Wolfspeed, a business unit of Cree, is unable to meet market demand for SiC wafers, diodes and MOSFETs and will double the company’s SiC materials and wafer fab capacity during the coming year. Cree plans to invest some $220 million in capital, most of which will fund Wolfspeed’s capacity expansion, expected to be online and qualified by July of 2018. The wafer fab expansion will add 150 mm capability.

While the RF segment of the business is growing, Wolfspeed’s capacity crunch is coming from a recent uptick in demand for SiC power devices used in electric vehicles and battery storage applications.

Cree announced the plans in conjunction with releasing the company’s fourth quarter and full fiscal year financial results.

Wolfspeed generated $60.8 million in revenue in Q4, 30 percent greater than the same quarter in fiscal 2016 and 8 percent more than the prior quarter.

Wolfspeed Quarterly Revenue

For the full fiscal year, Wolfspeed’s revenue was $221 million, a growth of 25 percent compared to the $176 million generated in the prior fiscal year.

Wolfspeed’s revenue comprises materials (i.e., SiC wafers and epitaxial growth), power devices (i.e., SiC diodes and MOSFETs) and RF devices (i.e., GaN transistors, MMICs and foundry services). The company does not break out revenue by product segment.

Wolfspeed’s gross margins have been declining quarter versus quarter during the past two years, from 54 percent for fiscal 2016 to 47 percent in 2017.

During the earnings call, financial analyst Harsh Kumar of Stephens asked Chuck Swoboda, CEO, if Cree’s investment in Wolfspeed reflects a commitment to retain the business. Swoboda, who has announced his retirement as CEO, said the near-term plan is to invest to take advantage of the current market demand for SiC devices. He said the long-term strategy for Wolfspeed will be defined by the new CEO and board. Listen to his comments: