DURHAM – Today, Wolfspeed officially changed its name from Cree, and announced a deal with GM.
The company’s stock will also now trade on the New York Stock Exchange (ticker symbol: WOLF) and CEO Gregg Lowe and other executive leaders are in New York today to ring the opening bell.
With these announcements, WRAL TechWire’s Jason Parker spoke with Mr. Lowe about the company’s strategy, which the company described as a four-year transformation, to focus its operational capacity on its Wolfspeed line of silicon carbide semiconductors, as the company sold off other lines of business in the prior two years.
A lightly edited transcript of the interview is below.
Jason Parker, WRAL TechWire (TW): Cree is officially changing its name to Wolfspeed. Can you tell us more about why the company has divested about two-thirds of its business?
Wolfspeed CEO Gregg Lowe (Lowe): It’s really about focus and focusing the company on its core silicon carbide technology and the amazing growth opportunity we have in front of us. Silicon carbide is an alternative in semiconductors to silicon — there’s a whole valley in California called Silicon Valley — the semiconductor industry has been based on silicon for 50 years, and we’re at a moment right now where we’re seeing a transition from silicon to silicon carbide because of the benefits of the efficiency gain that you get when you use silicon carbide. As a founding company in the silicon carbide business — we’ve been there for 30 years — we’re uniquely positioned to really capitalize on this opportunity as the semiconductor market transitions from silicon-based to silicon carbide. It offers a huge amount of growth and as we were thinking through the focus of the company, and selling off our LED business and our lighting business, what we were left with was a division called Wolfspeed, and we just thought, “well, that’s who we are right now. We are Wolfspeed.” So that’s what we’re changing the name of the company to be. We have an exciting day here at the New York Stock Exchange. We’re ringing the bell, we’ve got seven of our operations employees joining us, helping us ring the bell and celebrate the transition of the company to Wolfspeed. The ticker will be “WOLF” and that’s really cool as well. It’s a really exciting time for the company as we capitalize on this tremendous growth opportunity we have in front of us.
TW: Mr. Lowe, you joined Cree as CEO in 2017. How is the current global chip shortage opening up opportunity for the company? How is the company’s approach positioning the company for the future?
Lowe: It’s really about investment at this point. It’s investment in R&D. It’s investment in our operations. The Board of Directors has basically given us a green light to substantially increase our manufacturing capacity. We’re actually increasing our capacity by thirty times — 3 – 0 — it’s an incredible number. We actually began that journey about two years ago. And in between then and now, there’s been a huge semiconductor crisis in the auto industry. There’s not enough capacity. I was just up in Detroit last week, and met with a number of different customers, and they’re super excited about our capacity expansion. We began that investment two years ago, and it’s going into production in early 2022, and 2022 is just a few months from now. We’re bringing an increase in capacity in just a matter of months. Quite frankly, we look like geniuses, because two years ago, who would have thought there would be this crisis? But it was a bit of good fortune, and in talking to customers there’s been a shift in their mentality in how they decide where they’re going to award business. The traditional things of — is your technology good, do your devices meet the criteria they need, is your quality good, is your pricing in line — all of those things remain really important. But there’s now a huge element of asking what you’ve done to invest in capacity. And we have a brand new facility in New York and an expanded materials operation in Durham and we’ve had several customers come to visit those facilities. It’s not something that we’re thinking about doing, or that we’re going to do, it’s something that we have done. I think that’s been a huge positive from a customer perspective.
TW: With increasing capacity — you said by 30 times — is that coming also with an increasing staff in those two locations? What’s the current state of the job market, in the Triangle and nationally?
Lowe: Yes, we’re expanding the workforce in both areas, already in the Mohawk Valley, we’ve added 200 people already, which is more than we had planned. We continue to hire in the operational capacity here in our Durham facility, and one thing that we did a couple of years ago is that we began to understand that the nature of the workforce here in Durham is also going to change. It’s going to move from an operator-type workforce more to a technician-type workforce, so we opened up a program for our operators to train as technicians. To go into a track that allowed them to bring up their skills, increase their skills, and we’ve had five or six cohorts go through that program, and these cohorts are 15, 20 people, so we’ve probably had 60 operators already graduate from that program, to move up in their career and develop in their career. This gives opportunities for continued development and pays them more money. It’s an exciting program for workforce development here, and we’ve done it in conjunction with some of the local community colleges. We’re super excited about that program.
TW: Let’s go more in depth about the current state of the semiconductor shortage, in the auto industry in particular, and about how the company is thinking about its strategy.
Lowe: What’s happening in the semiconductor industry, and especially with vehicles, is completely and totally unprecedented. I’ve been associated with this industry for 30 years, mostly in the automobile sector, and what’s happening right now has never happened before. Car plans are being shut down. Toyota announced last quarter they would reduce production by something on the order of 40%. Hot selling cars are not being able to be delivered to customers because they’re missing semiconductor chips, and this just doesn’t happen in our industry. This has become a really important moment for vehicle manufacturers. You’re seeing large company CEOs coming and talking about what they’re doing. The fundamental thing that is changing is that car manufacturers are now getting much more involved in relationships with semiconductor companies like Wolfspeed. I just visited Detroit, all the car companies up there, and that wouldn’t be normal in the industry. But the car companies themselves now want to have an engagement.
TW: Let’s talk about another trend in the automobile industry, the push toward electrification and the adoption of electric vehicles. With increasing demand on the consumer side and from the company’s perspective, on moving to electric vehicles, can you talk about what’s happening in the semiconductor market and the adoption of electric vehicles and how it will change the industry in the next 10-20 years?
Lowe: It’s an amazing transition over the last three to four years. The transition from the internal combustion engine to the electric engine has accelerated. The internal combustion engine, or the ICE, is basically going away. And we like to say that we’re helping drive the end of the ICE age. We’re doing that by bringing onboard new chips that do two really important things for an electric vehicle. Number one, we help extend the range of an electric vehicle. If you use silicon carbide in an electric vehicle, versus silicon, your car is going to go 5-15% further with an electric battery, and range is a really big deal in electric vehicles. There’s so-called “range anxiety” that people have, but when you extend the range, that goes away. There’s a new startup company in California called Lucid that got EPA certification of their electric vehicle, with a 520-mile range. That’s pretty darn good. Those vehicles are powered by silicon carbide. The second thing is the ability to rapidly recharge your car and the so-called rapid chargers. Tesla, and now Lucid, has a rapid charger, where you’re able to add hundreds of miles of range with a charge, in 10-15 minutes. That’s not quite a gas station, but it’s pretty close. That whole issue of range, and recharging, basically is solved by silicon carbide. We’re super excited about that, and companies are really excited as well. I think that’s helping drive that trend. From a consumer perspective, we’re seeing a pull for electric vehicles, for multiple reasons. I think a lot more people are more aware of what’s happening with the environment with pollution, global warming. People are more aware and want to have a car that has a better carbon footprint and doesn’t emit noxious gasses. So, there’s a pull from that perspective, and then you have the whole electric vehicle experience. You have the same exterior sized car, but when you jump into an electric car, there’s a ton more space, because you don’t have the transmission axel going below the car, you don’t have the engine in the front of the car, there’s a ton more space, so you have substantially more interior space without increasing the exterior space, you don’t need a huge car to have a huge amount of space inside. The cars are quiet, they’re electric, they don’t have an engine. And finally, the acceleration is unbelievable. You have electric cars that go 0 to 60 mph in 1.9 seconds, that’s faster than a $1 million Bugatti. You have high performance, quiet ride, lots of space… these are compelling vehicles. That consumer pull combined with government regulations and the need to clean up the environment is a nice combination.