22 August 2023
Wolfspeed selling RF business to MACOM for $125m
Wolfspeed Inc of Durham, NC, USA — which makes silicon carbide materials as well as silicon carbide (SiC) and gallium nitride (GaN) power-switching & RF semiconductor devices — has agreed to sell its radio frequency business (Wolfspeed RF) to MACOM Technology Solutions Inc of Lowell, MA, USA (which designs and makes RF, microwave, analog and mixed-signal and optical semiconductor technologies) for about $75m in cash (subject to a customary purchase price adjustment) plus 711,528 shares of MACOM common stock, valued at $50m based on its 30 trading day average through 21 August.
“Given the significant growth we’ve seen in automotive, industrial and renewable energy markets, we believe this is the right time to further focus on scaling our Power device and materials businesses to meet this accelerated demand,” says Wolfspeed’s president & CEO Gregg Lowe. “This transaction also represents a tremendous opportunity for our RF team to grow and operate at scale, leveraging MACOM’s diverse customer base, RF engineering leadership and operational efficiencies.”
As well as its product development pipeline, Wolfspeed RF has expertise supporting a gallium nitride (GaN) on silicon carbide product portfolio optimized for next-generation telecommunications infrastructure, military and other commercial applications. Serving a broad customer base of aerospace, defense, industrial and telecommunications customers, Wolfspeed RF most recently generated annualized revenue of about $150m. Leveraging MACOM’s diverse customer base and operational expertise, Wolfspeed RF is reckoned to be well positioned to continue to deliver products at scale.
“The RF team’s engineering capabilities, technology and products are a perfect fit with MACOM and our strategy,” comments MACOM’s president & CEO Stephen G. Daly.
MACOM will assume control of Wolfspeed’s 100mm GaN wafer fabrication facility in Research Triangle Park, North Carolina (the RTP Fab) approximately two years after closing the transaction to accommodate Wolfspeed’s relocation of certain production equipment. Prior to that, the shares of MACOM’s stock that Wolfspeed receives at closing will be subject to restrictions on transfer.
The acquisition also includes design teams and associated product development assets in Arizona, California and North Carolina, as well as back-end production capabilities in California and Malaysia. In addition, MACOM will be assigned or licensed an intellectual property portfolio including more than 1400 patents associated with the RF business.
A workforce of about 280 is expected to join MACOM at closing, with additional employees joining when the RTP Fab conveys.
Subject to the expiration of the waiting period under the Hart–Scott–Rodino Antitrust Improvements Act of 1976 (HSR) and satisfaction of customary closing conditions, the transaction is expected to close by the end of 2023. The acquisition is expected to be immediately accretive to MACOM’s non-GAAP earnings.
Wolfspeed adjusts September-quarter revenue outlook from $220–240m to $185–205m
Based on the agreement to sell Wolfspeed RF, the operations of the RF business will be classified as discontinued operations. Wolfspeed is hence updating its guidance to reflect continuing operations only.
For fiscal first-quarter 2024 (to end-September), Wolfspeed targets revenue from continuing operations of $185–205m (compared with $220–240m previously).
Non-GAAP net loss from continuing operations remains unchanged from 16 August’s business outlook of $75–94m ($0.60–0.75 per diluted share). This excludes $63–69m of estimated expenses (net of tax) related to stock-based compensation expense, amortization of debt issuance costs, net of capitalized interest, project, transformation and transaction costs and loss on Wafer Supply Agreement.