On Wall Street, the majority do not have high hopes for Wolfspeed.

Wolfspeed has postponed its plans to build a $3 billion factory in Germany, highlighting the difficulties the European Union faces in increasing semiconductor production and reducing its dependence on Asian chips.

A spokesperson stated that the factory Wolfspeed plans to establish in Saarland, Germany, will produce chips for electric vehicles. The factory has not been completely canceled, and the company is still seeking funding.

However, the spokesperson added that due to the weak electric vehicle market in Europe and the United States, Wolfspeed has cut capital expenditures and is currently focusing on increasing production at its New York factory. The company will not start construction in Germany until the middle of 2025 at the earliest, which is two years behind the original target.

Over the past year, Wolfspeed's stock price has fallen by about 51%, so the company has been under pressure from investors to increase shareholder value.

Investing over 2 billion euros, Wolfspeed announced the construction of an 8-inch silicon carbide wafer factory in Germany.In February 2023, Wolfspeed announced plans to invest over 2 billion yuan to build an 8-inch silicon carbide (SiC) wafer factory in Saarland, Germany. This will be Wolfspeed's first wafer factory in Europe and also the company's most advanced factory, to meet the growing demand from industries including automotive, industrial, and energy.

Wolfspeed stated that the wafer factory will become the world's largest 8-inch silicon carbide wafer factory, covering an area of 35 acres, and will adopt innovative manufacturing technology to produce next-generation silicon carbide wafers, with plans to start construction as early as the first half of 2023.

According to the plan, Wolfspeed's new wafer factory will be included in the "Important Project of Common Interest in Europe," which belongs to the cooperation part under the framework of microelectronics and communication technology. Its implementation will be subject to the approval of the EU Commission's state aid rules. The funds of the Important Project of Common Interest in Europe will also be used to support the development of technology and early deployment of this plan.

In addition, the automotive manufacturing group ZF Group will also participate in Wolfspeed's plan to build an 8-inch silicon carbide wafer factory in Germany, reach a strategic cooperation with Wolfspeed, and provide investment to support the construction of the new wafer factory.

Wolfspeed stated that this new wafer factory in Europe will, together with another 8-inch wafer component factory and the John Palmour Silicon Carbide Manufacturing Center, become an important part of the company's 6.5 billion yuan capacity expansion plan. The wafer factory is also expected to increase about 600 local job opportunities.

In 2023, Wolfspeed's market value evaporated by more than a third, and the company still faces a difficult year in 2024.

In 2023, the stocks of American semiconductor companies recorded the best annual performance in more than a decade. However, Wolfspeed, also a semiconductor company, saw its market value evaporate by more than a third, and most Wall Street analysts still do not expect the stock to rebound quickly in the new year.

This chip manufacturer, which produces power chips for electric vehicles and other equipment, is the only stock in the Philadelphia Semiconductor Index that fell in 2023. The company's delay in launching a more advanced manufacturing method for electric vehicle chips has disappointed investors. Wolfspeed's new factory in upstate New York has also been unable to operate at full capacity.

As of the beginning of this year, the average target price for Wolfspeed on Wall Street is only a few dollars higher than the current stock price, indicating that analysts lack confidence in the stock's rebound. Wolfspeed has become the worst-performing company in the benchmark chip index. Among the 24 analysts covering the company, less than half gave a "buy" rating.Susquehanna Investment Group analyst Chris Rolland said, "The company's performance record has been very erratic." He mentioned a series of disappointing financial reports, and it was not until October last year that the company's sales exceeded expectations. "The company's performance needs to continue to meet market expectations, and even better, the mass production at the Mohawk Valley factory will drive the company's revenue to exceed expectations."

Wolfspeed's problems stem from production chaos at another one of its factories, which is one of the largest silicon carbide wafer manufacturers. Wafers are the foundation of its chips, and insufficient supply has hindered the production of the Mohawk Valley chip factory.

For chip manufacturers, failing to maximize output in expensive production facilities is a major disadvantage, as chip manufacturers face high fixed production costs, which can quickly become obsolete. The cost of building a factory is only justified when companies can operate the factory 24 hours a day at the fastest possible speed.

Wells Fargo analyst Gary Mobley said that if the Mohawk Valley factory can quickly reach full production, Wolfspeed will be able to reduce costs by up to 40% on the basis of existing capacity, and the company should have a "significant cost advantage" over competitors such as ON Semiconductor (ON.US) in the coming years.

However, time is running out. With automakers cutting orders to reduce the inventory of unused parts, demand in the automotive sector is slowing down.

Of course, not everyone is pessimistic about Wolfspeed. Jed Dorsheimer of William Blair rated the stock as its "best stock" for 2024. This view is based on his confidence in the company that the Mohawk Valley factory will soon have the wafers needed to operate at higher capacity, while the supply of wafers from China will not weaken Wolfspeed's competitive advantage soon.

George Gianarikas of Cannacord Genuity also gave Wolfspeed a "buy" rating, believing that holding Wolfspeed can be summed up as betting on the company's ability to produce enough SiC wafers to supply the Mohawk Valley factory. Currently, there are 11 analysts on Wall Street who have given the stock a "buy" rating.

According to the average forecast of analysts, Wolfspeed's net loss from continuing operations in the second quarter of the fiscal year will reach $139 million. The company has not achieved annual profitability since 2014 and is expected to return to profitability by 2027.

The company's target for the Mohawk Valley factory is to achieve a utilization rate of 20% by the end of the 2024 fiscal year in June. To meet the demand for more SiC wafers, the company is also investing in another factory in North Carolina.