They are expensing six new fabs simultaneously while legacy 12-inch lines are sold out.
Thesis: The market is mispricing a temporary accounting and startup drag as a structural margin collapse. Reported gross margin of 18.4% includes startup costs for six sites and an accounting pivot in Texas. Normalized gross margin is 31%. Legacy 12-inch capacity is at 95% utilization and GaN is overbooked. This is a trough-cycle buy before the 2027 supply squeeze.
Verdict: LONG — Conviction: MEDIUM
Catalyst: Q4 gross margin bottoming as seasonal energy costs roll off and new line revenue begins to contribute.
Key Risk: SOI optimization complexity. Management admitted the learning curve for Missouri SOI is longer and more difficult than ordinary silicon.
The Tell: Doris admitted customers ask to delay LTA volumes and convert to spot purchase. Management must provide special support to maintain volume. They are price-takers even with 95% legacy utilization.
Friction Level: MODERATE_FRICTION — The disagreement centers on whether the margin collapse is a temporary startup artifact or a structural reset to a higher cost base across a global footprint.
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