Wolfspeed’s parent, Cree, reported financial performance for the third quarter (Q3) of fiscal 2018, which ended 25 March 2018. Wolfspeed’s revenue grew 16 percent sequentially to $81.9 million, which was 46 percent above the prior year’s quarter.

Wolfspeed’s revenue included less than one month’s revenue from the Infineon RF power business, which Cree acquired on 6 March 2018. Exluding Infineon’s contribution, Wolfspeed’s revenue grew 10 percent sequentially and 38 percent year-over-year.

Including the RF power business, Wolfspeed generated $39.3 million in gross profit, 48 percent of revenue, compared to $26.4 million, 47 percent of revenue, in the prior year’s quarter (without the Infineon RF power business).

During the earnings call, Cree disclosed that the power RF business acquired from Infineon will be impacted significantly by the U.S. banning exports to ZTE, announced by the Department of Commerce on April 16. Gregg Lowe, Cree’s CEO, said ZTE contributed approximately 20 percent of the revenue in the RF power business in Q3 and not being able to ship to the Chinese infrastructure manufacturer “is creating some short-term headwinds.” He added “it doesn’t change the long-term strategic benefit of this acquisition.”

Infineon, now Wolfspeed, was shipping custom products to ZTE; if the export ban isn’t lifted, the inventory will be written off, estimated to impact earnings by approximately $0.01 per share.

Despite the freeze on shipments to ZTE, Wolfspeed’s revenue and gross profit should grow sequentially in Q4, according to Cree. Lowe said Wolfspeed’s businesses — power and RF — “are the primary growth drivers of the company.”

Cree is investing in additional capacity to support Wolfspeed’s growth, which will use most of the $190 million in capital investment planned for fiscal 2018. CFO Mike McDevitt said the company is “on target” to double materials capacity for external customers by the end of calendar 2018 and will bring additional capacity for power and RF devices online during fiscal Q4.