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wolf speed (New York Stock Exchange: wolf) was initiated with a Neutral rating at Mizuho Securities, as the investment firm sees potential in silicon carbide, but concerns about competition and the slowdown in the electric vehicle market raise concerns.
“WOLF is enabling the future of global automotive and renewable energy roadmap, and is an integral part of the high energy management market,” analyst Vijay Rakesh wrote in an investor note.
“However, with the (total addressable silicon carbide market) growing at an estimated CAGR of ~30%, competition from new and existing suppliers in the US, Europe and China could pressure supply, pricing and prices.” margins in the face of a slowing EV market,” Rakesh added. .
Rakesh also set a $30 price target on Wolfspeed shares as he believes slowing EV demand and capacity ramps are likely to negatively impact margins.
The silicon carbide market is expected to grow about 28% on a compound annual basis to reach about $7.5 billion by 2027, with the automotive industry accounting for nearly 36% of that figure, up from 12% currently, Rakesh said. .
Wolfspeed currently holds approximately 53% of the silicon carbide supply chain market and is a key substrate supplier to other chip companies in the space, such as ON Semiconductor (ON), Infineon (OTCQX:IFNNY) (OTCQX: IFNNF), STMicroelectronics (STM), Rohm and Diodes (DIOD), Rakesh said.
However, there are concerns that these companies may source silicon carbide supplies from cheaper suppliers in China, Rakesh said.
