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

While we have a full room in here. I'm glad to see a full room. Since this is the last meeting of the day, last fireside of the day. My name is Gary Mobley. I'm one of the 3 semiconductor analysts here at Wells Fargo Securities. I cover a lot of the analog semiconductor companies. I cover the power semiconductor companies, including Wolfspeed. With us here today, we have the management team, including Neill Reynolds, the CFO, to my immediate right and Tyler Gronbach. He has kind of an extravagant title, but I'll take a swipe at it. For today's purposes, you have Investor Relations. Let's just call it that. And so what I was hoping to do is just start out very quickly level set everybody, what the profile of the Wolfspeed business looks like once we get beyond the divestiture of the [indiscernible] business.

Yes. So I think if you look at the size of Wolfspeed, and maybe, Gary, what I can do there is talk a little bit about just some commentary just about the overall business, kind of what we're seeing from that perspective. I think with the announcement of the RF divestiture sale, that makes us the only kind of pure-play silicon carbide integrated business in the industry from substrate capability all the way through end devices and modules. And what that really means for us now is -- and I think this is abundantly clear, silicon carbide is at the core of the transition and the next generation of power, high-power electronic applications, particularly around high power semiconductors. And we expect that market to grow from where it is today out to over $20 billion by the end of the decade. So maybe the highest growing industry or market in the industry at this time. And from a competitive perspective, and Gregg talked about it at our last earnings call, we've got kind of the undisputed leader in this technology. I think right now, we're ramping 200-millimeter power substrates at a very high quality and putting those into our Mohawk Valley fab. I would say that we're the only one doing that in the world. I think if you look at 150-millimeter substrates, no one can really match our quality or a scale there either. So I think we feel very good about where we are post the RF divestiture in terms of the positioning we have in this high-growth market. From a device perspective, we've put together $22 billion of design in just over the last 3 years. So we've got very good visibility with -- to revenue growth over that time. That's with the likes of General Motors with Jaguar, Land Rover and many Tier 1s as well. And a lot of end customers, I think strong end customers with good capability that we're selling to mature companies over that time. And then on the substrate side, as you know, we've got 60% share on the merchant side on substrates doing deals with the major power semiconductor companies like [indiscernible] or on semiconductor or ROHM and others. So very good capability from that standpoint as well. So when you put all that together, essentially, what we're doing is we're going to leverage that advantage over time to really invest in capacity. And the biggest thing we're doing now is investing in the JP which is going to be the world's largest silicon carbide substrate facility in Siler City, North Carolina. And I think that will allow us really to advance our scale and capability as you think about that over time. So as we divested the RF business, we expect that to happen here by the end of the year. It will really allow us to focus on these power opportunities I just outlined as you start to think about the company moving forward.

And so if I'm not mistaken, that divestiture takes away, what $35 million roughly in revenue per quarter.

That's right. Yes, per quarter.

And so you have a residual substrate supply arrangement with MACOM?

Yes. And that was in the announcement that we made. So we'll do a material supply agreement with them. We'll go through an MSA period where we're working together with them on a fab that we have in North Carolina and will help supply them as we do today. And then post that MSA period, which would take about 2 to 3 years, we'll supply them substrates for approximately 5 years after that.

Got it. Got it. And so if yours accurate -- if your group is accurate in the forecast, what you'll keep specific to that business on the material side, is what roughly $12 million a quarter in substrate supply to them?

I think it's something smaller than that. It's actually a pretty modest amount of revenue per year into what's required there.

All right. Well, let's get to what's more important. So the key performance indicator that everybody is watching is the bring up of Mohawk Valley. It's all about feeding this shiny new facility in upstate New York with enough 200-millimeter silicon carbide materials. And so what you've laid out from a KPI perspective is this destination by the end of the fiscal year, the June quarter of next calendar year to be at a 20% utilization rate and in the near term, for the current December quarter, I believe your revenue guidance includes about $10 million to $15 million of Mohawk Valley generated revenue. Maybe if you can give us an update on where you stand with bringing up that facility, feeding it with enough wafers and anything else you can add?

Yes. So from -- we're 2 months into the quarter. I think we've entered into our fiscal 2Q, which is the December quarter here. I think we feel very good about where we're at from a guidance perspective for the quarter. And in that guidance, what we gave out was a $10 million to $15 million revenue for Mohawk Valley. And what that means is the prior quarter, we did about $4 million of revenue. So we're thinking about tripling that or so at the midpoint. What we talked about on the call as it relates to the fab is really just bringing up capacity at this point inside the fab. From a substrate perspective, the substrates that we're delivering to the fab have been very, very good. The 200-millimeter substrates have been very solid from a quality perspective. We're seeing output levels that are better than our expectations from a 200-millimeter substrate perspective, and it's actually ahead of the fab. So we anticipate an equivalent 15% utilization in terms of substrate output and 200-millimeter from our building 10 site in Durham to feed the fab. So I think step one is that piece of it's going very, very well. What we talked about on the call now is now that we have the substrates, as you run those substrates through the fab and start fabbing them, it's having some bottlenecks inside the fab. Now Gregg was actually our CEO, was actually up at the fab last week. He was here on Thanksgiving Day, actually given out Turkey and meeting with employees and meeting with the fab team. I'm happy to report there's been very, very good progress on a lot of the bottlenecks that we talked about at the earnings call just about a month ago. So we are seeing very positive performance. So I think we're solidly within that $10 million to $15 million revenue for the quarter. Now looking forward, what that means is we should be able to double that again as you look into the March quarter into Q3, based on what we're seeing from not just a substrate standpoint, but the debottlenecking of some of the process steps in the fab. And then again, doubled again as you get out into the June quarter, which I think puts us confidently in place to get to the 20% utilization. And what that would mean is about $100 million per quarter revenue starting in December next year. So I think right now, all signs are pointing to. We've got the pieces together. We're seeing the fab get debottlenecked. And at this point, it's really about just driving cycle time and yields and driving process through the fab.

Okay. So let me see if I got all that straight. So maybe $30 million in revenue in the March quarter possibly, $60 million in the June quarter possibly, but the destination at 20% utilization would be $100 million in quarterly revenue. So why the lag and maybe if you could help us bridge from a time perspective $60 million to $100 million, even though you may be at 20% utilization in the quarter that you're generating $60 million.

Yes. So I think the $10 million to $15 million would put that midpoint around 12, so you're probably talking about 25 or 50 in those times Gary. But basically, what that means is, yes. So Mohawk Valley has the capability of doing $2 billion of annual device revenue at full capacity. So what that means is that 20%, you'd expect to get to about $400 million a year or $100 million a quarter. So if we get to 20% utilization sometime in the June quarter time frame, there will be a lag from the time we actually have the starts utilization. That's a start number. So how many wafers did we start in the fab in that time frame. So you have to go through a full fab cycle time. To get that through the fab, you have to get it shipped to our back-end facilities and have those wafers converted into chips and it eventually sent out to customer. So there's just a bit of a lag between the start time and when we would see at that revenue. Now this is based on a, I would say, start-up of the factory. I think over time, you'd see those cycle times improve. But as these are the early days of building out the fab, I think that's kind of a safe assumption around the time it would take and the time you start a wafer to the time you actually start to see that revenue occur.

I think, Gary, the other important point on all of this is that the crystal growth in Building 10, we've got 75% of the growers activated, the remaining will be installed between now and early next year. So -- and what we're doing now is we're probably by the end of this year, we'll be producing enough wafers to support a 15% utilization. So what we're actually doing is banking wafers because the fab is not ready to accept it. So we really like the performance of what we're seeing out of Mohawk. At the same time, we really like the performance of what we're seeing out of Building 10 from a substrate production perspective. .

Got it. And to take Mohawk Valley to $2 billion in annual revenue generation, it's all contingent on the JP facility. And we'll get to that in a second. But I wanted to stick on the -- I want to stick on the 150-millimeter silicon carbide Wafer side, which I think you had a record quarter in the just reported September quarter. And if I'm not mistaken, that might be $100 million roughly in revenue?

$96 million, $97 million, yes.

And so my question is what drove that record level? And is it repeatable?

Yes. Good question, Gary. So I think if you -- step one is, I think, as it relates to the [ side ] of business, the record material substrate, 150-millimeter kind of legacy 150-millimeter technology, and we sell those substrates into the marketplace. So there's a very heavy demand for those substrates, I think, both in the short term where we are supply-demand disconnected on substrates right now. We're also seeing good demand from a longer-term perspective, as many of the customers that we worked with are looking for expansions or extensions of current agreements that we have. So we are seeing both, I'd say, a current period and a future period kind of heavy demand for the 150-millimeter substrate. So we continue to see that. So that's kind of step one. From a production perspective, I think what we're seeing is the team -- the operations team in Durham, the materials operations team just did a terrific job. I think the stated capacity we had a couple of quarters ago was about $90 million or so a quarter capability. I think 2 quarters ago, they did close to $95 million. Last quarter, they went up to $96 million, $97 million. I would say that's at the high end of the capability. I think that was very good execution by the team. You could see that come back down to the mean at some point. But given that we're hand to mouth with customers, we'll just push it every quarter as far as we can. I don't want to commit to that being kind of a sustainable level, so we can kind of prove it out over a longer period of time.

Okay. I'm going to address an elephant in the room, and that is some of the cross currents that we've been hearing in the silicon carbide market, maybe the electric vehicle market. One of your competitors was -- this year may end up owing quadrupling its silicon carbide revenue versus increasing fivefold as previously anticipated. And that's a $200 million revenue shortfall for that company and so the highlight was always that there were LTSAs, which underpin a lot of your business. You spoke about your pipeline and your design ins. Are those really LTSA -- I mean, are they really nonreturnable, nonrefundable? Or is there the option for customers to back out of those with no financial penalty in the future?

Yes, I don't think we've ever talked about our demand in that light, Gary. But what I can tell you is, from an automotive perspective and the device level, what we're essentially shipping out of our Durham fab and now Mohawk Valley -- from an automotive perspective, we see very, very heavy demand. In fact, what we're seeing is we have over $100 million of unfulfilled auto demand right now that we -- if we have the capacity for that we could fulfill. I think a lot of what you're hearing in the -- and Gregg referred to this on the call, I think, last month, what you're hearing in terms of these cross currents on demand is that these are a lot of silicon-based electric vehicles that are probably you're not selling them have great range or capability in them and maybe they're not selling. What we're talking about is shipping into the ramps of the first-of-a-kind model of silicon carbide-based electric vehicles. So these ramps across a number of different customers, I named some of them earlier, are very much at the early stages of ramping these things. And I can tell you, both Gregg's time and my time, a significant amount of that time is meeting with executives at major OEMs and Tier 1s on allocation reviews reviewing supply. So I think we have a very broad, diverse set of demand across a lot of different customers across our design-ins. And right now, what I would say is that it is pretty heavily supply-demand disconnected and it's something that we're just focused on, on meeting [indiscernible].

And I think the other thing is, again, Gary, we've talked about this, but we are only pursuing opportunities within automotive where we are the primary supplier. And that's not because we have bravado, it's because it's logical to us because we're supply constrained. So to take a secondary supply agreement where you have to stand at the ready with capacity so that if the primary cannot fulfill the obligation. For us, it just doesn't make good sense. So I think when you think about the profile of the different silicon carbide players, we're only going for primary supply agreements that we're not looking at secondary supply agreement.

Okay. Let's shift gears and talk about the JP, which is named after John Palmer, one of the co-founders of Wolfspeed [ past ] little over a year ago. Where do you stand with shelling that facility and how far are we away from having product roll off that line. And this is 200-millimeter substrate supply, by the way, for silicon carbide.

Yes. So from the JP perspective, just again to give you a little bit, and I'll again give you some dates and times. First of all, the facility is on schedule and it's on budget. And we're very happy about that. So it's progressing right in line with what -- what we had expected, which is great. From a size perspective, the JP is going to be able to fulfill 10x more capacity than what we're able to do today at our current Durham campus. And to give you an idea of what that means, the current Durham campus is the largest silicon carbide facility in the world. So this is a very large step-up in terms of capability, in terms of supply, and it's going to be able to do that all at 200 millimeter. So we are making very good progress, I think, on the construction. I've been down there several times over the last few months. I know Tyler has been down there as well. Gregg has been visiting it frequently. So I think we're on track. So our anticipation would be as you get into the fall of next calendar year, so second half of next year calendar year, we should start some crystal production with heavier production starting in the first half of calendar 2025. So that's really what we're looking at out in that time frame.

Okay. That facility is being built in phases. It's a 400-acre piece of land or more. And so you have, I think, a lot of optionality to build out the capacity. So how should we think about the phases of the build-out and what drives your decision-making in extending the phases? Is it getting commitments from customers like Renesas, like the deal you recently signed.

Yes. So it will depend. I think what we're talking about here is building out a flexible manufacturing footprint in Siler City. So once we have the base capability that we've invested in, we are investing in right now. It leaves us, as you point out, Gary, a lot of flexibility in terms of how we can manage that. In step one of what we're building right now, we can fill the rest of the Mohawk Valley fab and we can supply what we've talked to Renesas about as well within that fab and probably have some left over for potentially some substrates for an additional fab beyond that. So I think it puts us in a very, very good position from a -- from a capacity arrangement if you think about things moving forward. So I think we're in good shape with that. As it relates to what's next, it will just depend on -- do we have another fab, how would that work down in time? That's really not what we're focused on right now. What we're really focused on right now is getting the JP build, ensuring that we can fill Mohawk Valley to 20% and then filling it with more substrates down the line over that time line I just mentioned from the JP. So that's really what we're focused on right now. Anything beyond that is something that we'll think about as time goes on. But again, we've have a lot of choices and a lot of flexibility in terms of how we can think about that.

And Gary, one thing to add to what Neill just said, as we're bringing up Siler, the other thing that we are also doing is we're kind of putting some belt [ spending ] around Building 10. So we think that with continued innovation and R&D work that 20% utilization is what we're -- is what we intend to get out of Building 10, but we think there's a couple more points of productivity. And what we've done is we've put some satellite operations in place, a facility in Farmers Branch, Texas that we'll be doing epitaxial. We've got a facility very close to the Durham campus that will do back-end processing. So in the event that Siler doesn't come on like the time line that we originally thought. We do have -- the plan is to put some excess capacity in place and building 10 to kind of bridge that.

Okay. Based on the current footprint that you're building out in Siler City, how much of that output will be consumed internally through Mohawk Valley and how much will be consumed externally?

Yes. So if you look at what we have today. So right now, the only deals that we have or the only arrangements that we have or contracts that we have for merchant sales is on 150-millimeter. That's what we are shipping today. The Renesas arrangement where we did a $2 billion customer reservation deposits or capacity reservation deposit with them. That will be fulfilled with 150-millimeter wafers for the first several years of that contract, leveraging our current capability. So there isn't really any significant incremental CapEx required to supply that deal. . As you think out in time, though, we wouldn't be thinking about shipping any 200-millimeter substrate until after 2027. And by that time, the Mohawk Valley fab should be full. So we would think about everything really focused on filling Mohawk Valley first and then potentially supplying others as we get to the end of that kind of time frame.

A lot of people are worried about additional competition, too much capacity being built up, particularly on the substrate side of the equation where I think China probably has some working product that is for debate. But -- how do you see your business transitioning from a substrate perspective. How much of that business will be for internal capacity looking 5 years down the road? And how much will be for merchant supply.

Yes. So a couple of things there. Just on what our strategy is in terms of growth. I mean, if you look at the size of the revenue capability for Mohawk Valley, we talked about $2 billion. Our Durham campus today, our small fabs from a device perspective, can do about $400 million a year. And our expectation is to grow Mohawk Valley to its full capacity, and we have more than enough demand to support that and also fill Durham. So you think about $2.4 billion of device revenue capacity over time, just think about Mohawk Valley and the Durham fab. From a materials perspective, right now, we talked earlier, Gary, about $90 million, $95 million a quarter, let's say, in terms of material substrate capacity. I could see that growing over time. We're kind of going to be capped, I think, around that level until we open up the JP. We could add more capacity to the JP, potentially sell more 150-millimeter Wafers, certainly sell 200-millimeter Wafers to Renesas. But our focus is going to be really on driving up the revenue and the value out of the device business over that time. And that's really where our focus is going to be as you think about that kind of longer-range thinking type plan.

And I think what we've seen over the last several months, the supply out of China is making progress on 6-inch. It's more of an industrial and energy grade, not automotive grade yet. And I think, as Gregg kind of mentioned on our most recent results call, we've always assumed everybody was going to get there with internal capability, but the truth is they probably won't. So there probably is, as Neil mentioned is opportunity for us to be smart about supplying more of the market 150. It's just going to be a question of who needs it.

Yes. I think that there's going to be -- our view is there's going to be some supply-demand disconnect, even on substrates for some time. And the reason for that is we just talked about having a record quarter in selling 150-millimeter substrates today. We are seeing customers come back looking for additional arrangements in terms of 150-millimeter capacity. The feedback, as Tyler mentioned, we're getting back in our own checks is that the China-based substrates are not really ready for being automotive capable. And that's a 150-millimeter no less 200 millimeter. So I think there's going to be some disconnects there in terms of supply for quite some time. .

Okay. We talked already about the steps of improvement at Mohawk Valley from a revenue and from a utilization perspective. But the gating factor in creating those steps is tweaking the tools in the fab, as you described in your last earnings call. So starting out there, maybe if you can talk about how that's been going, what some of the remaining bottlenecks, production bottlenecks may be? And then as well, what are some of the more significant and impactful qualifications that you're going for -- going through from a customer perspective.

Yes. So we're managing through the qualification cycles now. I think as we talked about this maybe 4, 5, 6 months ago, we talked about having different customers taking parts at different stages. Well, that's really -- fast forward today, that's been actually very positive. And the reason for that is we've had very good success and qualification in the Mohawk Valley Fab. So almost all of the MOSFETs that we -- all of the MOSFETs that we have tried to qualify, qualified on first pass in the fab, which is very unusual. So we're very proud of that fact. And what that speaks to is the capability of the technology of what we're delivering to have that type of success first time. So -- we've got the substrate and we've got the qualified material, which I think makes us feel very confident in terms of being able to solve the delivery challenges, but also the competitiveness of our parts, which I think is great. So that leaves us really with one challenge now, bringing up volume in the fab. And we've been working on various process steps. The process step that Gregg has been talking about on the last call, we've made very, very good progress on since then. And it's really just been -- if you think about it, these are the first -- very first time what we're trying to do is very challenging as we've learned. 200-millimeter substrate for the first time running through a fab on these tools. People have done this for a number of years at 150 millimeter, but these are the first time they're running throughout 200-millimeter. You have to remember, silicon carbide substrates are very hard. So they can be very tough on the tools. You think about trying to get the right maintenance schedules in to try and keep those tool times up, that's what we're talking about here. And this is -- these are solvable issues, which we've just proven the process step we talked about last month. Our teams got together with the vendor team, they've worked together to solve this. Gregg has been up to fab several times for reviews, and we've worked through it. There are some process steps after that and later in the fab that we're working through. I wouldn't say anything to the extent that we were working through on what we talked about, that's what gives us really good confidence about driving volume through the fab. These are a matter of time to solve what I think are realistic challenges in bringing something up for the first time.

Okay. I think the decision to move forward with the Mohawk Valley Fab, going back maybe as long as 5 years ago was contingent on some of the tax credit you get from the State of New York. And what we've seen is a slower bring up of Mohawk Valley. So based on the employment requirements to get those state tax credit, are you going to be able to fully utilize those.

Yes, we're well on our way to working with New York on reimbursements for tools and achieving the milestones that we had agreed upon with them. And I think that's what's mean,if you look at Mohawk Valley right now, getting through the build-out of the fab getting the reimbursements from New York, which has been a terrific partnership for us, has all worked out well. And now what we're doing is installing tools and those tool reimbursements are coming in a lot faster than they do for construction as you can imagine. . And so when you think about like as we're adding tools to the fab right now, we're still drawing down on these credits from the State of New York, which is making Mohawk Valley is not really much of a cash drag for us right now. Most of our CapEx is really going into the JP at this time to build out that facility. And that will make this year from a CapEx investment perspective, kind of the peak year in our journey here, and that allow us to have, I think, a modest step down as we get into fiscal 2025.

Okay. Your guidance for the current quarter is roughly, what, mid-20% gross margin. And there's some utilization charges that are incorporated into that. And if not for those underutilization charges, you would probably be trending in the what, low 30%, mid-30% range. But I think the destination for gross margin is close to 50%. I'm not sure. Exactly how that's been altered over the last several quarters, but I think 50% is the destination. Maybe if you can help bridge going from the mid-20% gross margin today.up to 50%?

Yes. Look, there's no real change into our gross margin plan in terms of how we achieve the margin, but I think from a material substrate perspective, there's not a whole lot of work to do there. I think products from that perspective are already kind of at the company targeted company goals. So this is really about devices. And this is the same challenge we've always had. The Durham fab is higher cost. It's not nearly as competitive Mohawk Valley will be on 150-millimeter substrates. As you make the transition from 150-millimeter substrate to a 200-millimeter substrate, this math is the same as on silicon. You get a 70% bigger surface area on the substrate itself. That drives a 40% cost improvement at the die level. So I've said this many times and probably every public statement, but all roads lead the Mohawk Valley for many reasons and another one of them is gross margin. As we make the transition to a competitive fab with competitive processing costs, as we start to see the benefit of a larger diameter, we could see our cost improvement move dramatically. So as we run more revenue through the fab, we'll get a couple of benefits. We'll get the benefit of the fab itself being more productive than the current fab that we're running in. We'll see the benefit off of the lower die cost based on the larger substrate. And then we also are taking, as you mentioned, the utilization charge right now -- underutilization charge, sorry, right now just because the fab is just in its infancy in terms of driving capacity. So as we start to bring more volumes to the fab, we'll get a third tailwind there as well. So as we drive more volume through Mohawk Valley, we'll get advantage of the scale, the cost benefits for those various reasons, and you see the margins improve with that over time, which has always been the strategy from a margin expansion perspective.

You guys, as we've highlighted numerous times, very capital intensive right now. You've got a lot of plans to add multiple -- capacity at multiple points in the supply chain. Maybe you can talk about the capital intensity for the next few years where you stand with funding that capital intensity.

Yes. So first of all, from a balance sheet perspective, I think we're in very good shape. We ended last quarter with over $3 billion of cash on the balance sheet, and that does not include the second drawdown on our $2 billion Renases capacity reservation deposits. So there's another $1 billion that we would likely take in tranches in fiscal -- in the first half of of next calendar year. So that's what we'll kind of work through there. That puts us in a very good position to have about $2 billion of CapEx this year in fiscal 2024, primarily focused on the JP facility and building that facility out. And as you work into the following year, what we'll see is a step down in the CapEx as you think about 2025. And then as you get below outside of that period, then you get back to some of these tax credits and things will be working for their chipset and other things, we'll start to see reimbursements out in that time frame. So not only will our facilities that have been built, will start to come down that curve as you get out into 2026 and beyond, you'll also start to see reimbursement. So there'll be a natural reduction in the requirement for CapEx, and we'll also see an influx of more of the government incentives. This is very -- this will mirror what we just did with Mohawk Valley on a larger basis. In Mohawk Valley, we funded the upfront investment and then came back down the other side as we started seeing reimbursement. It's exactly what we've seen. We anticipate seeing the same thing as we start to do the further build out of the company just at a larger scale.

I know the first draft of the CHIPS Act did not include silicon carbide as a target for subsidization. But I think there's been a request for a common period and maybe the second draft there's an opportunity for silicon carbide to be included. Where does that stand? And what's potentially beneficial to you if it's included? .

Yes. We've worked very closely with both treasury and commerce on the point that Gary just identified. We've submitted some what we'll call language that provide some guardrails on how do we include silicon carbide. And they've indicated that it's -- they like the structure of what we put together. We've also met with the chips program office and Todd Fisher to kind of outline a few things as earlier this year, silicon carbide was identified as a critical mineral by the U.S. Geological office. So there's national security interest there. So we feel very good about where things stand. And I think it's going to be opportunities of funding across CHIPS Act or the IRA. So where we sit now, there's optimism that we'll get our applications in between now and the end of this year and have some kind of indication next year of what the funding structure looks like with the U.S. government.

Okay. So it sounds like you're well funded for the current capital intensity plans. But a potential wrinkle from the investor concerns that I hear is if you build a German facility. And so what what's the driving force behind -- what would be the driving force behind that? What sort of guarantees would you need from potential customers and from the German government. How should we think about maybe a need for more capital to fund that?

First of all, Gary, let me be really clear, our #1 priority is driving Mohawk Valley to 20% utilization. I think that we've got to go execute that plan, and I think that will underpin our capability as a company to drive a profitable cash flow-generating enterprise over time -- so that's absolutely our #1 priority right now and everyone who walks in the door, every day, it will speed is laser-focused on this from Gregg down out through the organization. So that is step one or pretty much anything we want to think about doing. As it relates to a second fab Saraland, such as Saraland, it really depends on the funding structure. We'd have to see the funding structure. We haven't seen the funding yet. And when we do see the funding come back, we'd expect it to be similar to what we've seen from Mohawk Valley, and we can -- if that funding comes in, we can talk about that, then and we'll give an update later on that.

All right. Well, we don't have a whole lot of time left, so this is probably a good stopping point. I appreciate you guys joining us today. I appreciate everybody in the room joining us. And I appreciate everybody online joining us. And so with that, thanks again, guys.

Great. Thank you, Gary.