WOLFSPEED, INC. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Information set forth in this Quarterly Report on Form 10-Q contains various “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). All information contained in this report relative to future markets for our products, trends in and anticipated levels of revenue, gross margins and expenses, and ability to access funding as well as other statements containing words such as “believe,” “project,” “may,” “will,” “anticipate,” “target,” “plan,” “estimate,” “expect” and “intend” and other similar expressions constitute forward-looking statements. These forward-looking statements are subject to business, economic and other risks and uncertainties, both known and unknown, and actual results may differ materially from those contained in the forward-looking statements. Any forward-looking statements we make are as of the date made, and except as required under the U.S. federal securities laws and the rules and regulations of the Securities and Exchange Commission (the SEC), we have no duty to update them if our views later change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this Quarterly Report. Examples of risks and uncertainties that could cause actual results to differ materially from historical performance and any forward-looking statements include, but are not limited to, those described in “Risk Factors” in Part II, Item 1A of this Quarterly Report. Executive Summary The following discussion is designed to provide a better understanding of our unaudited consolidated financial statements, including a brief discussion of our business and products, key factors that impacted our performance and a summary of our operating results. The following discussion should be read in conjunction with the unaudited consolidated financial statements and the notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q, and the audited consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (the 2024 Form 10-K). Historical results and percentage relationships among any amounts in the financial statements are not necessarily indicative of trends in operating results for any future periods. Unless otherwise noted, the following information and discussion relates to our continuing operations. Overview Wolfspeed, Inc. (Wolfspeed, we, our, or us) is an innovator of wide bandgap semiconductors, focused on silicon carbide materials and devices for power applications. Our product families include power devices and silicon carbide and gallium nitride (GaN) materials. Our products are targeted for various applications such as electric vehicles, fast charging and renewable energy and storage. Our materials products and power devices are used in electric vehicles, motor drives, power supplies, solar and transportation applications. Our materials products are also used in military communications, radar, satellite and telecommunication applications. During and prior to fiscal 2024, we designed, manufactured and sold radio-frequency (RF) devices. As discussed more fully in Note 2, “Discontinued Operations,” to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report, we completed the sale of certain assets comprising our former RF product line (the RF Business Divestiture) in the second quarter of fiscal 2024. The RF Business Divestiture represented a strategic shift that had a major effect on our operations and financial results. As a result, we have classified the results and cash flows of the RF product line as discontinued operations in our consolidated statements of operations and consolidated statements of cash flows for fiscal 2024. Unless otherwise noted, discussion within this Quarterly Report to the consolidated financial statements relates to our continuing operations. 31 Table of Contents Industry Dynamics and Trends There are a number of industry factors that affect our business which include, among others: • Overall Demand for Products and Applications Using Our Wolfspeed Materials and Devices . Our potential for growth depends significantly on the continued adoption of silicon carbide materials, device products in the power markets and our ability to win new designs for these applications. Demand also fluctuates based on various domestic and global economic and market cycles, continuously evolving industry supply chains, trade and tariff terms, and inflationary impacts, as well as evolving competitive dynamics in each of our respective markets. These uncertainties make demand difficult to forecast for us and our customers. Recently, we and other semiconductor companies have been experiencing softening demand for our products. We continue to experience increased mid- and long-term demand for our power products designed for electrical vehicle applications, though at a slower pace than initially expected. We believe that this reflects the value that the industry places on a transition to silicon carbide materials and devices while also evidencing the growing global focus on adopting higher efficiency energy solutions, including electric vehicle and related technologies. We believe these trends could have a significant positive impact on revenues in future periods. • Intense and Constantly Evolving Competitive Environment. Competition in the industries we serve is intense. Many companies have made significant investments in product development, production equipment and production facilities. To remain competitive, market participants must continuously increase product performance, reduce costs and develop improved ways to serve their customers. In addition, market participants often undertake pricing strategies to gain or protect market share, increase the utilization of their production capacity and open new applications in the power markets we serve. To address these competitive pressures, we have invested in new production facilities, as well as research and development activities to support new product development, lower product costs and increase levels of product performance to differentiate our products in the market. In addition, we invest in systems, people and new processes to improve our ability to deliver a better overall experience for our customers. • Governmental Trade and Regulatory Conditions . Our potential for growth, as with most multi-national companies, depends on a balanced and stable trade, political, geopolitical, economic and regulatory environment in the countries where we do business. We continue to monitor the recent changes in global trade policy, including tariffs and related trade actions announced by the U.S., China and other countries. The degree to which such tariffs and other related actions impact our business, financial condition and results of operations will depend on future developments, which are uncertain. Changes in trade policy, such as the imposition or expansion of tariffs or export bans to specific customers or countries, could reduce or limit demand for, or increase the cost of production of, our products in certain markets. • Technological Innovation and Advancement. Innovations and advancements in materials and power technologies continue to expand the potential commercial application for our products. However, new technologies or standards could emerge or improvements could be made in existing technologies that could reduce or limit the demand for our products in certain markets. • Intellectual Property Issues. Market participants rely on patented and non-patented proprietary information associated with product development, manufacturing capabilities and other core competencies of their business. Protection of intellectual property is critical. Therefore, steps such as additional patent applications, confidentiality and non-disclosure agreements, as well as other security measures are generally taken. To enforce or protect intellectual property rights, litigation or threatened litigation is common. Overview of the nine months ended March 30, 2025 The following is a summary of our continuing operations financial results as of and for the nine months ended March 30, 2025 compared to the nine months ended March 31, 2024, unless otherwise stated. • Our year-over-year revenue decreased ($45.9) million to $560.6 million, primarily driven by weaker demand for applications serving the industrial and energy end markets, partially offset by continued growth from our automotive products. • Gross margin decreased to (17.1)% from 12.4%. Gross margin includes the impacts of underutilization costs primarily in connection with the start of production at the Mohawk Valley Fab and restructuring and closure-related costs associated with the Durham Fab. • Operating loss was $747.6 million compared to $299.4 million. • Diluted loss per share was $6.88 compared to $3.18. • Combined cash, cash equivalents and short-term investments was $1,329.6 million at March 30, 2025 and $2,174.6 million at June 30, 2024. • Long-term debt, net was $6,511.8 million at March 30, 2025 and $6,161.1 million at June 30, 2024. 32 Table of Contents • Cash used in operating activities was $469.2 million compared to $431.8 million. • Purchases of property and equipment, net were $820.9 million (net of $238.6 million in reimbursements) compared to $1,451.3 million (net of $178.4 million in reimbursements), primarily due to a planned decrease in capital expenditures and our initial receipt of Section 48D Advanced Manufacturing Investment Credits (AMIC) refundable tax credits, both related to our expansion initiatives. • Design-wins and design-ins decreased for the nine months ended March 30, 2025 compared to the same period ended March 31, 2024. Design-wins for the third quarter of fiscal 2025 were the second highest in company history, as customers begin to ramp previously reported design-ins, although at a lower ramp rate than initially expected Business Outlook We believe we are uniquely positioned as an innovator in the global semiconductor industry. We are currently focused on three key priorities designed to put us on a path toward long-term growth and profitability: • improving the financial performance of the company • taking aggressive steps to strengthen our balance sheet • deploying cost-efficient capital to support our growth plan We believe these efforts will support our goals of delivering long-term growth and profitability, while enabling us to continue to invest in our business to further develop the technologies and accelerate the growth opportunities of silicon carbide materials and silicon carbide power devices and modules. In addition, we are focused on continuous improvement in the number of usable items in a production cycle (yield) as our manufacturing technologies become more complex. We have significantly improved yields and expect to continue to improve yields as we transition additional device production to the Mohawk Valley Fab, where we have consistently realized quarterly yield improvements during fiscal 2025. During the first quarter of fiscal 2025, we initiated a headcount reduction and facility consolidation plan (the 2025 Restructuring Plan), intended to further optimize our cost structure as we accelerate our transition from 150mm to 200mm silicon carbide devices. We have made targeted adjustments to the 2025 Restructuring Plan as we identify additional opportunities to optimize our cost structure while continuing to support future growth and meet long-term demand. Refer to Note 13, "Restructuring," to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report for additional discussion of the financial impact of these activities. We believe we have the ability to navigate the current environment while maintaining our capital expenditure plans to support future growth to meet long-term demand. We incurred approximately $0.8 billion of net capital investment for the nine months ended March 30, 2025 and expect to incur an additional $0.2 billion of net capital investment during the fourth quarter of fiscal 2025. Our net capital investment during fiscal 2025 includes approximately $0.2 billion of incentives received for eligible expenditures, primarily under the AMIC refundable tax credits, as further discussed in Note 1, "Basis of Presentation". Our major expansion projects at the Mohawk Valley Fab and Siler City, NC facility are approaching substantial completion. Consequently, we expect gross capital investment to decrease significantly, to approximately $0.2 billion in fiscal 2026. We also expect to receive an additional $0.6 billion of incentives primarily related to the AMIC refundable tax credits, during fiscal 2026. 33 Table of Contents Fiscal Quarters Our fiscal quarters end on the last Sunday of the month in September, December, March and June. Each fiscal quarter is generally 13 weeks as part of a 52-week fiscal year. Occasionally, we have a 53-week fiscal year, and in those instances, one quarter within the fiscal year is comprised of 14 weeks instead of 13 weeks. Fiscal 2025 is a 52-week fiscal year. Fiscal 2024 was a 53-week fiscal year, and the second quarter of fiscal 2024 was a 14-week fiscal quarter. Results of Operations Selected consolidated statements of operations data for the three and nine months ended March 30, 2025 and March 31, 2024 were as follows: Three months ended Nine months ended March 30, 2025 March 31, 2024 March 30, 2025 March 31, 2024 (in millions of U.S. Dollars, except share data) Amount % of Revenue Amount % of Revenue Amount % of Revenue Amount % of Revenue Revenue, net $185.4 100.0 % $200.7 100.0 % $560.6 100.0 % $606.5 100.0 % Cost of revenue, net 207.9 112.1 % 178.2 88.8 % 656.5 117.1 % 531.5 87.6 % Gross (loss) profit (22.5) (12.1) % 22.5 11.2 % (95.9) (17.1) % 75.0 12.4 % Research and development 42.2 22.8 % 52.5 26.2 % 137.5 24.5 % 141.9 23.4 % Sales, general and administrative 41.1 22.2 % 55.8 27.8 % 154.4 27.5 % 184.8 30.5 % Factory start-up costs 23.5 12.7 % 14.4 7.2 % 66.0 11.8 % 33.3 5.5 % Amortization of acquisition-related intangibles 0.3 0.2 % 0.3 0.1 % 0.9 0.2 % 0.9 0.1 % Loss on disposal or impairment of long-lived assets 31.1 16.8 % 0.6 0.3 % 157.5 28.1 % 1.0 0.2 % Other operating expense 33.8 18.2 % 5.3 2.6 % 135.4 24.2 % 12.5 2.1 % Operating loss (194.5) (104.9) % (106.4) (53.0) % (747.6) (133.4) % (299.4) (49.4) % Non-operating expense, net 90.9 49.0 % 42.4 21.1 % 191.9 34.2 % 98.7 16.3 % Loss before income taxes (285.4) (153.9) % (148.8) (74.1) % (939.5) (167.6) % (398.1) (65.6) % Income tax expense 0.1 0.1 % 0.1 — % 0.4 0.1 % 0.6 0.1 % Net loss from continuing operations (285.5) (154.0) % (148.9) (74.2) % (939.9) (167.7) % (398.7) (65.7) % Net loss from discontinued operations — — % — — % — — % (290.6) (47.9) % Net loss ($285.5) (154.0) % ($148.9) (74.2) % ($939.9) (167.7) % ($689.3) (113.7) % Basic and diluted loss per share Continuing operations ($1.86) ($1.18) ($6.88) ($3.18) Discontinued operations — — — (2.32) Revenue Three months ended Nine months ended (in millions of U.S. Dollars) March 30, 2025 March 31, 2024 Change March 30, 2025 March 31, 2024 Change Power Products $107.5 $102.1 $5.4 5 % $295.4 $311.0 ($15.6) (5) % Materials Products $77.9 $98.6 ($20.7) (21) % $265.2 $295.5 ($30.3) (10) % Revenue $185.4 $200.7 ($15.3) (8) % $560.6 $606.5 ($45.9) (8) % Net sales for the three and nine months ended March 30, 2025 were down 8% compared to the same periods in 2024. • Net sales of our Power Product offerings were primarily impacted by ongoing weakness in the industrial and energy end market. This decrease has been primarily offset by growth in demand for automotive applications, though we are continuing to experience slower growth for automotive applications than we previously expected. • Net sales of our Materials Product offerings were primarily impacted by weaker end market demand that has resulted in some of our customers adjusting the timing and size of their orders. 34 Table of Contents Gross Profit and Gross Margin Three months ended Nine months ended (in millions of U.S. Dollars) March 30, 2025 March 31, 2024 Change March 30, 2025 March 31, 2024 Change Gross (loss) profit ($22.5) $22.5 ($45.0) (200) % ($95.9) $75.0 ($170.9) (228) % Gross margin (12.1) % 11.2 % (17.1) % 12.4 % The primary drivers of the decrease in gross profit and gross margin for the three and nine months ended March 30, 2025 compared to the same periods in 2024 included: • $16.8 million and $82.5 million, respectively, of costs in connection with the 2025 Restructuring Plan as discussed in Note 13, "Restructuring," to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report. • Unfavorable changes in product mix driven by (1) a decrease in the percent of total net sales attributable to our higher-margin Materials Products offerings and (2) an increase in the percent of Power Product net sales attributable to lower margin automotive applications, due to ongoing weakness in the industrial & energy end market. Production capacity in the Durham fab has shifted from industrial and energy products to automotive products, which have a higher production cost in that fab. The gross margin impact of the above items was partially offset by slightly lower underutilization costs due to the timing of the Mohawk Valley Fab ramp. We incurred $26.3 million and $81.6 million for the three and nine months ended March 30, 2025, respectively, of underutilization costs in connection with the start of production at our Mohawk Valley Fab. Underutilization costs were $30.4 million and $100.4 million for the three and nine months ended March 31, 2024, respectively. Research and Development Three months ended Nine months ended (in millions of U.S. Dollars) March 30, 2025 March 31, 2024 Change March 30, 2025 March 31, 2024 Change Research and development $42.2 $52.5 ($10.3) (20) % $137.5 $141.9 ($4.4) (3) % Percent of revenue 23 % 26 % 25 % 23 % The decrease in research and development expenses for the three and nine months ended March 30, 2025 as compared to the three and nine months ended March 31, 2024 was primarily due to a decrease in salary and benefits costs related to lower headcount and lower material costs from a planned decrease in research and development wafer starts associated with product transfers and technology qualifications related to the Mohawk Valley Fab ramp. Sales, General and Administrative Three months ended Nine months ended (in millions of U.S. Dollars) March 30, 2025 March 31, 2024 Change March 30, 2025 March 31, 2024 Change Sales, general and administrative $41.1 $55.8 ($14.7) (26) % $154.4 $184.8 ($30.4) (16) % Percent of revenue 22 % 28 % 28 % 30 % The decrease in sales, general and administrative expenses for the three and nine months ended March 30, 2025 as compared to the three and nine months ended March 31, 2024 was primarily driven by a reduction in salaries related to planned decreases in headcount and variable compensation costs of approximately $9.9 million and $24.0 million, respectively. Outside services spending also decreased by $2.8 million and $6.5 million for the three and nine months ended March 30, 2025, respectively, as compared to the same periods in fiscal 2024 as a result of our recent efforts to optimize our cost structure. 35 Table of Contents Factory Start-up Costs Three months ended Nine months ended (in millions of U.S. Dollars) March 30, 2025 March 31, 2024 Change March 30, 2025 March 31, 2024 Change Factory start-up costs $23.5 $14.4 $9.1 63 % $66.0 $33.3 $32.7 98 % Start-up costs increased for the three and nine months ended March 30, 2025 as compared to the three and nine months ended March 31, 2024 due to increased costs incurred in connection with the construction of our materials manufacturing facility in Siler City, North Carolina. These costs are expected to be minimal once the facility begins to ramp production. Loss on Disposal or Impairment of Long-Lived Assets Three months ended Nine months ended (in millions of U.S. Dollars) March 30, 2025 March 31, 2024 Change March 30, 2025 March 31, 2024 Change Loss on disposal or impairment of long-lived assets $31.1 $0.6 $30.5 5,083% $157.5 $1.0 $156.5 15,650% Loss on disposal or impairment of long-lived assets primarily includes the write-offs of fixed assets, as well as the write-offs of impaired or abandoned patents, partially offset by proceeds from asset sales. Loss on disposal or impairment of long-lived assets for the three and nine months ended March 30, 2025 consist of impairments of abandoned facility-related assets totaling $155.2 million related to the 2025 Restructuring Plan as discussed in Note 13, "Restructuring," to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report. Other Operating Expense Three months ended Nine months ended (in millions of U.S. Dollars) March 30, 2025 March 31, 2024 Change March 30, 2025 March 31, 2024 Change Legal settlements 17.0 — 17.0 100 % 17.0 — 17.0 100 % Restructuring and other exit costs 10.0 $ — $ 10.0 100 % 95.0 $ — 95.0 100 % Project, transformation and transaction costs 6.8 $ 5.3 $ 1.5 28 % 20.6 $ 12.5 8.1 65 % Executive severance costs — — — — % 1.4 $ — 1.4 100 % Other — — — — % 1.4 — 1.4 100 % Other operating expense $ 33.8 $ 5.3 $ 28.5 538 % $ 135.4 $ 12.5 $ 122.9 983 % The increase in Other Operating Expenses during the three and nine months ended March 30, 2025 compared to the three and nine months ended March 31, 2024 was primarily driven by costs related to the 2025 Restructuring Plan. Additionally, during the third quarter of fiscal 2025, we agreed to settle several ongoing legal matters and recognized the associated financial statement impact of those settlements in Other Operating Expense. Refer to Note 13, "Restructuring," in Part I, Item 1 of this Quarterly Report for more information on Restructuring and Other Exit Costs. Refer to Note 5, "Commitments and Contingencies," in Part I, Item 1 of this Quarterly Report for more information on our accounting for contingent losses. 36 Table of Contents Non-Operating Expense, net Three months ended Nine months ended (in millions of U.S. Dollars) March 30, 2025 March 31, 2024 Change March 30, 2025 March 31, 2024 Change Interest income ($19.4) ($30.1) $10.7 (36) % ($58.6) ($108.9) $50.3 (46) % Interest expense, net of capitalized interest 85.4 59.5 25.9 44 % 230.4 185.5 44.9 24 % Loss on customs matter — 7.7 (7.7) (100) % — 7.7 (7.7) (100) % Loss on Wafer Supply Agreement — 6.9 (6.9) (100) % 9.2 20.4 (11.2) (55) % Unrealized loss (gain) on equity investment 24.9 (1.9) 26.8 (1,411) % 9.2 (7.3) 16.5 (226) % Other expense, net — 0.3 (0.3) (100) % 1.7 1.3 0.4 31 % Non-operating expense, net $90.9 $42.4 $48.5 114 % $191.9 $98.7 $93.2 94 % Interest income. The decrease in interest income for the three and nine months ended March 30, 2025 as compared to the three and nine months ended March 31, 2024 was primarily due to lower short-term investment balances and a lower interest rate environment. Interest expense, net of capitalized interest . The increase in interest expense for the three and nine months ended March 30, 2025 as compared to the three and nine months ended March 31, 2024 was primarily due to higher average debt outstanding and a higher average borrowing rate, offset, in part, by increased interest capitalization in the three and nine months ended March 30, 2025. Refer to Note 9 "Long-term Debt," to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report for the summary of outstanding debt. Income Tax Expense Three months ended Nine months ended (in millions of U.S. Dollars) March 30, 2025 March 31, 2024 Change March 30, 2025 March 31, 2024 Change Income tax expense $0.1 $0.1 $— — % $0.4 $0.6 ($0.2) (33) % Effective tax rate — % — % — % — % The change in our effective tax rate for the three and nine months ended March 30, 2025 compared to the three and nine months ended March 31, 2024 was immaterial. In general, the variation between our effective income tax rate and the current U.S. statutory rate of 21.0% is primarily due to: (i) changes in our valuation allowances against deferred tax assets, (ii) income derived from international locations with differing tax rates than the U.S., and (iii) tax credits generated. 37 Table of Contents Liquidity and Capital Resources Overview We require cash to fund our operating expenses, debt service costs, working capital requirements and capital expenditures, including the purchase of goods and services in the ordinary course of business such as raw materials, supplies and capital equipment, as well as outlays for research and development, strategic acquisitions and investments. We expect to need additional funding to fully complete all of our intended capacity expansions. Further, we may need to reduce capital expenditures and/or take other steps to preserve working capital in the future in order to ensure that we can meet our needs and obligations and maintain compliance with our debt covenants. Our principal sources of liquidity are cash on hand and marketable securities. In the second quarter of fiscal 2025, we filed a shelf registration statement on Form S-3 to register for possible future sale shares of our common stock. The registration statement became automatically effective upon filing with the SEC on December 9, 2024. Under this shelf registration statement, we implemented an at-the-market program (the ATM Program) as described in the prospectus supplement filed with the SEC on December 9, 2024. As discussed further in Note 14, "Shareholders' Equity", the ATM Program was conducted pursuant to an equity distribution agreement (the Equity Distribution Agreement) with J.P. Morgan Securities LLC and Wells Fargo Securities, LLC (the Managers). The ATM Program concluded on January 14, 2025, and we completed the sale of approximately 27.8 million additional shares of common stock for total gross proceeds of approximately $200.0 million and net proceeds of approximately $195.2 million, after $4 million in commissions to the Managers and $0.8 million in other offering costs. As discussed in Note 9 "Long-term Debt," to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report, we also obtained additional funding of $250.0 million through the issuance of additional 2030 Senior Notes, and expect to pursue additional funding through debt refinancing (which may involve refinancing, modifying or retiring some of our existing debt), equity offerings or other non-debt capital sources. In the third quarter of fiscal 2025, we received an initial federal cash tax refund of $186.5 million for the AMIC claimed under Section 48D of the Internal Revenue Code, related to capital projects included in fiscal 2023 and fiscal 2024 tax returns. As described above and in Note 1, “Basis of Presentation and New Accounting Standards – Liquidity,” to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, we have a significant amount of outstanding indebtedness and have engaged external advisors to assist with the evaluation of a number of strategic alternatives, including a potential out-of-court or in-court capital restructuring. These alternatives include, but are not limited to, restructuring, refinancing or amending our existing debt, seeking new financing or pursuing asset sales to bolster liquidity. No definitive terms have been agreed upon to date and there can be no assurance that we will reach an agreement or successfully complete a transaction in a timely manner or at all. Any restructuring or other transaction is expected to be costly, would likely be substantially dilutive to our existing shareholders, and would likely limit our ability to utilize our net operating loss carry forwards (and/or other nonrefundable tax attributes). Our ability to generate and monetize certain refundable tax credits, such as the AMIC, is not anticipated to be limited as a result of any potential strategic alternatives being pursued. While we consider these strategic alternatives, we retain sufficient liquidity in the near term, with approximately $1,329.6 million of unrestricted cash and cash equivalents and short-term investments on its unaudited consolidated balance sheet as of March 30, 2025, compared to scheduled debt repayments and debt service costs of $575 million and $322 million, respectively, over the next 12 months. We also plan to submit for approximately $600 million in cash tax refunds related to the amounts eligible for reimbursement under the AMIC over the next 12 months. We expect that our current operating forecast over the next 12 months will allow us to maintain operations and meet our obligations to customers, vendors and employees in the ordinary course of business. However, due to our ongoing consideration of an in-court restructuring that would result in an event of default during the implementation of that potential solution, management has concluded that there is substantial doubt about our ability to continue as a going concern as of the issuance date of the unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q, in accordance with the requirements of ASC 205-40, “Presentation of Financial Statements – Going Concern.” 38 Table of Contents Sources of Liquidity The following table sets forth our cash, cash equivalents and short-term investments: (in millions of U.S. Dollars) March 30, 2025 June 30, 2024 Change Cash and cash equivalents $730.2 $1,045.9 ($315.7) Short-term investments 599.4 1,128.7 (529.3) Total cash, cash equivalents and short-term investments $1,329.6 $2,174.6 ($845.0) The significant components of our working capital are liquid assets such as cash and cash equivalents, short-term investments, accounts receivable and inventories, partially reduced by accounts payable and accrued expenses. In the first quarter of fiscal 2024, we entered into the Unsecured Customer Refundable Deposit Agreement (the CRD Agreement) with Renesas Electronics America Inc. (Renesas America), pursuant to which Renesas America agreed to provide us up to $2.0 billion in unsecured deposits, subject to certain conditions. We received an initial deposit of $1.0 billion in the first quarter of fiscal 2024, a second deposit of $500.0 million in the third quarter of fiscal 2024 and the third and final deposit in the fourth quarter of fiscal 2024. As discussed in Note 9, "Long-term Debt," to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report, we entered into an amendment to the CRD Agreement in October 2024 to permit us to pay the accrued interest on the outstanding loans payable on the last business day of each of December 2024 and June 2025 by adding those amounts to the outstanding principal amount of the loans rather than in cash, reducing our expected cash interest payments in fiscal 2025 by approximately $120.0 million. As also discussed in Note 9, "Long-term Debt," to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report, in the second quarter of fiscal 2025, we issued an additional $250.0 million aggregate principal amount of 2030 Senior Notes. The 2030 Senior Notes Indenture permits us to issue additional tranches up to $500.0 million subject to certain conditions. We are required to maintain a minimum amount of at least $630.0 million in unrestricted cash and permitted investments as of the last day of any calendar month through March 31, 2025 and at least $750.0 million beginning on April 1, 2025, which amount will be reduced over time upon the fulfillment of certain conditions. All of our short-term investments had investment grade ratings, and any such investments that were in an unrealized loss position at March 30, 2025 were in such position due to interest rate changes, sector credit rating changes or company-specific rating changes. We evaluate our short-term investments for expected credit losses. We believe we are able and intend to hold each of the investments held with an unrealized loss as of March 30, 2025 until the investments fully recover in market value. No allowance for credit losses was recorded as of March 30, 2025. We also continue to actively pursue opportunities for federal funding, including but not limited to awards that may be made available through the CHIPS Act or other programs, including the recently established US Investment Accelerator Office ("federal funding opportunities"). From time to time, we evaluate strategic opportunities, including potential acquisitions, joint ventures, divestitures, spin-offs or investments in complementary businesses, and we have continued to make such evaluations. We may also access capital markets through the issuance of debt or equity, which we may use in connection with the acquisition of complementary businesses or other significant assets or for other strategic opportunities, debt restructuring or general corporate purposes. Expected Uses of Liquidity We believe we have the ability to navigate the current environment while maintaining our capital expenditure plans to support future growth to meet long-term demand. The initial phase of our major expansion projects at the Mohawk Valley Fab and Siler City, NC facility are approaching substantial completion. Consequently, we expect gross capital investment to decrease significantly, to approximately $0.2 billion in fiscal 2026. We also expect to receive an additional $0.6 billion of incentives primarily related to the AMIC refundable tax credits, during fiscal 2026. As such, our ability to modulate capital investment up or down in response to expected production capacity demand requirements will continue to increase. 39 Table of Contents We have take-or-pay supplier agreements that require a minimum of $209.9 million of purchases over the next five years and a commitment to provide quarterly capacity reservation deposits with a remaining total of $7.1 million, as outlined further in Note 5, "Commitments and Contingencies," to our unaudited financial statements in Part I, Item 1 of this Quarterly Report. As mentioned above, considering the significant amount of our outstanding indebtedness, we have engaged advisors to assist with the evaluation of a number of potential out-of-court and in-court strategic alternatives, including, but not limited to, restructuring, refinancing or amending our existing debt, seeking new financing or pursuing asset sales to bolster liquidity. Cash Flows In summary, our cash flows were as follows: Nine months ended in millions of U.S. Dollars March 30, 2025 March 31, 2024 Change Net cash used in operating activities of continuing operations ($469.2) ($431.8) ($37.4) (9) % Net cash used in investing activities of continuing operations (254.5) (1,571.4) 1,316.9 84 % Net cash provided by financing activities of continuing operations 407.9 1,446.1 (1,038.2) (72) % Effects of foreign exchange changes on cash and cash equivalents 0.1 (0.1) 0.2 200 % Cash used in discontinued operations $— ($57.4) 57.4 100 % Net change in cash and cash equivalents ($315.7) ($614.6) $298.9 49 % Cash Flows from Operating Activities Net cash used in operating activities of continuing operations increased due to higher interest payments on our long-term debt and payments under the 2025 Restructuring Plan, offset in part by reductions in personnel costs and other variable spend due to our 2025 Restructuring Plan and related cost optimization efforts. Cash Flows from Investing Activities Our investing activities of continuing operations primarily relate to short-term investment transactions, purchases of property and equipment, and property and equipment related reimbursements under various federal, state, and local incentive programs. Cash used in investing activities of continuing operations decreased primarily due to decreases in net purchases of short-term investments of $761.1 million and in net property and equipment purchases of $630.4 million. The decrease in net property and equipment purchases was driven by lower capital expenditures associated with our ongoing expansion projects and the receipt of cash tax refunds as discussed in Note 1 - "Basis of Presentation and New Accounting Standards," in our unaudited financial statements in Part I, Item 1 of this Quarterly Report. Cash Flows from Financing Activities For the nine months ended March 30, 2025, cash provided by financing activities primarily consisted of proceeds of $240 million from the issuance of additional 2030 Senior Notes, net proceeds of $203.9 million from issuances of common stock primarily related to our ATM Program and a $10.0 million refund of escrow deposit, partially offset by $40.2 million of debt issuance costs and $3.9 million in tax withholdings on vested equity awards. For the nine months ended March 31, 2024, we had proceeds of $1.5 billion primarily related to borrowings under our CRD Agreement during fiscal 2024 and $10.9 million from the issuance of common stock. These proceeds were partially offset by payments of $46 million for debt issuance costs and $17.5 million in tax withholdings on vested equity awards. Off-Balance Sheet Arrangements As of March 30, 2025, we did not have any off-balance sheet arrangements. We do not use off-balance sheet arrangements with unconsolidated entities or related parties, nor do we use any other forms of off-balance sheet arrangements. Accordingly, our liquidity and capital resources are not subject to off-balance sheet risks from unconsolidated entities. 40 Table of Contents Critical Accounting Policies and Estimates For information on critical accounting policies and estimates, see the “Critical Accounting Policies and Estimates” section of “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the 2024 Form 10-K. Recent Accounting Pronouncements For a description of recent accounting pronouncements pending adoption, including the expected dates of adoption and the estimated effects, if any, on our consolidated financial statements, see Note 1, “Basis of Presentation and New Accounting Standards,” to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report. 41 Table of Contents