Wolfspeed incurs $39.5M of factory startup costs in Q4

“As part of expanding our production footprint to support expected growth, we are incurring significant factory start-up costs relating to facilities that we are constructing or expanding that have not yet started revenue generating production. These factory start-up costs have been and will be expensed as operating expenses in our statement of operations,” the company said. “When a new facility begins revenue generating production, the operating costs of that facility that were previously expensed as start-up costs will instead be primarily reflected as part of the cost of production within the cost of revenue, net line item in our statement of operations. For example, our new silicon carbide device fabrication facility in Marcy, New York began revenue generating production at the end of fiscal 2023 and the costs of operating this facility going forward will be primarily reflected in cost of revenue, net in future periods. During the period when production begins, but before the facility is at its expected utilization level, we expect some of the costs to operate the facility will not be absorbed into the cost of inventory. The costs incurred to operate the facility in excess of the costs absorbed into inventory are referred to as underutilization costs and are expensed as incurred to cost of revenue, net. We expect that these costs will be substantial as we ramp up the facility to the expected utilization level. We incurred $39.5 million and $160.2 million of factory start-up costs for the fourth quarter and full fiscal year 2023, respectively, which accounted for a significant portion of our operating expenses. For the first quarter of fiscal 2024, we target our operating expenses to include approximately $8 million of factory start-up costs primarily in connection with our materials expansion efforts and our cost of revenue, net, to include approximately $37 million of underutilization costs primarily in connection with our new silicon carbide device fabrication facility in Marcy, New York.”