$125M Mega Sale: Wolfspeed's RF Business Finds a Bold New Path
Wolfspeed, a leading player in the technology sector, has made a strategic decision to divest its RF business, known as Wolfspeed RF, in a deal valued at $125 million. The recipient of this business unit is the prominent semiconductor corporation, MACOM Technology Solutions Holdings, Inc., headquartered in the United States. The comprehensive agreement has been finalized, and the transaction is anticipated to be completed by the close of this calendar year.
The transaction structure encompasses two key components: a cash portion of $75 million (subject to customary adjustments to account for purchase price) and the issuance of 711,528 shares of common stock of MACOM. Drawing from the average trading price over the preceding 30 trading days leading up to August 21, the market value of the equity component stands at $50 million.
MACOM is an industry leader in the design and manufacturing of advanced semiconductor solutions catering to diverse segments, including RF, microwave, analog, mixed-signal, and optical semiconductor technologies. Its market reach extends to sectors such as telecommunications, industrial, defense, and data centers. The corporation's operational footprint spans continents, including North America, Europe, and Asia.
The stipulations of the agreement outline a future transition, approximately two years after the transaction's conclusion, wherein MACOM will assume control over Wolfspeed's 100mm GaN wafer fabrication facility located in the Research Triangle Park of North Carolina. This transition is aligned with Wolfspeed's strategic plans to facilitate the relocation of select production equipment to new facilities.
The integration of Wolfspeed's RF business into MACOM's portfolio is set to bolster the latter's position in the high-end RF sector. This acquisition not only empowers MACOM with expanded market influence but also positions Wolfspeed's RF team to leverage MACOM's wide-ranging customer base, RF engineering acumen, and operational efficiency for further business expansion.
For Wolfspeed, the divestiture of its RF business unit aligns seamlessly with its strategic objectives. The decision is underpinned by the company's discernment of substantial growth potential within markets like automotive, industrial, and renewable energy. By shedding the RF division, Wolfspeed will strategically focus its resources on SiC (Silicon Carbide) materials and power devices, efficiently increasing SiC production capacity to cater to escalating market requirements and bolster its financial performance.
Recent financial results highlight Wolfspeed's upward trajectory. In the fourth quarter of the 2023 fiscal year, the company's revenue reached $2.358 billion, reflecting a 3.19% year-over-year growth. While the growth rate across the fiscal year demonstrated moderation, the company's investments in facility expansion underscore its proactive stance in anticipation of heightened market demands.
During the 2023 fiscal year, Wolfspeed secured $500 million in funding to facilitate its capacity expansion strategy. Initiatives included the commencement of an 8-inch SiC materials production facility in North Carolina and preliminary revenue generation from the 8-inch device plant in Mohawk Valley. Looking ahead to the 2024 fiscal year, Wolfspeed holds a positive outlook for SiC demand in automotive, industrial, and renewable energy sectors, projecting a robust growth trajectory.
However, the divestiture's impact on Wolfspeed's financial outlook necessitated adjustments. The RF business has been classified as a discontinued operation. Wolfspeed's projections for the first quarter of the 2024 fiscal year anticipate revenue ranging from $185 million to $205 million. The projected net loss from continuing operations, calculated under US GAAP, is expected to improve to $138 million to $163 million, or a diluted loss per share ranging from $1.1 to $1.3. Under non-US GAAP, the projected net loss from continuing operations is estimated at $75 million to $94 million, or a diluted loss per share ranging from $0.6 to $0.75.
According to the latest report titled "2023 SiC Power Semiconductor Market Analysis - Part 1" by TrendForce, a reputable industry research firm, the SiC power device market is on track to reach $2.28 billion in 2023, registering an impressive year-on-year growth of 41.4%. Driven by strong demand from downstream application markets, TrendForce's projections indicate that the SiC power device market has the potential to expand to $5.33 billion by the year 2026.
