Wolfspeed, Inc. · NYSE:WOLF
Wolfspeed — Cree — Investor Day (November 2019)
129 slides from Wolfspeed's investor day presentation, Nov 20, 2019
Slide 1: Cree Investor Day November 20, 2019
Cree Investor Day November 20, 2019 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 2: Forward-Looking Statements & Non-GAAP Measures
Forward-Looking Statements & Non-GAAP Measures Note on Forward-Looking Statements This presentation includes forward-looking statements about Cree’s business outlook, future financial results and targets, product markets, plans and objectives for future operations, and product development programs a
Slide 3: Strategic Overview
Strategic Overview Gregg Lowe President & Chief Executive Officer Cree Investor Day 2019 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 4: Today's Agenda
Today’s Agenda Strategic Overview Gregg Lowe - President & Chief Executive Officer Silicon Carbide 101 John Palmour – Chief Technology Officer Wolfspeed Overview Cengiz Balkas – Senior Vice President and General Manager, Wolfspeed Jay Cameron – Vice President and General Manager, Wolfspeed Power Aut
Slide 5: Our Transformation Journey
Our Transformation Journey We communicated several key imperatives at our last Investor Day Wolfspeed LED Lighting Build a powerhouse Focus where our best-in-class Fix the business semiconductor company technology and application- focused on silicon carbide and optimized solutions are gallium nitrid
Slide 6: Our Transformation Journey: Progress
Our Transformation Journey Since then, we have made significant progress on our transformation journey… 2018 2019 February: Announced Transformative Plan at 2018 January: Announced Long-Term Silicon Carbide Investor Day Wafer Supply Agreement with STMicro Announced Sale of Lighting Business to Annou
Slide 7: Our Transformation Journey: Industry Headwinds
Our Transformation Journey …Despite several near-term industry headwinds 2018 2019 April: Ban on sales to ZTE for breaching terms Ban on U.S. companies’ shipments of sanctions settlement May: to Huawei announced May: China U.S. Trade War commences with June: Changes in EV incentives take first round
Slide 8: Momentum Continues with Recent Announcements
Momentum Continues with Recent Announcements In the last 70 days, announced a number of key partnerships underscoring the growth opportunities across the business Leverage silicon carbide Establish world’s largest semiconductors to Create highly efficient silicon carbide device enable faster, smalle
Slide 9: Silicon Carbide vs. Silicon
Silicon Carbide vs. Silicon The next generation in power semiconductors will be driven by silicon carbide technology Silicon Carbide vs. Silicon Silicon Carbide Solar Inverters and On-Board Chargers are: 10 • Lighter 9 • Smaller • More efficient GaN-Silicon Carbide Based 5G 3 Systems enable: • Incre
Slide 10: Key Applications of Silicon Carbide and GaN
Key Applications of Silicon Carbide and GaN The superior performance of silicon carbide is powering new sectors and reviving established ones Industrial & Energy Electric Vehicles RF Infrastructure On-board and off-board charging GaN on silicon carbide Silicon carbide power devices systems convert p
Slide 11: EV Adoption Continues to Accelerate
EV Adoption Continues to Accelerate Global OEMs have announced more than $300 billion of EV investments Announces Model S and Announces $11B to Announces $25B Targets 15-25% EV Model X extended ranges introduce 40 EVs by 2023 Investment to build EV production by 2025; with silicon carbide versions o
Slide 12: Key Drivers of EV Adoption
Key Drivers of EV Adoption Benefits to both consumers and OEMs are driving the opportunity for rapid EV adoption Emission Range Regulations Key Drivers EV Adoption Performance Charge Time Incentives 12 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfs
Slide 13: EU CO2 Emission Standards – BEVs Offer a Solution
EU CO2 Emission Standards – BEVs Offer a Solution The EU CO2 standards will dramatically alter the European car market in the coming years Illustrative example: 160 10x increase in 130 g/km Hybrid/Electric Cars 140 120 g/km 95 g/km 2 2 100 81 g/km CO 80 10% Hybrid / 60 25% Electric 59 g/km 40 Gasoli
Slide 14: Growing and Diversified Pipeline
Growing and Diversified Pipeline The shift to silicon carbide has led to a growing and diversified pipeline of device opportunities Industrial & Energy Recent Wins Infrastructure Automotive Partnership to utilize silicon carbide semiconductor device technology to enable more efficient and powerful e
Slide 15: Winning in Materials – Key Deals Announced
Winning in Materials – Key Deals Announced Our wafers are driving the transition in the power semiconductor industry from silicon to silicon carbide Customer #4 $500+ Million $100+ Million $85+ Million $85 Million In addition to many other large contract wins in Materials 15 CREE CONFIDENTIAL & PROP
Slide 16: Expanding Leading Materials Position
Expanding Leading Materials Position Maintaining leadership position with silicon carbide materials substrate and epi capacity expansion 16 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cre
Slide 17: State-of-the-Art Wafer Fab
State-of-the-Art Wafer Fab Highly automated and automotive-qualified facility with additional future capacity at lower net cost than previously announced 17 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered
Slide 18: Why We Win
Why We Win Well-positioned to benefit from significant and growing opportunities in silicon carbide Executing well against our Growing and diversified pipeline transformational strategy to supported by secular trends in become a powerhouse attractive end markets including semiconductor company focus
Slide 19: Why We Win
Why We Win Well-positioned to benefit from significant and growing opportunities in silicon carbide Executing well against our Growing and diversified pipeline transformational strategy to supported by secular trends in become a powerhouse attractive end markets including semiconductor company focus
Slide 20: CREE Cree®, the Cree logo, Wolfspeed®, and the
CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 21: Silicon Carbide
Silicon Carbide 101 John Palmour Chief Technology Officer Cree Investor Day 2019 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 22: Key Questions We'll Address Today
Key Questions We’ll Address Today What is Wide Bandgap and why is it important? Why is silicon carbide so difficult to grow? How are cycles of learning the KEY to making cost and quality improvements in Silicon Carbide crystal growth? Why does Cree’s 30 years of experience uniquely position us in th
Slide 23: Covalent Bonding in Semiconductors
Covalent Bonding in Semiconductors A covalent bond involves the C sharing of electron pairs between atoms Shared Electrons Silicon and Carbon each share four electrons – creating very C Si C strong covalent bonds This bond strength is key to band gap, electric breakdown, and thermal C conductivity 2
Slide 24: Band Diagrams of Common Semiconductors
Band Diagrams of Common Semiconductors Wide bandgap semiconductors allow devices to operate at much higher voltages and temperatures, making them ideal for next-generation applications Empty Empty Empty Empty Key for power & RF: Wide bandgap yields a 10 X higher electric 1.1 eV 1.4 eV E = 3.2 eV E =
Slide 25: GaN High Electron Mobility Transistor (HEMT)
GaN High Electron Mobility Transistor (HEMT) V = -3V Typ.* Ground G Vd for GaAsGaN is is about about 150V! 15V Gate Width (e.g. 1mm) Source Drain Gate Basic 1mm GaN HEMT Unit Cell AlGaN Electron flow Insulating GaN AlN Buffer Layer Semi-insulating silicon carbide substrate GaN power density is 5-8 W
Slide 26: Advantages of Wide Bandgap (GaN on Silicon Carbide)
Advantages of Wide Bandgap (GaN on Silicon Carbide) Properties High thermal conductivity High breakdown voltage is of the silicon carbide the key for wide bandgap substrate enables high microwave devices power densities in terms of W/mm2 of die area • High voltage gives higher power density in terms
Slide 27: Higher Substrate Thermal Conductivity Gives Higher W/mm2
Higher Substrate Thermal Conductivity Gives Higher W/mm2 Pitch with silicon substrate Pitch with silicon carbide substrate 27 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 28: MOSFETs in Silicon and Silicon Carbide for 1000V
MOSFETs in Silicon and Silicon Carbide for 1000V Higher electric breakdown of silicon carbide than silicon allows silicon carbide power devices to have much thinner more heavily doped blocking layers Silicon Silicon Carbide 10 mm thick 1x1016 cm-3 The drain region dominates the total resistance 100
Slide 29: High Electric Breakdown Field Allows Very Low on-Resistance in SiC
High Electric Breakdown Field Allows Very Low on-Resistance in SiC Lower is better is Lower 29 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 30: High Electric Breakdown Field Allows Very Low on-Resistance in SiC
High Electric Breakdown Field Allows Very Low on-Resistance in SiC The lower the on-resistance, the lower the power loss Lower is better is Lower 30 Source: Cree estimates CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo
Slide 31: Silicon Carbide Offers Much Lower Losses Than Silicon
Silicon Carbide Offers Much Lower Losses Than Silicon Silicon carbide MOSFETs offer significantly lower losses than Si IGBTs at both 400V and 800V 400V 800V Inverter-level Loss Comparison: Inverter-level Loss Comparison: Silicon vs. Silicon Carbide Silicon vs. Silicon Carbide (same voltage and switc
Slide 32: Higher Efficiency of Silicon Carbide
Higher Efficiency of Silicon Carbide Silicon carbide inverters are the key to driving inverter loss reduction % inverter loss comparison % EPA City Cycle % EPA Hwy Cycle 10 ~9.1% 10 ~ 77% inv. loss ~ 85% inv. loss 8 reduction 8 reduction Using Cree’s technology, Ford tested the comparison of inverte
Slide 33: How To Make Silicon Carbide – Video
How To Make Silicon Carbide – Video 33 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 34: Silicon Carbide Does Not Occur In Nature Without Other-Worldly Help
Silicon Carbide Does Not Occur In Nature Without Other-Worldly Help Canyon Diablo, Arizona 34 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 35: SiC Maturation for Commercial Applications – Crystal Growth
SiC Maturation for Commercial Applications – Crystal Growth Silicon liquid-phase growth Silicon carbide vapor-phase growth How Hot? 5000 C : surface of sun 2500 C : Silicon carbide growth 1730 C : molten lava 1414 C : molten silicon http://what-when-how.com • Silicon is pulled from molten silico
Slide 36: SiC Polytypes
SiC Polytypes On this (0001) plane, all polytypes have the same structure Stacking sequence for different SiC polytypes in the {1120} plane 36 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of
Slide 37: SiC Polytypes
SiC Polytypes On this (0001) plane, all polytypes have the same structure (0001) (1120) plane (1100) But they stack differently in the 3rd dimension Stacking sequence for different SiC polytypes in the {1120} plane 37 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the
Slide 38: SiC Polytypes – More Than Different Crystal Structures!
SiC Polytypes – More Than 200 Different Crystal Structures! 38 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 39: SiC Polytypes – More Than Different Crystal Structures!
SiC Polytypes – More Than 200 Different Crystal Structures! Only useable polytype for Silicon Carbide Power 39 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 40: Capacity Driven Advantage in Materials Development
Capacity Driven Advantage in Materials Development Our scale in development capacity accelerates R&D and production improvements Starting Seed High Quality Growth • do not add new defects • reduce existing defects Improved Seed High Quality Silicon Carbide Wafers High Quality Crystals Slice and Surf
Slide 41: What If Conditions Are Wrong? What If Process Shifts?
What If Conditions Are Wrong? What If Process Shifts? A beautiful mess! 41 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 42: Top Silicon Carbide Suppliers
Top Silicon Carbide Suppliers Cree is the market leader in producing silicon carbide today… 62% 38% Cree Rest of World 42 Source: Yole Power SiC Report 2018 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered
Slide 43: Top Silicon Carbide Suppliers
Top Silicon Carbide Suppliers Cree is the market leader in producing silicon carbide today……and for the last 22 years 96.5% 3.5% Cree Rest of World 43 Source: Cree estimates CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed log
Slide 44: Why We Win: Silicon Carbide
Why We Win: Silicon Carbide Silicon Carbide and Gallium Nitride are ideal materials for Silicon carbide is extremely power and RF applications difficult to grow with high due to high power density quality Cree has by far the most Cree has a tremendous head experience and learning in start over compe
Slide 45: CREE Cree®, the Cree logo, Wolfspeed®, and the
CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 46: Wolfspeed Overview
Wolfspeed Overview Cengiz Balkas Senior Vice President and General Manager, Wolfspeed Cree Investor Day 2019 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 47: Our Transformation Path
Our Transformation Path Creating a powerhouse semiconductor company focused on silicon carbide and GaN Capitalize on large, multi-decade growth opportunities in Electric Vehicles, Energy, Communications Infrastructure, Industrial and Aerospace and Defense Invest to expand scale and to accelerate gro
Slide 48: Strong Revenue Performance
Strong Revenue Performance Our focus on fast growing end markets has significantly increased our revenue over the last 4 years Wolfspeed Revenue ($M) $538 $329 Automotive Communications $221 $176 Energy Industrial FY16 FY17 FY18 FY19 48 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights re
Slide 49: Moving Into The Mainstream
Moving Into The Mainstream Clear and proven value propositions with strong focus on silicon carbide and GaN Substantial growth in opportunity pipeline across all addressable markets Material business supporting industry transition with global scale First phase of capacity investments in place to exp
Slide 50: Materials Business Strategy
Materials Business Strategy Maintain leading global Expand capacity to Use scale to drive market share accelerate industry innovation, quality and transition from silicon to cost reduction silicon carbide improvements 50 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, t
Slide 51: Materials Market Opportunity
Materials Market Opportunity Silicon carbide materials market expanding to more than $1 billion by 2024 $1.1B Drivers SAM 2024 Value proposition validated in applications that are driving significant growth EV applications driving significant volume steps in power wafer market Significant adoption i
Slide 52: Materials Capacity Expansion
Materials Capacity Expansion 30x Increase in materials Materials production mega factory 1x Q1 FY2017 FY2024 Existing building Next phase in Durham ready of expansion for deployment 52 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wo
Slide 53: Expanding Silicon Carbide Epitaxy Business
Expanding Silicon Carbide Epitaxy Business Epitaxy Process Over 4x Increase in Epi Units units Silicon carbide Growing silicon Silicon carbide substrate carbide epiwafer Gas Injector 2018 2019 2020 Epitaxy defines device performance and quality Highly customized systems for quality and throughput Wi
Slide 54: Extended and Expanded Agreement with STMicro
Extended and Expanded Agreement with STMicro We are accelerating the industry transition to silicon carbide January 2019 • Cree and STMicro Announce Multi-Year Silicon Carbide Wafer Supply Agreement • Agreement value >$250M for 150mm Power substrates and epitaxy November 2019 • Cree and STMicro Doub
Slide 55: RF Business Strategy
RF Business Strategy Drive value with vertical Support Communication Serve Aerospace and integration and Infrastructure customers Defense markets with technology leadership with focused product and select distribution worldwide application partnerships 55 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree,
Slide 56: Complete Vertical Integration Serving GaN RF Market
Complete Vertical Integration Serving GaN RF Market With the acquisition of Infineon’s RF business in March 2018, we have significantly expanded our team and capabilities Application Product & Capabilities Centers and IP Business Materials Technology (system, Customer Portfolio technology, Scale Por
Slide 57: RF Business On Track Despite Short-Term Uncertainty
RF Business On Track Despite Short-Term Uncertainty Despite near-term headwinds, we are winning in the market and positioned well for long-term growth Challenges and uncertainty due to ongoing global trade tensions Over $200 billion of investments announced for 5G deployments GaN applications and ad
Slide 58: RF Device Market Opportunity
RF Device Market Opportunity GaN RF device market expanding to $2 billion in 5 years Drivers $2B SAM: Year 2024 5G revolution driven by exponential rise in data rate and bandwidth requirements High-performance next generation $645M aerospace and defense systems GaN RF Device Revenue 2018 Improved pe
Slide 59: GaN Drivers: Communication Infrastructure
GaN Drivers GaN adoption continues in Communication Infrastructure APPLICATIONS AND DRIVERS SOLUTION: GaN BASED 5G SYSTEM • Explosive growth in mobile data • Compact systems • Faster Down/Up Link speeds with lower latency • Increased frequency bandwidth • More capacity for more user equipment • Lowe
Slide 60: GaN Drivers: Multiple Applications
GaN Drivers GaN improves system performance across multiple applications APPLICATIONS AND DRIVERS SOLUTION • Lower Power Consumption with higher performance A 25W GaN Solid State Power Amplifier provides • Smaller, lighter Equipment better value than a 4kW magnetron transmitter with >60x longer oper
Slide 61: Power Business Strategy
Power Business Strategy Convert high voltage Expand leadership Invest in R&D, sales and (>600V) power market to position in Automotive marketing to gain scale silicon carbide through and increase revenue focused ecosystem and diversity with Industrial distribution partnerships and Energy 61 CREE CON
Slide 62: Silicon Carbide Power Device Market Opportunity
Silicon Carbide Power Device Market Opportunity The automotive and industrial & energy end markets are driving rapid acceleration $5B Drivers SAM 2024 System level cost benefits and increased range accelerate EV adoption Efficient power supplies and motor drives Fast charging stations for electric v
Slide 63: Industrial and Energy – Market Opportunity
Industrial and Energy – Market Opportunity Strategy and approach • Increase revenue diversity through industrial and energy • Engage a fragmented market through a larger sales team and a focused channel strategy • Accelerate adoption through ecosystem development with industry partners Applications
Slide 64: Automotive – Market Opportunity
Automotive – Market Opportunity Strategy and approach • Drive enabling scale and cost reductions • Engage through die, component and module products Applications • Powertrain • On board chargers • Primary power converter Value propositions • Powertrain efficiency improves over silicon, enabling long
Slide 65: Fast Charging – Market Opportunity
Fast Charging – Market Opportunity Silicon carbide enables fast charging for electric vehicles Fast Charger Deployments Current fast chargers can add 75 miles of range in five minutes 3.5 • Worldwide fast charger deployments predicted to be 3.3M units in 2024 • Silicon carbide will capture a portion
Slide 66: Why We Win: Wolfspeed
Why We Win: Wolfspeed Driving the industry transition Expanding serviceable markets from silicon to silicon carbide and pipeline opportunities across and GaN all business lines Building a world-class Investing to create organization with the scale and substantial scale necessary industry experience
Slide 67: CREE Cree®, the Cree logo, Wolfspeed®, and the
CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 68: Automotive Opportunity
Automotive Opportunity Jay Cameron Vice President and General Manager, Wolfspeed Power Kenric Miller Automotive, Vice President Global Sales & Marketing Cree Investor Day 2019 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed l
Slide 69: Key Messages
Key Messages Significant market shift from silicon to silicon carbide for battery electric vehicles Automotive Power Growth enabled by three dynamics: • Automotive industry recognizes silicon carbide value proposition at system level • Silicon carbide enables more range and faster charging • Increas
Slide 70: Expanding BEV Market – Picking Up Momentum
Expanding BEV Market – Picking Up Momentum Strong growth opportunity as emission standards drive significant shift to battery electric vehicles 20% 41% 39% 2030 7% 27% 66% 2025 0.5% 11% 88% 2020 2% 98% 2015 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% BEVs Other EVs Pure ICE Source: Yole and Cree est
Slide 71: OEM Shift from Silicon to Silicon Carbide
OEM Shift from Silicon to Silicon Carbide Unique market transformation being driven by lower costs, faster charging and better performance Do you plan to use silicon carbide in your inverter by 2025? Yes No No Probable As of As of As of August Yes August August 2017 2018 2019 No Probable Yes 71 CREE
Slide 72: Driving Cost Savings in Electric Vehicles
Driving Cost Savings in Electric Vehicles The shift from silicon to silicon carbide delivers cost savings for OEMs Battery Electric Vehicle ~5.0% - 10% Silicon Carbide Battery Savings (80kWh battery x $102/kwh battery cost) ~$400 - $800 Space / Weight Savings (battery & inverter) $++ Cooling Require
Slide 73: Customers Benefit from Silicon Carbide
Customers Benefit from Silicon Carbide Silicon carbide is the driving force behind more range and faster charging New Tesla drive unit has silicon carbide power electronics New Models S and X can now use Tesla 2019 Tesla Model X 3rd generation Superchargers, which deliver charges up to 50% faster Ba
Slide 74: Investing $720M Over Five Years to Expand Silicon Carbide Capacity
Investing $720M Over Five Years to Expand Silicon Carbide Capacity Capacity announcement drove strong response from our customers and addressed major concerns regarding the shift from silicon to silicon carbide Increase in Output Delivering >30x >25% increase in silicon carbide more output compared
Slide 75: Investing $720M Over Five Years to Expand Silicon Carbide Capacity
Investing $720M Over Five Years to Expand Silicon Carbide Capacity Capacity announcement drove strong response from our customers and addressed major concerns regarding the shift from silicon to silicon carbide “Congratulations on the capacity increase.” – Tier One Auto CEO “It's very exciting to kn
Slide 76: Automotive Pipeline Growth Opportunity
Automotive Pipeline Growth Opportunity Automotive is expected to be the driving force of Power revenue We’ve Added Automotive Represents $2.6B ~45% In the Last Twelve Months Of Total Opportunity Pipeline 76 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo,
Slide 77: Why We Win in Automotive
Why We Win in Automotive Silicon carbide defeats silicon Cree wins silicon carbide • Higher cost offset by increased battery • The right strategy: savings - Focused on automotive silicon • Increased advantage with lower cost carbide power needs cooling system and space savings • Great products that
Slide 78: CREE Cree®, the Cree logo, Wolfspeed®, and the
CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 79: Customer Perspective
Customer Perspective Tobias Keller ABB Vice President of Product Development, Semiconductors 79 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 80: CREE Cree®, the Cree logo, Wolfspeed®, and the
CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 81: Opportunity Pipeline
Opportunity Pipeline Thomas Wessel Senior Vice President, Global Sales & Marketing Cree Investor Day 2019 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 82: Key Messages
Key Messages Pipeline spans across multiple industries where our technologies enable future capabilities Strong development of our Opportunity Pipeline and the key drivers Focused sales organization and channel partnerships to extended our geographic and market coverage 82 CREE CONFIDENTIAL & PROPRI
Slide 83: Cree Wolfspeed Focus Segments
Cree Wolfspeed Focus Segments Our Silicon Carbide and GaN solutions enable next generation technology in fast evolving markets Automotive Communication Infrastructure Aerospace & Defense Industrial Energy Lighting 83 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the C
Slide 84: Device Pipeline Opportunity Development
Device Pipeline Opportunity Development $9B $2.9B $2.5B $1B $1.2B Device Pipeline New Auto / New oppy in New LED New Oppy Opportunity CIFR oppy Geographic opportunities with Arrow today Sales Territories Last 12 months 84 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®,
Slide 85: Focused Sales & Marketing Organization
Focused Sales & Marketing Organization Over the last eighteen months we’ve established a sales and marketing team well equipped to win in the global market Added 1000 years 3x FAE team 9x Wolfspeed Semiconductor Technical Support Geo Sales Sales Experience Broad Market Coverage $9B 50% 82% Automotiv
Slide 86: Design Cycle – Automotive Case Study
Design Cycle – Automotive Case Study The execution of a design win is an extensive process from start to finish Pipeline Profile Supplier Design & Selection Qualification Process 2 – 4 Years Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Identification Commitment SOP NBO DIN DWIN 86 CREE CONFIDENT
Slide 87: Automotive Pipeline Profile – Next Projects
Automotive Pipeline Profile – Next 255 Projects Our automotive pipeline increases dramatically through 2025 as silicon carbide adoption rapidly accelerates 2020 2021 2022 2023 2024 2025 87 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and th
Slide 88: Cree Wolfspeed Opportunity Pipeline
Cree Wolfspeed Opportunity Pipeline Industrial & Energy Infrastructure EV Charging Motor Drive Power Supplies Transportation Solar Automotive Wind Inverter Distribution &Transportation $9B OBC Opportunity Pipeline DC/DC LIGHTING Lighting In/Outdoor Specialty Communication Display Infrastructure Macr
Slide 89: Cree Wolfspeed Opportunity Pipeline
Cree Wolfspeed Opportunity Pipeline $9B Opportunity Pipeline ~ 50% decided in 6 to 18 months 89 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 90: Why We Win: Pipeline
Why We Win: Pipeline Capitalizing on the Creating GaN on silicon electrification of the carbide technology to enable drivetrain and a clear silicon next generation communication carbide value proposition standards Establishing a focused sales & marketing Expanding capacity to scale organization and
Slide 91: CREE Cree®, the Cree logo, Wolfspeed®, and the
CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 92: Global Operations & Quality
Global Operations & Quality Rick McFarland SVP Global Operations Lisa Fritz VP Global Quality Cree Investor Day 2019 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are trademarks of Cree, Inc.
Slide 93: Key Messages
Key Messages Highly automated New York wafer fab has ability to efficiently respond to demand increases while achieving a competitive wafer cost Maintaining capacity leadership position with materials substrate and epi expansion by repurposing existing Durham building Continuing to execute growth st
Slide 94: Investing $720M Over Five Years to Expand Silicon Carbide Capacity
Investing $720M Over Five Years to Expand Silicon Carbide Capacity Creating an East Coast silicon carbide corridor with new wafer fab and mega materials factories Increase in Output Delivering >30x >25% increase in silicon carbide more output compared to the wafer fabrication New previously planned
Slide 95: Wafer Fab Strategy
Wafer Fab Strategy Driving device capacity expansion through a highly automated, more efficient facility Wafer Fab Capacity Silicon Carbide vs. Silicon Learning Curve Silicon Silicon carbide – Rapid Carbide pace of growth Cost Si – several cycles, low Silicon single digit growth Cycles of learning R
Slide 96: Materials and Epi Strategy
Materials and Epi Strategy • Today the Silicon Carbide Substrate and Epi business share a facility with the Durham Fab • Once Mohawk Valley is fully operational, Materials will use the whole facility Durham Buildings 1/5/8 With Mohawk Valley, our Wafer Fab shell in Durham is available for repurposin
Slide 97: Capacity Expansion Plans to Meet Demand
Capacity Expansion Plans to Meet Demand We are well positioned to ramp capacity as demand for silicon carbide expands When fully equipped, our fab could supply silicon carbide to 5.5M BEV, ~5% of worldwide auto sales When fully equipped, our Materials factory could supply silicon carbide to 22M BEV,
Slide 98: Quality Strategy Update
Quality Strategy Update Lisa Fritz 98 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 99: Cree Quality Focus
Cree Quality Focus Our strategy to integrate our people, systems and culture is driving our competitive advantage Build out experienced Invest in scaling quality Advance automotive quality engineering management systems culture through key teams and processes quality initiatives 99 CREE CONFIDENTIAL
Slide 100: Silicon Carbide Automotive Quality – A Corporate Culture
Silicon Carbide Automotive Quality – A Corporate Culture Leading the industry transformation and defining the roadmap for silicon carbide quality Advancing • Leading silicon carbide engagement in industry standards Industry Standards organizations (JEDEC, AEC, ECPE) Enhancing Cree’s • Automotive cer
Slide 101: Building Our Quality Culture
Building Our Quality Culture Delivering on customer expectations through key quality initiatives CULTURE • High quality product at ATTITUDE optimized cost • Increased customer • Proactive mindset satisfaction BEHAVIOR • Enable zero defects • Active engagement PROCESSES in risk mitigation • Meet auto
Slide 102: Why We Win: Operations
Why We Win: Operations Executing expansion strategy to Reducing total cost through efficiently respond to materials improved efficiencies and scale and wafer fab demand Investing in our people, Implementing zero defect processes and systems in strategies to further our order to achieve scale automot
Slide 103: CREE Cree®, the Cree logo, Wolfspeed®, and the
CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 104: LED Overview
LED Overview Claude Demby Senior Vice President and General Manager, LED Cree Investor Day 2019 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 105: Industry Leading Market Position
Industry Leading Market Position We have established the industry’s strongest LED brand Leading Position in Strong Track Record of Global Creating a Resilient Attractive Markets Product Innovation Business Model • Best-in-class, high-power • 1,650 patents issued and 250 • Silicon carbide to sapphire
Slide 106: Focus on Attractive Markets
Focus on Attractive Markets Driving towards high-margin end markets with best-in-class application–optimized technology solutions • Leveraging our leadership in HP General Lighting to expand into HP General Lighting Automotive Automotive, Specialty and Video Screen end-markets • Ability to solve com
Slide 107: LED Path Forward
LED Path Forward Creating a resilient LED business through innovation on sapphire substrate and transition to fabless model Sales Gross Margin Mid 30%s ~$0.6B $0.5B 28% 19% FY19 FY24 FY19 1Q’20 FY24 Fab Transition Key Takeaways: • Improve profitability through silicon carbide to sapphire conversion
Slide 108: Why We Win: LED
Why We Win: LED Achieve gross margin expansion and modest growth, supported by OpEx lean, CapEx light business model Focus on attractive markets where our best-in-class technology and solutions are differentiated and valued Improve profitability through the conversion of silicon carbide to sapphire
Slide 109: CREE Cree®, the Cree logo, Wolfspeed®, and the
CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 110: Financial Overview
Financial Overview Neill Reynolds Chief Financial Officer Cree Investor Day 2019 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 111: Key Messages
Key Messages Our transformation is accelerating; business is refocused and our work continues Three stages to achieve our target model: Transform, Ramp, Execute The 2024 target model results in high growth, high margin, strong cash flows Growth accelerates beyond 2024 as we continue to invest for lo
Slide 112: Cree Transformation: Recent Accomplishments
Cree Transformation: Recent Accomplishments Significant momentum in our transformation journey since our last Investor Day $9B 4 ~$1B Current device pipeline silicon carbide device Materials LTAs partnerships announced $720M 2 6 New additions to the Net investment in capacity M&A transactions comple
Slide 113: Cree Transformation Roadmap
Cree Transformation Roadmap Transforming Cree into a powerhouse semiconductor company Summary Lighting 24% 30% Portfolio • Re-focused business on highest growth segment LED 36% Transition • Divested Lighting, re-investing proceeds into Wolfspeed 70% (% of GM$) Wolfspeed 40% • Focused LED on higher v
Slide 114: Revenue Outlook
Revenue Outlook Wolfspeed growth driven by electric vehicle adoption rate with larger opportunity beyond FY2024 Drivers & Assumptions Wolfspeed ~$1.5B • Modest BEV ramp to ~5% of vehicles by FY2024 Revenue • 5G roll out expansion • BEV charging stations, Industrial applications $538M • Materials LTA
Slide 115: Wolfspeed – Phases of Revenue Growth
Wolfspeed – Phases of Revenue Growth Our growth reaches an inflection point as electric vehicle deployments commence $1.5B+ Accelerated Growth $0.5B-$0.7B Inflection Point Modest Growth FY2019 - 2021 FY2022 - 2023 FY2024+ Transform Ramp Execute Device design wins BEV adoption Accelerated BEV a
Slide 116: Gross Margin Outlook (Non-GAAP)
Gross Margin Outlook (Non-GAAP) Substantial cost reduction programs and scale from fab capacity support gross margin expansion Wolfspeed Drivers & Assumptions 50%-54% GM% 46% • Materials cost reductions on track • Fab costs improve with Mohawk Valley Fab • LTAs pricing locked in with solid visibilit
Slide 117: OPEX Optimization
OPEX Optimization Enhancing our cost structure to drive scale and efficiency as we grow OPEX % of Revenue 35% Realigning OPEX Spend +13% pts operating • R&D investment to support new products SG&A 18% efficiency 22% • Expanding Sales & Marketing reach 9% • Modernizing digital capabilities & systems
Slide 118: Capacity Expansion & Cash Flow
Capacity Expansion & Cash Flow Strong balance sheet supports capacity expansion; profit growth drives significant cash flows CAPEX FREE CASH FLOW $0.4B $0.2B $0.05B FY20 FY21 FY22 FY23 FY24 FY19 FY20 FY21 FY22 FY23 FY24 • Significant net $720M CAPEX investment in capacity expansion from ‘20-‘24 • St
Slide 119: Cree Target Operating Model
Cree Target Operating Model Building a high growth, high margin, and significant cash generating business Target Model Overview FY2019 FY2024 • Wolfspeed BEV Adoption to ~5%, 5G roll out • Growth continues to accelerate beyond FY2024 Revenue $1.1B $2.1B • Wolfspeed GM% 50-54% Wolfspeed 46% 30%+ • OP
Slide 120: Why We Win
Why We Win Transforming Cree into a powerhouse semiconductor company Multi-decade long growth Substantial opportunity in both opportunity that accelerates up materials and devices to and beyond FY2024 Leadership position with over 30 Target model produces years in silicon carbide positions substanti
Slide 121: CREE Cree®, the Cree logo, Wolfspeed®, and the
CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 122: Closing Remarks
Closing Remarks Gregg Lowe President & Chief Executive Officer Cree Investor Day 2019 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 123: Why We Win
Why We Win Well-positioned to benefit from significant and growing opportunities in silicon carbide Executing well against our Growing and diversified pipeline transformational strategy to supported by secular trends in become a powerhouse attractive end markets including semiconductor company focus
Slide 124: Question & Answer Session
Question & Answer Session 124 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 125: CREE Cree®, the Cree logo, Wolfspeed®, and the
CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 126: Appendix
Appendix 126 CREE CONFIDENTIAL & PROPRIETARY © 2019 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.
Slide 127: Appendix – Non-GAAP Measures Reconciliation – Q1'20
Appendix – Non-GAAP Measures Reconciliation – Q1’20 Non-GAAP Gross Margin Reconciliation FY20Q1 Non-GAAP Operating Expense & Operating Loss Reconciliation FY20Q1 Revenue $242.8 Revenue $ 242.8 GAAP Gross Profit $74.2 Operating expense, GAAP to Non-GAAP GAAP Gross Margin % 30.6% Cost of revenue, net
Slide 128: Appendix – Non-GAAP Measures Reconciliation – FY19
Appendix – Non-GAAP Measures Reconciliation – FY19 Non-GAAP Gross Margin Reconciliation FY19 Non-GAAP Operating Expense & Operating Income (Loss) Reconciliation FY19 EBIT Reconciliation FY19 Revenue $1,080.0 Revenue $ 1,080.0 Revenue $1,080.0 GAAP Gross Profit $391.0 Operating expense, GAAP to Non-G
Slide 129: Appendix – Non-GAAP Measures Reconciliation
Appendix -- Non-GAAP Measures Reconciliation Cree excludes the following items from one or more of its non-GAAP measures when applicable: • Stock-based compensation expense. This expense consists of expenses for stock options, restricted stock, performance stock awards and employee stock purchases t