Wolfspeed: Undervalued Despite Competition In SiC

Summary

• Wolfspeed's FY2024 revenue growth slowed significantly, driven by competitive pressures and delayed revenue realization from key deals, impacting its market share in SiC power devices and materials.
• The company's competitive positioning weakened against rivals like Infineon and ON Semiconductor, with Infineon leading in product breadth and performance, and onsemi showing robust growth.
• Despite increased competition, WOLF maintains the largest market share in SiC materials, supported by long-term contracts, including an expanded deal with Infineon worth $275 million.
• Although industrial market weakness impacted revenue, it represents only 20% of Wolfspeed's total revenue. A recovery in telecom capex is expected to mitigate this slowdown.

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In our previous coverage, we highlighted Wolfspeed, Inc. (NYSE:WOLF) strategic decision to divest its RF business due to its lagging growth rate and negative profitability, which we expected to strengthen its position in the SiC

Analyst’s Disclosure: I/we have a beneficial long position in the shares of WOLF either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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