what you meant by these statements. The first on power devices, you said supply will chase demand for 10 years. Can you elaborate on your expectations on demand? And what makes you think that?

The demand for silicon carbide, of course, is being driven by the adoption of electric vehicles. And I think that is a trend that is not reversible. The -- all the car companies have abandoned any development of internal combustion engine, car engines at all. And most of them have either made redundant or have repurposed those engineers for electric vehicles. So I think that trend is kind of a nonreversible trend. Probably 8 years ago, it could be reversible, but it's not reversible anymore. So that's number one. Number two is 5, 6 years ago, there was a grand total of 1 company that was committed to use silicon carbide in an inverter for an electric car. Of course, that was Tesla. Today, I can't think of a company, there probably is one, but I can -- I don't know of a company that is not committed to using silicon carbide in many, if not all, of their vehicles. It is a technology that does 2 really important things. It allows to cargo further with the same battery, so fixing range anxiety. And it allows the car to charge faster. These are the 2 most important issues that need to be resolved for consumers and silicon carbide is a trend that's happening pretty substantially. So you got electric vehicles kind of leading the charge while other modes of transportation are doing the same thing. There are electric airplane companies. There are companies that are doing vertical takeoff and landing, taxis, drone taxis, so to speak, that are using silicon carbide. Silicon carbide is now being used in earthmoving equipment. Think of big trucks in the middle of forest, not burning diesel, not leaking oil and having substantially more torque for pulling things and so forth. So pretty dramatic adoption there. In personal watercraft, so boats, other modes of transportation are adopting silicon carbide. And finally, it's being adopted across a wide range of industrial applications. Last time I looked, we had over 4,000 design-ins, many of which are industrial applications. And the key is it's a more efficient technology, which means it uses less energy. When you use a silicon carbide in a solar field, more of the sun's energy gets to the grid. You're not wasting it in the form of heat and so forth. When you use silicon carbide in an electric car, more of the battery energy pushes you going forward and so forth. And the -- so bottom line is that most estimates are forecasting silicon carbide growth to be 40%, 50% compounded for the foreseeable future. And I think even trying to catch up with that is going to be a major challenge. And I do remind customers of that all the time, is that it's going to be a challenge keeping up with the demand. What's going to be different though, certainly from a Wolfspeed perspective, is what you get this year is going to be more than last year, and what you get next year is going to be a lot more than the year before, that we're going to be chasing it up, but it's always going to be feeding more. So that's how I think of it. It's a very tricky technology to master. We were very fortunate to make an announcement in May of 2019 that we were going to build this fab in upstate New York and then stick a shovel in the ground in March of 2020, if you recall, kind of week 1 of COVID. And we did not blink all during COVID, all during supply chain issues, all during that stuff. We built a factory, and we're just beginning to ramp up that factory right now. It's got a tremendous amount of capacity. It's the world's largest silicon carbide fab. It's the world's only 200-millimeter silicon carbide fab. We're in the early stage of ramp on that. We had $1 million worth of revenue last quarter. We'll get a couple of million dollars probably this quarter. And I think we're going to be ramping and customers' demand is doing nothing but increasing and being pulled in. Long answer to your question. Sorry about that.

That's great. You guys are a leader on 200-meter silicon carbide. You talked about 70% more dies on a 200-millimeter substrate versus 150-millimeter; 40% lower cost at 70% utilization. And the statement that you made is Renesas is a big dog in autos and they signed a $2 billion contract with Wolfspeed. So my question to you is what makes a customer pick Wolfspeed?

From a device perspective, customers look at a lot of different things, and I'll get back to Renesas here in a second. They look at the performance of your part. And when they do that, we always end up in the top echelon. Most of the time with somebody else, but we're in that top tier. They look at your understanding of the underlying technology, silicon carbide. We're in the top tier alone. We have 35 years of experience building silicon carbide. They look at the company's experience in dealing with their industry, the auto industry. We are in the second tier in this area. ST, Infineon, ROHM, they are much bigger players in the automotive market than we are. So we're in the second tier of that. And what we're doing to fix that, by the way, is we're hiring people from the semiconductor industry that have worked in automotive to build up our credibility in that regard. Pricing is always part of the equation as well. It's hard to tell where you land there because I've never won business where the purchasing guy called and said, "Congratulations, you were the lowest bidder. You're always the worst; it's kind of hard to tell. We're probably in the middle of the mix on that. So they look at a mosaic of things. And I think that mosaic has turned into $19 billion worth of design-ins for our device business. On the materials side of it, it's a lot different because here, you've got a technology which is really, really difficult to master. Growing silicon carbide occurs at 2,500 degrees C. That is 1/2 the temperature of the sun. So even the equipment that you build to -- that you use to grow silicon carbide is very highly specific and engineered. You're not running to Home Depot if you need another screw. It's really engineered product that's living in an environment that's pretty harsh. When it grows, it can form into 1 of 200-plus crystal structures. One of them works. So you got to grow it in a very specific way. And if you don't get it that way, you got junk. Now that you're able to do that, now you need to slice it into a wafer. It's the second-hardest material on earth. So even doing that is difficult. And then you got to grind it, which, of course, is difficult as well, and epi is difficult. So all of that stuff is very, very difficult. We produce about 60% of the world's silicon carbide substrates. We sell these substrates to Infineon, ROHM, ST, Onsemi through long-term agreements. And we've used that experience to build up even more scale for our silicon carbide business. And so with Renesas, obviously, they're a new player into the silicon carbide MOSFET. They're a very, very established player, both in power electronics and in automotive. They're 1 of the top, if not probably the #2 automotive semiconductor company. And in working with them, they obviously scouted the world looking for silicon carbide substrates and determined that we had such a substantial lead that they put down what I believe is the largest deposit in the history of the semiconductor industry. $2 billion cash deposit to reserve capacity for our silicon carbide substrates. I'm unaware of a deposit that's higher. There might be, I don't know, it's pretty big. And it's a 10-year deposit. So there's a lot of chatter about this company's going to do this and this company's going to do that and so forth. Maybe China's going to come on board with silicon carbide substrates. And we pay attention to all of that. And -- but I think this was a pretty significant vote of confidence that $2 billion and a 10-year agreement says we're probably ahead of everybody. Now as part of our business kind of thinking, many of our materials customers are trying to build their own materials business. And I think that makes a lot of sense. I would do the same thing if I were them. The substrate is a key aspect. It's a key part of the bill of materials for a silicon carbide MOSFET. So doing that makes a lot of sense. Many of them have announced very specific plans. I might get this a little bit wrong, but I think ST is planning to do roughly 40% of their silicon carbide in-house by a few years from now and then by 60% of it from the market. So they've been very transparent about that. We baked that into our plans, and we make the assumption that everybody who has made a plan like that and has articulated it to you is going to execute on that plan. And so that is part of our business plan, is that they are going to be successful in doing that. I think they'll probably find it more difficult than anticipate. But I think -- and I kind of come back to the Renases deal, it's a pretty large endorsement of the leadership position that we have with the largest cash deposit in the history of semiconductors and a 10-year deal.

Good. And the third and the last statement, Gregg, all roads lead to Mohawk Valley Fab. You guys are always maxed out at Durham. You've had some manufacturing missteps in terms of crystal growth at 200-millimeter. Kind of walk us through what were some of these challenges and how you're going to learn from it to expand and scale out capacity?

Absolutely. Just quickly before that, you'll hear me coughing a little bit. So when I came back from Japan, I brought 2 things. One is $2 billion, and the second is a bucket of COVID. So it was kind of worth it. But -- so I've got this post-COVID viral bronchitis been going on, so I apologize if you hear me hacking. I'm not sick. I don't have COVID now, but just a heads up on that. Mohawk Valley is the complete focus of our company right now and getting it to 20% utilization by the June quarter of next year is where we're going after it. We've had a tremendous amount of success getting Building 10 and the crystal growth operation functioning. It is now -- we've got 70 -- greater than 75% of the intended crystal growers for that facility that then would support 20% utilization in Mohawk Valley. Greater than 75% are currently functioning, growing crystals and growing superb crystals. The defect quality that we see out of our 200-millimeter crystals is better than our 150-millimeter crystals and that's an amazing accomplishment. Wafering is going well. Epi is going well. So the feeding of Mohawk Valley is now happening and is pretty systematic at this point. So feel real good about that. What we're doing now is we're just -- we're running wafers through the fab. And when you do that in a wafer fab, you're fine-tuning the processes. You don't just dump a bunch of wafers and start producing. These are -- this is the first 200-millimeter fab. So the tools need to be fine-tuned and tweaked, and that's the level of implant and different things that we do with etch and things like that. That's all fine tuning. We're making really good progress on getting the machines tuned into where we want. And as we do that, we'll have more wafers flying through. This past quarter, we did $1 million worth of revenue. This quarter, we'll do a couple more million dollars' worth of revenue, and we'll see a steady ramp on that. As we dial in and tune the factory and it's humming at the rate that we really want, then we'll obviously be loading more wafers into the fab. I would tell you that we've been quite successful with qualification of devices in that fab. We've got customers really hankering for getting product out of that wafer fab, so they've done risk orders. And we have successfully completed qualification on a number of devices, including our largest chip, which is always kind of a challenge, and our most complicated automotive chip has qualified, which is also a challenge. And one thing I'd note is that the qualification results are exceptional. When you do qualification, you do a characterization of the device, what are its parameters, before you do all the stresses and then you do the qualification stresses and then you look at the parameters after that, and you're looking for a very tight distribution, so not a big shift in the parameters. And the results that we're getting so far out of Mohawk Valley are better than what we got when we qualified the devices out of Durham. So 100% of the focus is on that, and you can bet that's what we're working on, on a day-to-day basis.

And then what is the status on The JP, Siler City ramp and the 20% utilization that's going to be supported by Building 10? And when do you expect the Siler City, JP fab coming on?

The Siler City factory is also called The JP, named after our founder, John Palmer. The JP is currently under construction. It's gone vertical now. So if you go to the site, you'll actually see a pretty giant building. The square footage of the Phase 1 is?

$2.1 million.

So it's a very, very large footprint facility. We're building it out in stages, and we will fit it out in stages as well, depending on the demand and the capacity ramp that we're going to do, both in Mohawk Valley and our next fab in Saarland, Germany. So it's gone vertical right now. It's currently on schedule to be in a position to accept first installations of crystal growers in the first half of calendar '24. And in the July to October quarter of '24, we would expect to be turning on and growing our first crystals out of there. While The JP is being built, we're building crystal growers, and we will have them ready for installation so that we're not kind of in a panic mode, trying to build crystal growers at last minute. We feel very confident about that because the -- once we were able to get the electrical substation work at Building 10 done, the ramp of crystal growth has gone actually quite good inside of Building 10. That will -- so we're excited about The JP right now. Everything is on schedule. I'm sure there's going to be a million challenges that we're going to have in between now and then. And so what we're doing is with Building 10 is we're pushing to get higher utilization capability for Mohawk Valley out of our current footprint just to give us a little bit of buffer. But right now, we're on schedule.

Great. And maybe, Tyler, this one for you. I've been getting quite a few questions in terms of the timing of your RF divestiture and the impact on your financials?

Yes. For those of you that don't know, we announced the deal with MACOM to sell our RF business. The timing is that we expect to close that between now and the end of the year. We think part of the reason why we did that was we had talked about RF remaining on 4-inch silicon carbide substrates, and that was going to put a little bit of drag on the gross margin and also require some CapEx because we were going to have to transition that to 6-inch. So really, the rationale and the thinking was management really wants to focus on the power device opportunity. MACOM was a terrific partner, and it was a good fit for them. So we expect to have that kind of concluded between now and the end of this year.

Maybe I'll hit a couple of other things just before we're going to add a couple more questions because one that I was asked earlier today is demand for silicon carbide. There's talking about an auto strike in the U.S., what does that do and so forth. But basically, the demand for silicon carbide is pretty much up and to the right everywhere with the exception of China industrial. If you look at China automotive, still up and to the right, the industrial business in China is down. And that's unlike what's happening in the silicon industry right now where consumer went down and then industrial's going down, kind of worldwide and so forth. We're not seeing that. We have 1 area of softness, and that's the industrial business in China. But the rest of it, the demand is up and to the right. Our union strike or some strike against the car manufacturers in the U.S. would have a limited amount of issue with us at all. We're in the early phase of their ramping. They're putting early cars into production and so forth. And there's plenty of business outside the U.S. that we've won where we could shift that product to different areas. So again, China industrial, the only area where we're seeing softness. Everything else is pretty strong.

Okay. Gregg, you touched on this earlier, but some of your device competitors and one of them was here this morning, they talked about sourcing silicon carbide substrates from China. Is this viable? And why won't they look to Wolfspeed for more supply?

I think the best thing I can say is I'm not invited to the Chinese silicon carbide companies' program review. So best I can do is look from the outside. From the outside, both from actual observation plus industry feedback that we're getting, is there's still some distance that China needs to come in terms of getting quality of silicon carbide substrates at 150-millimeter to where it needs to be, and they're pretty far behind on 200-millimeter. Now I think Infineon is the boldest in terms of talking about silicon carbide supply from China. But they're also the only silicon carbide MOSFET producer that doesn't have an internal capability to produce silicon carbide substrates. ON has their own capability. ROHM has their own capability. ST bought Norstel a couple of years ago. So it might be a case where they have no choice but to service from China, if that's what they want to do. We supply silicon carbide to the industry vis-à-vis long-term agreements. We don't do -- and these are long-term agreements where they agree to buy a certain amount, we agree to sell them a certain amount, and there's some pricing associated with that and so forth. But what we don't do is we don't do the spot market business. We don't have reverse auctions for our supply this month. I think we could make a lot more money short term on that, but it would kill our business long term. And so what that translates to is if a company is relying on either their own capability or the China capability and they don't have a supply agreement with us, we're not going to be a backstop. We're very interested in having long-term agreements. We're engaged with all kinds of customers. We have no allergic reaction to that even today. We signed our first long-term agreement on 200-millimeter with Renases in response to the $2 billion capacity reservation. And so we have no problem with that. It's in our interest to continue feeding the industry and continuing this conversion from silicon to silicon carbide. And I think our strategy has done exactly that. If you do a word count on silicon carbide by most of the people in power electronics and you look at it 3 years ago, it was hardly said except by Wolfspeed. Today, everybody is talking about silicon carbide because the industry is converting. So I think helping convert the industry from silicon to silicon carbide when we started doing these supply agreements actually grew the market substantially. Most people are looking at a $20 billion market by 2027, I think, is the number.

Yes. That's right.

And if you look at that 5 years ago, it was tiny. So I think it's a strategy that works and it's a strategy that I communicate to all of our substrate customers. We've done 3 agreements with ST. They've been a really strong partner with us. They've been very transparent that they're trying to build their own internal capability, but they want us there for that other 60%. That's fine. No issue with that. And we're happy to engage with them on long-term agreements.

And where are you guys on your financing requirements to support your capital plans? And I thought you made a good point last night that the U.S. is in a position of strength in terms of silicon carbide where you and Coherent are 80%, 90% of the market share versus semiconductors where the U.S. is trying to catch up.

Yes. I'd think of this way. We've raised $5 billion in roughly the last 9 to 10 months. So we're kind of fit for purpose. We've got the treasure chest of cash that we need to kind of fund the capital program. And as we were talking about though, last night, but there's an opportunity for us to continue to optimize the capital structure. And so we did the deal with Apollo. A good way to think about that is that's really kind of a bridging strategy for us because we still see opportunity through the U.S. CHIPS Act, the European CHIPS Act, possible customer deposits from future deals. So I think we'll continue to look for ways to optimize the cap structure. At the same time we're going to continue to build out the footprint. I think one of the things that we also talked about last night is we've got to see more capital being invested by others because, as Gregg talked about, demand is outstripping supply between now and the end of the decade. So really, we really like our greenfield approach. We think it's innovative. We think it has really strong economics. I mean think about it. Mohawk Valley at full capacity is a $2 billion annual revenue-generating fab that will throw off $1.2 billion of cash. So we really think that we can take that model and repeat it again. And we think that Siler offers really strong economics too. So as we sit today, we've got the cash that we need to support the capital program, and we'll continue to optimize the cap structure as we go along.

And just to add to that, the -- 2 quarters ago, there was a lot of questioning of how you're going to get this funding and are you going to issue stock and dilutive, et cetera. And so we were very specific 2 quarters ago on our earnings call. We said we're going to be focusing on non-dilutive measures, private financing, government funding and customer funding. And that's what we've delivered. So I think we can take credit for basically doing just that. We're engaged with the CHIPS Act folks and the people there, we met with them this week. We're engaged with the Government of Germany for the Saarland fab, that's feeling really good. We're probably going to have an announcement sometime before the end of this year on the amount of funding that we'll be getting for that. So we basically did what we were going to say when there was a big question of could you even get this funded, I think it's mission accomplished. And I think nobody was expecting a $2 billion capacity reservation deposit. And I think that speaks a lot towards the value of what we have.

Great. Let me pause here and see if there are any questions in the audience. Yes, just wait for the mic to come. Can we have a mic up here?

Quick question on the Siler one. First -- oh sorry, on Building 10. Are you still growing the longer boule? Or is -- are you back to the original one that...

Oh. We're not going to go back to the original one.

So the longer boule.

The longer boule is good.

It's good now?

Yes, sure. Yes, sure. And that was largely on our 150-millimeter, which is technically not Building 10. So it's in our current facility. But the larger boules are really great. The issue we had was how to handle them. We've now fixed that. So the larger boules are on 150-millimeter, and we're taking the learning on how we got larger boules to apply to 200-millimeter in Building 10.

Great. And then on the 20% utilization, will you be yielding like 70% on that? I mean, will the cost be like still 40%? Will the yield be good enough to support it? I'm just curious because will there be a cost related to it? Like, will the line -- can the line be run independently like you're running 20% of the facility, while the 80% is idle and then you're creating -- the wafer is going through that. How does the line work? I just want to -- in the cost of underutilization that [indiscernible].

Sorry for the coughing, but it only hurts -- when I talk is kind of the issue. So obviously, as we're ramping up the fab, we're turning on the line, and it's substantially less than 20% utilized right now. But that's the path we'll be going down. And I think, as again, as we move product through the fab and we tune up all the machines in the process and get the yield where we want it to be, it's going to be a great fab. It's a highly automated fab. It's probably -- I haven't done the actual analysis, but I would say it's probably the most automated 200-millimeter fab on earth because it's the newest one using 300-millimeter automation equipment. It's probably the cleanest 200-millimeter fab on earth because the clean room, there's a certain class, but we've -- all the material is in a sub clean room in what's called a snip pod. And the class of cleanliness of that is in order of magnitude lower, which is great. So I think we're really excited about the fab. It's going to be a substantial improvement from where we were and where we are in our North Carolina fabs. These are 150-millimeter fabs. I don't know the exact date, but I would say most 150-millimeter fabs are more than 30 years old. So you can forget about automation because no one thought of overhead transport. And if you didn't build the ceiling height, waiting for that, you can't automate it. So it's going to be a difficult challenge.

And last one. So is it fair to assume that once like a particular line is that you get the yield that you want, the ramp-up for the rest of the 80% of that capacity will be much faster than...

There is -- we've got tools on order that are coming in for filling out further expansions of it. But what I would say is once we're at 20%, we've got a fab that's humming and going from 20 to 40 will be faster than going from 0 to 20, and going from 40 to 60, it will be faster than that. So it'll have a smooth ramp smooth -- or smooth ramp isn't the right word. It'll have an acceleration effect as you get through it. What's really important was we actually have inventory, we've plenty of inventory of wafers now in the fab because Building 10 is doing great right now for the supply up there. It's really tuning that fab. We don't want to just throw a bunch of wafers at it and then have a low-yielding fab -- low yielding wafers that wouldn't be helpful. But I'm super excited about the qualification that's happened with our MOSFET so far. The reliability that's coming out is super solid. Customers are excited about it. They're very much pulling us for more output out of Mohawk Valley. A lot of times when you change a fab, there's -- they're kind of wanting to slow you down because they have to do this work, and there's none of that going on.

I think the question's a good one in that for those of you in the room, as you start to look for milestones, it's -- probably this quarter is probably the low point for non-GAAP gross margin. And what you should see is we should be moving from 14 to something Neill talked about in the low 20s by the June quarter of next year. So it's really a function of putting more load or more volume in the Mohawk and you're going to continue to see that gross margin trajectory continue to improve over time.

And just as a reminder, Neill mentioned it in the earnings call as well. 20% utilization in the June quarter means revenue probably in the fourth quarter of calendar '24 because you've got to get it to test [ icing as fact ] and then through packaging and then the customer has to buy it and so forth. But there will be a lag between when we're producing it and when it goes out for sale.

Is there a revenue level threshold at which the company can be self-funding and still provide [indiscernible]?

Yes. Well, what we've talked about is that at the end of fiscal '25, we'll be generating operating cash flow. Okay? And that we -- and what we've said is that you should see free cash flow generation end of '26, early '27 and that's a couple of hundred million that we're talking about there. But that's kind of the trajectory, and it's a function of a turn-up of the facilities and being able to get Siler up and running at the same time.

Is that after or before CapEx required to...

Well, you've got to say -- think of it this way. That's the current snapshot in time in how we think about it. But depending upon what happens with CHIPS Act funding and there's other activities that could lead us to building more capacity. But right now, that's a snapshot in time.

And I couldn't get the [indiscernible]. I guess it seems like it's clear demand is outstripping supply for the next 10 years or so. So I guess one of the questions I have is how are you thinking about material allocation internally versus to clients as well? Because I'm thinking you're trying to kind of gain share on the device side, but at the same time you are providing material when demand is so much more than supply. How are you finding the right balance there?

Well, we have agreements with a number of different companies. And all of the material that is shipping to those companies today is 150-millimeter. And our 150-millimeter fab in Durham is capped at $100 million per year. So we can't allocate more to that because it's -- there's no more space to put fab equipment and so forth. So it's all about getting that material to our customers that doesn't go to our internal factory. And then in terms of Mohawk Valley, that is a 200-millimeter fab. And between now and 2027, all of the 200-millimeter wafers will be filling our own needs because our first agreement that we signed is with Renases and that starts in 2027 for 200-millimeter. So there's not really an allocation issue per se because we're not ramping up the Durham fab higher than it is right now. It's running at full capacity, and it's just a matter of getting that material to our customers. And so not really an issue.

And maybe a quick one. On -- I believe you mentioned moving -- you are looking to move your auto customers away from Durham to Mohawk moving forward. And I think you mentioned a 75% to 25% ratio long term? I guess, where are you on that ratio? And how are you thinking about that transition?

The beauty of it is all of our customers are excited to be in Mohawk. It's a better fab. It's an automated fab. It's a cleaner fab. It's a newer fab, and it has a ton more capacity. So there's a pull for customers to do that. So that's really good. The delay in starting Mohawk though made us build more of our capacity -- made us utilize more of our capacity in Durham for those automotive customers. And that's a drag on margin, and it's -- because they're bigger devices and they're more complicated devices in an older fab and so forth. So it gives us a challenge on that, but that's a decision we made because it's in the best interest of our customers. So I think as soon as we get Mohawk Valley open, customers are going to be clamoring to get material out of Mohawk Valley because it's a -- it will be a much more reliable fab since it's automated. The number of human interactions with a wafer in Durham is 10,000 per day. And the number of human interactions with the wafer in Mohawk Valley is 0. So human error, dropping wafers, mishandling them, breaking them, losing them is just people are whip runners work 12-hour shifts, moving material. They're going miles and miles a night. Leaving something in the wrong place, it's just human error happens in a nonautomated fab. And when we get the fab and Mohawk dialed in, it's all automated with none of that human error intervention kind of stuff. So that's what the automotive guys are really interested in is reliability and the cleanliness of the fab is just dramatically better.

Can you share your perspective on some of these technological innovations that slice the wafers? And is this something that the industry will have at their disposal to increase the supply of silicon carbide?

We're at the early stage of the adoption of silicon carbide and you're seeing it go from a billion dollar business a few years ago to a $20 billion. I think we're in the early phase of massive improvement and adoption of new ways of utilizing silicon carbide more efficiently in an application. We've teamed up with Arrow to help customers really learn how to use silicon carbide in an application, and we've done that through an evaluation board that we call SpeedVal, which obviously connotates you're quickly evaluating how to use silicon carbide. Arrow's been a great partner to work with on that. There's going to be innovations in how to grow the crystals turning into taller crystals, which is more wafers per crystal, which is lower-cost crystals. There's going to be innovation in how to separate the wafers from the boules. We're already doing that in a highly automated way in our 150-millimeter facility, and it will be more automated in the 200-millimeter facility. These are all things that are going to be driving down costs and driving up efficiency and so forth. And so I think we're at the early phase of adoption of all of this kind of stuff.

We're almost out of time. Gregg and Tyler, thank you for coming to the Citi Conference.

Thank you.

Thank you.