Say goodbye to lead in petrol
The United Nations program for the environment has formalized the farewell to the classic leaded petrol, thanks to the end of the last stocks in the possession of Algeria. The unmistakable "super" red (from the color of the pumps) had already been abandoned for over twenty years in major industrialized countries, but not all of them did so in a timely manner. And if we talk about timeliness, Italy is automatically excluded, where leaded petrol remained available until 2002 (Germany and the USA had abandoned it in the 1990s).The presence of lead in fuels causes numerous damages to the organism and was among the first causes of premature deaths from pollution. From the relative discoveries, about forty years ago, a large part of the environmental movement linked to the control and updating of fuels started. Too bad that since the adoption of the so-called "green" (already calling a petrol in this way is a contradiction) the problem of pollution has not been reduced, far from it. The proliferation of diesel cars with their fine particles, as well as the increase in traffic in large cities, has made the farewell to traditional gasoline a drop in the ocean.
And like all ads, even the signed one United Nations has a few asterisks and a side note. Airplanes, for example, continue to use lead in their fuels like certain motorsport-related events and various boats. More than anything else, it is a "formal" farewell that underlines the current energy transition and the transfer of cars to the world of electricity. But it neither solves nor poses definitive solutions to the pollution issue which has rarely been adequately addressed in forty years.
If the (almost total) farewell to lead is certainly good news, it was accompanied by other measures to contain traffic and the number of vehicles in circulation. Because the problems related to pollution derive mainly from the amount of vehicles on the road and only subsequently from the type of fuel used. This is demonstrated by smog and other issues related to air quality that return on time to our cities, where unleaded petrol is now the standard.
Cree (CREE) Q4 2021 Earnings Call Transcript
© Provided by The Motley Fool Cree (CREE) Q4 2021 Earnings Call TranscriptCree (NASDAQ: CREE)
Q4 2021 Earnings Call
Aug 17, 2021, 5:00 p.m. ET
Contents:Operator
Good day, and thank you for standing by. Welcome to the Cree, Inc. fourth-quarter fiscal 2021 conference call. At this time, all participants are in a listen-only mode.
After the speaker's presentation, there will be a question-and-answer session. [Operator instructions] Please be advised that today's conference is being recorded. [Operator instructions] I would now like to hand the conference over to your speaker today, Tyler Gronbach, vice president of investor relations. Please go ahead.
Tyler Gronbach -- Vice President of Investor Relations
Thank you, and good afternoon, everyone. Welcome to Cree's fourth-quarter fiscal 2021 conference call. Today, Cree's CEO, Gregg Lowe; and Cree's CFO, Neill Reynolds, will report on the results for the fourth quarter and full year of fiscal year 2021. Please note that we will be presenting non-GAAP financial results during today's call, which is consistent with how management measures Cree's results internally.
Non-GAAP results are not in accordance with GAAP and may not be comparable to non-GAAP information provided by other companies. Non-GAAP information should be considered a supplement to and not a substitute for financial statements prepared in accordance with GAAP. A reconciliation to the most directly comparable GAAP measures is in our press release and posted on the Investor Relations section of our website, along with a historical summary of other key metrics. Today's discussion includes forward-looking statements about our business outlook, and we may make other forward-looking statements during the call.
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Such forward-looking statements are subject to numerous risks and uncertainties. Our press release today and the SEC filings noted in the release mention important factors that could cause actual results to differ materially, including risks related to the impact of the COVID-19 pandemic. During the Q&A session, we would ask that you limit yourself to one question and one follow-up so that we can accommodate as many questions as possible during today's call. If you have any additional questions, please feel free to contact us after the call.
And now I'd like to turn the call over to Gregg.
Gregg Lowe -- Chief Executive Officer
Thanks, Tyler, and good afternoon, everyone. Thanks for joining us today, and I hope you and your families are in good health. I'm pleased to report that during the fourth quarter, we continued to execute and drive our business, delivering strong revenue in line with our guidance and non-GAAP diluted earnings per share at the high end of our guidance range. As we continue our transformational journey, we are excited to officially change the name of our company to Wolfspeed in the coming months.
This represents a pivotal step in our company history as we are now a pure-play global semiconductor powerhouse, well-positioned to lead the industry transition from silicon to silicon carbide. During fiscal 2021, we made formidable progress. We completed the divestiture of our LED business to Smart Global Holdings. We went from moving dirt to installing equipment in the cleanroom of the world's largest silicon carbide fab in upstate New York, which will begin processing 200-millimeter wafers in the first half of calendar 2022.
We also expanded our crystal growth and wafer production capacity on our North Carolina campus. And finally, we quickly adapted to the new operating environment because of the global pandemic, keeping our factories running, while at the same time, staying connected with customers to convert opportunities in our growing device pipeline. These are just a few of the many important developments that we achieved in the last 12 months as we see an acceleration of the demand for silicon carbide-based solutions across a range of industries. We are at the beginning of a multi-decade secular shift to silicon carbide.
And we now believe the demand curve is steeper for devices than we originally expected, further bolstering our confidence in our long-term outlook. The investments we are making today will position us well to capitalize on the tremendous opportunities ahead and firmly establish our industry leadership position. I'll now turn it over to Neill, who will provide an overview of our financial results and an outlook for the first quarter of fiscal 2022. Neill?
Neill Reynolds -- Chief Financial Officer
Thank you, Gregg, and good afternoon, everyone. We delivered solid results during the fourth quarter as we saw increased demand for our devices and materials. Revenues for the fourth quarter of fiscal 2021 were $146 million, slightly above the midpoint of our guidance range, representing an increase of 6.2% sequentially and 34.5% year over year. Our non-GAAP net loss was $26.9 million or $0.23 per diluted share, just above the midpoint of our guidance range.
Our fourth quarter non-GAAP earnings exclude $118 million of expense net of tax, or $1.02 per diluted share for noncash stock-based compensation, acquired intangibles amortization, accretion on our convertible notes, project transformation and transaction costs, factory optimization costs, changes in the value of our previously held ENNOSTAR investments, a restructuring expense related to a modification of our long-term plan regarding a portion of our Durham campus, and other items outlined in today's earnings release. Moving on to our fourth-quarter performance by product line. We delivered our fourth consecutive quarter of sequential growth for Wolfspeed. We continue to see strong demand in our power product line.
But the strong demand was partially offset by supply constraints due to the temporary closure of a contract manufacturing facility we use in Malaysia, which was shut down for approximately seven days during the quarter due to the COVID-19 outbreak and has been operating at lower staffing levels due to pandemic-related restrictions imposed by the local government. Despite the challenges with the production in Malaysia, power saw device revenue grew 46% versus the prior year. In RF, revenue increased largely due to increased 5G activity as communications infrastructure providers continue to support the rollout by carriers. For materials, we saw better order flow in the quarter, consistent with our expectations for the back half of fiscal 2021.
Fourth-quarter non-GAAP gross margin was 32.3%,3 compared to 35% last quarter. The sequential decline was primarily due to the growth in our device products at unfavorable margins due to higher Durham manufacturing costs in the short term. In addition, we were negatively impacted by the production shutdown at our contract manufacturer in Malaysia, which resulted in gross margin being at the lower end of our guidance range. As previously discussed, we view the gross margin impact as short term in nature due to the suboptimal device production footprint we have in North Carolina and expect it to modestly improve going forward as we work through factory transitions and eventually ship production to our new Mohawk Valley fab in calendar year 2022.
Non-GAAP operating expenses for Q4 were $82 million, and our non-GAAP tax rate was 25%. As anticipated, the increase in our operating expenses was fueled by our investments in R&D, including development projects that are well underway at our Mohawk Valley pilot line in order to support our 200-millimeter wafer launch, as well as an increased sales and marketing expense as we pursue new business opportunities. During the quarter, we also recorded a $74 million writedown for an unfinished facility that was built to support the LED business back in 2015, which is no longer viable to support our future growth plans. For fiscal 2021, revenue was $526 million, representing a 12% increase when compared to fiscal 2020 due to growth in our device businesses, partially offset by lower materials revenue.
Non-GAAP net loss from continuing operations was $104.7 million or $0.93 per diluted share. Non-GAAP loss excludes $237 million of adjustments net of tax or $2.11 per diluted share. We ended the fourth quarter with a strong and healthy balance sheet with approximately $1.2 billion in liquidity to support our growth strategy, zero withdrawn on our line of credit, and convertible debt with a total face value of $1 billion. For fourth quarter, days sales outstanding was 52 days and inventory days on hand was 147 days.
Cash generated from operations was negative $54 million and capital expenditures were $168 million, resulting in negative free cash flow of $222 million. As we expected, fiscal 2021 required a significant amount of investment in capex, totaling a net amount of $566 million. We expect this to represent the most significant period of investment between now and 2024 as we execute our capacity expansion plan, including the launch of our Mohawk Valley fab at 200-millimeter in the first half of 2022. As Gregg mentioned earlier, we are experiencing a significantly steeper demand curve from our customers for silicon carbide devices than we had previously anticipated.
This has resulted in supply constraints where some customer orders will not be fulfilled in fiscal year 2022 and channel inventory levels will remain low until capacity comes online in our Mohawk Valley fab. In the meantime, we are working to accelerate capacity capex investments, improved output in our Durham facilities, and manage through the COVID-related challenges with our contract manufacturer in Malaysia. As we remain in the midst of a rapid capacity expansion for both materials and our wafer fabs, we anticipate capex, net of expected reimbursements from the state of New York, to be approximately $475 million in fiscal 2022. We expect capex to be more heavily weighted to the first half of the fiscal year, with Q1 representing the peak investment period as we ensure our ramp of Mohawk Valley remains on track.
We are still on schedule to operationalize the world's largest silicon carbide fab in the first half of calendar year 2022. Access to capacity in semiconductors is top of mind for many of our customers, and we want to be ready to meet that demand given the steeper ramps that we are now experiencing for devices. Now turning to our outlook. In the first quarter of fiscal 2022, we are targeting revenue in the range of $144 million to $154 million.
We expect revenue to be driven by momentum in power, partially offset by the current supply constraints and some lower productivity as our Malaysian contract manufacturer continues to ramp activities following the recent COVID-19 outbreak. Our Q1 non-GAAP gross margin is expected to be in the range of 31.5% to 33.5%, which is flat to slightly up versus 4Q as modest improvements in productivity in our Durham site are offset by higher costs in Malaysia as the team works through COVID-19-related challenges. As previously noted, lower yields and factory transitions in our Durham fabs will continue to present some short-term challenges on gross margin performance and will remain a headwind as we shift our production to our new Mohawk Valley fab. Starting this quarter, we plan to start reporting start-up costs related to the ramp at Mohawk Valley.
We anticipate start-up costs for fiscal 2022 will be approximately $80 million, of which $60 million will be cash-related costs. We anticipate more than 50% of these costs will be incurred in the second half of fiscal year 2022 as we qualify and ramp the fab. We're targeting non-GAAP operating expenses of $85 million for the first quarter. The sequential increase in our operating expenses is due to R&D, including planned growth at Mohawk Valley to support our 200-millimeter wafer launch.
We target Q1 non-GAAP operating loss to be between $40 million to $34 million, and nonoperating net loss of approximately $1 million. We expect our non-GAAP effective tax rate to be approximately 27%. We're targeting Q1 non-GAAP net loss to be between $29 million to $25 million, or a loss of $0.25 to $0.21 per diluted share. Our non-GAAP EPS target excludes acquired intangibles amortization, noncash stock-based compensation, accretion on our convertible notes, project transformation and LED transaction-related costs, factory optimization restructuring costs and other items.
Our Q1 targets are based on several factors that could vary greatly, including the situation with COVID-19, overall demand, product mix, factory productivity, and the competitive environment. With that, I will now turn the discussion back to Gregg.
Gregg Lowe -- Chief Executive Officer
Thanks, Neill. As we look at our performance during fiscal fourth quarter and the full year, I'm very proud of what the team has accomplished. Demand in the automotive and RF markets continues to be very good, while at the same time, we are encouraged by growing interest across a variety of industrial and energy customers. And thanks to the hard work and unwavering commitment of our sales organization, our device opportunity pipeline is now above $15 billion, and the team is continuing to uncover new opportunities at a very good pace.
At the same time, the team is also doing a solid job of converting opportunities. During the fourth quarter, we secured our highest total to date for design-ins, posting slightly more than $1 billion of design-ins. With this record-setting performance in Q4, the sales team posted approximately $2.9 billion of design-ins during fiscal 2021, which is an amazing accomplishment by our team and demonstrates that we are well-positioned to compete and win in devices. The design-ins for the full-year 2021 represents more than 1,100 customer projects.
Automotive represents roughly two-thirds of the design-ins, including major awards from a leading global automotive manufacturer, while the rest is spread across a wide variety of applications, including an electric farm tractor, residential energy storage systems, and an electrical vertical takeoff and landing aircraft for passenger and cargo transport. Our massive pipeline and record design-ins give us further confidence in our ability to achieve our target revenue for fiscal 2024 of $1.5 billion based on the steepening demand curve for silicon carbide devices through 2024 and beyond. Looking toward the macro environment, we're encouraged to see our strategy continues to be supported by several recent developments that indicate long-term growth. Last month, European Union countries gave their final approval to a law to make the block's greenhouse gas emission targets legally binding.
The climate law sets 2030 targets to reduce net EU emissions by 55% from the 1990 levels and to completely eliminate them by 2050. On July 14, the European Commission released its new climate agenda, which effectively requires all new cars to be emission-free by 2035, removing any flexibility for automakers to continue selling some gasoline or diesel vehicles, including hybrids. In addition, a few weeks ago, the White House issued an executive order, setting a target for electric vehicles, hydrogen fuel cell, and plug-in hybrids to make up to 50% of U.S. sales by 2030.
This action comes at the same time as many U.S. automakers have increased their commitments to ramp their electric vehicle production activities. For instance, earlier this summer, General Motors announced its plans to boost global spending on electric vehicles and autonomous vehicles to $35 billion through 2025, which is a 30% increase over its most recent forecast. A key element to support the increased adoption of silicon carbide in the automotive sector and across several other industries is the expansion of manufacturing capacity.
Our Mohawk Valley 200-millimeter fab is on track to begin device qualification production runs in the first half of calendar 2022. The facility is shaping up nicely and has shown very well during recent customer visits to the fab. On our campus here in Durham, we expanded our materials operations to a second building on our Durham campus, which is part of the previously announced plan to increase materials capacity by 30 times. On a related note, a few weeks ago, we announced the expansion of our operations leadership team to support our expected growth and the retirement of Rick McFarland who currently leads Global Operations.
Rex Felton, who is currently directing the Mohawk Valley build, will now oversee the company's fab operations, planning functions, and quality efforts, reporting directly to me. And until he retires next summer, Rick will continue to lead the company's materials and back-end operations, along with facilities and procurement activities, and will, of course, assist Rex with the transition. When Rick leaves us next summer, Rex will assume leadership responsibilities for all global operations. In addition, we continue to attract incredible leadership talent to the organization.
Recently, Missy Stigall joined us to serve as the new Vice President of Fab operations here in North Carolina. Missy was most recently with Texas Instruments where she spent the last 20 years building extensive expertise in large-scale manufacturing operations. Additionally, Laura Russell is now part of our team, serving as our VP for Finance for Global Operations. Laura joins us from NXP, where she was most recently VP of Finance for the radio power business unit.
Laura has over 20 years of experience in the semiconductor industry. These recent additions further demonstrate our ability to attract and retain top talent in the semiconductor space, and folks who are keenly interested in helping drive the paradigm shift in power electronics in the marketplace. I'd like to thank Rick for his commitment and continued contributions to the organization and wish Rex, Missy and Laura continued success in their new roles. In summary, we are successfully capitalizing on opportunities in front of us today, while continuing to make investments to deliver this next-generation technology to customers.
We are growing our device opportunity pipeline and winning our fair share, as evidenced by the recent quarter with $1 billion of design-ins. Our balance sheet remains healthy to support our operations. We are excited about the future prospects as we expand our leadership position and make the necessary investments to address what we now believe to be a steeper-than-originally expected demand curve for silicon carbide devices. In late fall, we plan to hold an investor day in New York to further discuss the strong progress we've made on our transformation strategy and share more detail about the exciting long-term outlook.
With that, I'll turn it over to the operator, and we can begin Q&A.
Questions & Answers:Operator
[Operator instructions] We ask that you please limit yourself to one question and one follow-up question. We'll pause and wait until we have our first question.
Gregg Lowe -- Chief Executive Officer
Thanks, Gigi. And as you collect the questions, I did want to comment on the announcement we made at the close of the market today with STMicro. We're pleased to have reached an agreement that expands our multiyear, long-term 150-millimeter silicon carbide materials contract with ST. The amended agreement, which is now worth more than $800 million, calls for us to supply 150-millimeter silicon carbide bare and epi wafers to ST into the second half of the decade.
Our long-term 150-millimeter wafer supply agreements with all device manufacturers now total more than $1.3 billion and help support our efforts to drive the industry transition from silicon to silicon carbide. This latest extension demonstrates how the industry at large is shifting toward silicon carbide, and that we will continue to be an important partner for many of our current customers over the next several years. I want to thank Jean-Marc and the team at ST for their continued partnership, and we look forward to continuing to work with them. And with that, Gigi, I'll turn it back to you so we can begin the Q&A.
Operator
Thank you. Our first question comes from the line of Jed Dorsheimer from Canaccord Genuity. Your line is now open.
Jed Dorsheimer -- Canaccord Genuity -- Analyst
Gregg, thanks for pointing that out with STMicro. Kind of along those lines, I think that probably sums up your position on the material side of the business pretty well. And I guess my first question is a bit more granular in terms of the $1 billion of design-ins. If we think about the device side of your business and the design-ins, and in particular, automotive, can you give us some more clarity in terms of the '23 model year, and how many models or platforms we should expect to see the Wolfspeed MOSFET in either directly or with your partners? And then I have a follow-up.
Gregg Lowe -- Chief Executive Officer
OK, Jed. So, just to remind everybody on the call, the $1 billion of design-ins are all device design-ins, and the $15 billion opportunity pipeline that we talk about is all device opportunity pipeline. So we don't mix that with the materials. I know you know that, Jed, but I just wanted to remind everybody on that, to be clear.
Basically, the $1 billion that we posted in this recent quarter, I think around two-thirds of it was automotive. And the typical timeline for going from when you get a design-in to when it goes into production is typically four years, maybe five years sometimes. For electric vehicles, it's turning out to be a little bit shorter than that. And obviously, that's why we're seeing kind of a steepening ramp.
So the -- I can't give you the exact number of models, I don't have that data right handy here, Jed. But what I can tell you is that we've got a number of different customers that are going to be ramping -- that are ramping right now and ramping in '23, and then obviously supporting the $1.5 billion in '24. And that's what we're referring to as being steeper right now. There's a -- there's just a demand from the customer that's steeper than we were originally anticipating, and that's what we're trying to catch up with.
Jed Dorsheimer -- Canaccord Genuity -- Analyst
Got it. That's helpful. And maybe just a segue to my follow-up, and this might be better for Neil. I'm assuming that you're keeping your long-term targets, the 50% plus or minus in terms of gross margin.
And a lot of clients are asking us whether or not this 30% where you've been at for a while is sort of the new normal. And I was wondering if you might be able to help us bridge that understanding of what gives you the confidence in keeping that 50% out there? Maybe that also touches on, I guess, what I was asking in terms of, Gregg, for the shift from materials to devices a bit, too? Thanks.
Neill Reynolds -- Chief Financial Officer
Yes. Thanks, Jed, for the question. I think as you look at the current margins, we're impacted by about 1 point in 4Q and 1Q from the Malaysia situation. So I think in both quarters, you think about that driving us down about 1 point from where we would have been kind of normally.
And I think as you look at the rest of the year, the margin will be a function of how things play out in Malaysia. If you step back and think about achieving kind of mid-30s, I think plus or minus as you get to the back half of the fiscal year, we'll need to just improve execution out of the North Carolina factories. I think some of the management changes we discussed should bring in what I would think of as more high-quality expertise and experience kind of drive to those levels in the back half of the year. Now, if you shift from kind of midterm to long term, as you mentioned, that's kind of what a hit on our long-term target model for that 50% plus gross margin by 2024.
And as we've stated previously, the key to that transition from kind of the low 30s from where we're at today to 50% plus, kind of lies heavily on the kind of fab cost footprint transition from North Carolina to Mohawk Valley. And as we transition kind of that new footprint and qualify the factory in 2022, if you think about fiscal 2023 kind of the beginning of that and beyond, we'll see some very big and significant differences between what we're running today in North Carolina and what we'll be running in Mohawk Valley. Let me just kind of spell that out a little bit in further detail. I think If you think about the differences between North Carolina and Mohawk Valley, wafer cost, for instance, in Mohawk Valley will be more than 50% lower than what we currently have in Durham.
And that's not completely including the full benefit of moving from 150-millimeter to 200-millimeter at diameter change. Cycle times in Mohawk Valley will be 50% greater or better than what we have -- so 50% better than what we have in Durham. And then lastly, the yield in Mohawk Valley will be 20% to 30% -- sorry, 20 to 30 points higher than what we have currently in Durham. So, all of those benefits can be really derived as a function of moving from, as you know, is a very manual and I think a small footprint in North Carolina to kind of highly automated state-of-the-art facility that would be running up in New York.
And we've already seen good evidence of that from our Mohawk Valley pilot line to support some of the insertions. And we anticipate a heavy margin transition as we move from North Carolina into the new fab in Mohawk Valley.
Operator
Thank you. Our next question comes from the line of Edward Snyder from Charter Equity. Your line is now open.
Edward Snyder -- Charter Equity -- Analyst
Thanks. Gregg, you said you added a second building for materials. Materials has been growing very nicely. I know you're kind of throttled on devices, given not only in Malaysia but your footprint in Durham or in execution.
Is it safe to assume that materials continue to grow as a percentage of your total revenue? And can we expect that would be the case until New York comes on? Or is there something else going on? Maybe we can give it -- maybe just bucket it if you can --
Gregg Lowe -- Chief Executive Officer
Thanks, Ed. So we are expanding into a different building here on campus. In fact, I just went through the facility today. And so that is happening here on campus, and that will be for our materials factory.
And what I would say is we're also expanding, obviously, the wafer fab here in North Carolina for our devices as we move the LED business out of that as well. I would anticipate, Jed -- or Ed, I'm sorry, that when we look at our plans for 2024 at $1.5 billion, we were projecting that roughly $600 million of that was going to be devices and about $900 million of that was going -- excuse me, $600 million was going to be materials and $900 million was going to be devices. So, we actually are anticipating that our device business will be growing faster than the materials business through that time frame of 2024. And it will most likely accelerate as a percentage of the business beyond '24 as we start seeing customers ramp with the $1 billion of device wins that we just posted this previous quarter.
Does that make sense, Ed?
Edward Snyder -- Charter Equity -- Analyst
Yes, it makes sense. Once New York comes on, device is going to grow much faster. It's kind of a chicken and the egg issue. I mean, you've got a lot of demand out there, and there's obviously -- or a lot of potential demand out there.
We'll see how those EVs sell. I know industrial and RF are doing quite well, too. But it seems like based on -- especially on the STMicro agreement here and what we've been hearing from the food chain is that it's really a materials limited business to some degree, and Cree is still the largest. I know there's been a lot of talk, and we've gotten a lot of calls from folks who are kind of concerned about some of the press releases coming out of Infineon's internal efforts.
STMicro made an announcement of a 200 millimeter. You got Jeep out there talking about shipping stuff. The reality though seems to be quite a bit different on the ground. You've got about $1.3 million in -- or $1 billion in long-term supply agreements.
Has the competitive dynamic in materials, both crystal wafers, bare wafers, and epis, changed much? And if it has, is it safe to say it's favoring the incumbents, maybe you, 2 Six, little bit of ROHM? Or are we seeing more people come on board because the demand is so strong?
Gregg Lowe -- Chief Executive Officer
No. I think, Ed, what I would say is certainly, from our perspective, there's a huge growth in the opportunity for silicon carbide. And so you see a lot of folks attempting to get into this business. But it has a lot of pretty tough barriers to entry and meet our technical barriers that you can't just kind of solve with money.
So some of this is very, very difficult stuff to work with. And I think the fact that we've got $1.3 billion worth of long-term supply agreements pretty solid with pretty much the who's who in the market, really kind of shines a light on our fundamental capability. And as we talk to customers in this area, this is a really important thing for them to know that we've got a very, very strong materials business. So -- and then finally, what I would say is we are absolutely not resting on our laurels in terms of our materials capability.
We drive it every single quarter, whether that's the transition, the 200-millimeter reductions in cost, improvements in yield, all of that kind of stuff, is a very, very intense activity for us. And so basically, it's just creating an even more difficult environment to try to jump into because learning and scale is really important for silicon carbide. We've got 30 years of learning and the largest scale, and we're growing that scale pretty rapidly now as well. So I think it's just going to create -- it's going to continue to have kind of really tough barriers for entering this market.
But again, we don't rest on that at all. We're driving this like crazy every day of the week.
Operator
Thank you. Our next question comes from the line of Joe Moore from Morgan Stanley. Your line is now open.
Joe Moore -- Morgan Stanley -- Analyst
Great. Thank you. I wonder if you could talk about the start-up costs that you mentioned in the second half of fiscal '22, $60 million. How do you see that rolling through, just in general? Obviously, a lot higher margin out of the new fab.
But what happens to your overall cost of sales? Do you sort of maintain both fabs? And do you have to grow into a revenue level to sort of support some of these incremental costs coming in?
Neill Reynolds -- Chief Financial Officer
Hey, Joe, thanks for the question. This is Neill. So first of all, yes, so Mohawk Valley start-up costs, we anticipate being about $80 million. That was for the year.
And $60 million of that was roughly in cash costs. And you can think about more than 50% of that being kind of in the back half of the year. So as you move into fiscal year 2023, that will start to fall off pretty significantly as we start to ramp the fab, and you'll start to see that fall away. So I don't think it's about -- I think it's very much in line with our long-term plan.
I don't think there's any real change to it. I think this is something we kind of anticipated as you bring up a new factory. So, I think this is right in line with the trajectory we need to hit the $1.5 billion of revenue. And I think it's on track to where we need to get to.
And again, as you said, as you look at the cost numbers, the cycle time differences, and the yield differences between what we're currently seeing today and what we anticipate seeing in Mohawk Valley, that all of that will then underpin pretty significant transitions in margin. I just start to bring up the fab as you get out into more significantly into '20 -- fiscal year '23, you start to bring that revenue on.
Operator
Thank you. Our next question comes from the line of Pierre Ferragu from New Street Research. Your line is now open.
Pierre Ferragu -- New Street Research -- Analyst
Hi, guys. Thanks for taking my question. So I've been following this earnings season, and I was actually very impressed to see how many people are talking about silicon carbide and how positive comments are. And I had in mind STMicro reiterating that they want to increase the front end -- I mean, the front-end capacity by 10 times between 2017, 2024.
I think that Infineon was not that specific, but 2 Six talked about spending $1 billion in capex on silicon carbide over the next decade. ROHM Is talking about growing capacity five times between 2020 and 2025. And so my question to you -- my first question to you, Gregg, was, I guess you guys are following that very closely as well. And how does that stack up when you add up all like the capacity for cars that are being made public by your potential competitors, and when you compare that to what you see in terms of end demand and what you see in terms of potential market and what you guys are planning for and winning, do you feel like the whole thing is stacking up to a healthy market in which you'd be one of the top three players, and you see these other players taking their fair share as well? Or do you feel there is a level of dilution in the market, and some of them might be too optimistic and maybe underappreciating the difficulty of getting into silicon carbide and scaling out?
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Gregg Lowe -- Chief Executive Officer
Yes. I guess I'd answer that from a couple of different vectors. First off, the demand is definitely there, and the appetite for silicon carbide just continues to grow. Neill and I were just in Europe a month ago or so, for a couple of weeks visiting with OEMs and with Tier 1s and so forth.
And all of the indications we got from pretty much all the customers we saw is what they thought was going to be demand, it's now higher than what they originally thought and faster than they originally thought across multiple different end equipments, and certainly, automotive being a pretty key part of that. So, I think the demand is definitely rapidly expanding, and that's obviously a good thing. In terms of the market itself, I think from a materials perspective, we're obviously growing our capability pretty strong in that area. And the $1.3 billion of materials long-term agreements that we have, I think, is just an indication that this stuff is pretty hard to do.
And everyone -- we have a lot of people that are trying to do internal efforts, but I think with $1.3 billion worth of long-term agreements, it's kind of an indication that maybe it's a little bit more challenging than most people originally think. So, I would say, I think having the experience and having this capability is one thing that I talk to customers quite a lot about. When they look at making this transition to silicon carbide, the company that's been in it for the longest amount of time that has the most experience, and it is us. And so I think it does kind of shine a light on us as someone that has a lot of capability.
And obviously, there are other folks that are entering the market as well. But it feels to me like the demand is -- it's way past any kind of tipping point right now. And the automotive market certainly has said goodbye to the internal combustion engine. I mean, the number of companies that just are no longer developing any plans for internal combustion engine cars by 2030, 2035 and so forth has grown.
And now, we're seeing industrial customers. We talked about vertical takeoff and landing, cargo, transport, electric tractors, motor drives, compressors. We're just seeing a lot of industrial customers jumping on this silicon carbide bandwagon. And when you see the benefit of 10 times the electron mobility or 10x the performance from an electron mobility perspective, the lower energy costs and so forth for operating these equipment, the transition is pretty solid.
Operator
Thank you. Our next question comes from the line of Craig Irwin from ROTH Capital Partners. Your line is now open.
Craig Irwin -- ROTH Capital Partners -- Analyst
Hi. Good evening. Thanks for taking my questions and congratulations on that design-in momentum. Impressive.
Gregg, I wanted to ask a little bit about the industrial market since this is something we haven't talked a whole lot about on the last couple of calls. I don't remember if it was your prior Analyst Day or the one before that, where you had the gentleman from ABB who discussed the potential in some of their utility equipment, and there was a conversation about high-power MOSFETs. I think 3,500-volt, 5,000-volt MOSFETs. Can you maybe frame out for us the importance of these future devices to your 2024, 2025 outlook? Is this in the guidance that you give us? And how would you rank this as a priority for the industrial markets and the development that's available there?
Gregg Lowe -- Chief Executive Officer
Great question, Craig. And what I would tell you, the industrial market, I obviously have a ton of experience in with my time at TI. The one thing about it that's really very different is that it's very, very fragmented. You have thousands of customers, and all the individual different sockets that you're trying to win are relatively small individually, but collectively, it's very, very large.
And so the real key there is having an ability to engage with those customers. And since we are -- we have a relatively small footprint, this is where the partnership we have with Arrow has really played very, very well for us. They've gotten engagements with thousands of different customers with their massive sales channel that they have. We've got a great relationship with them.
In fact, Neill and I and some of our other execs were out there one and a half months ago, I think, and meeting with them. And the subject line of the meeting was, how do we take this to the next level? It's already gone great. How do we continue building that relationship and capitalizing on each other's progress? So, it's a very important market for us. And the good news is we've got a great partner in helping us reach that, and that's going very, very well.
I think as it relates to 2024, it's kind of baked into the plan. But obviously, the steepening demand that we're seeing into '24 and then beyond gives us a lot of comfort for what the growth trajectory looks like beyond that, Craig.
Operator
Thank you. Our next question comes from the line of Brian Lee from Goldman Sachs. Your line is now open.
Brian Lee -- Goldman Sachs -- Analyst
Hey, guys. Good afternoon. Thanks for taking the questions. One thing I just wanted to clarify, Neill, you mentioned the $80 million of start-up costs in fiscal 2022 with more than half of that in the back half due to the Mohawk Valley ramp.
Is that all flowing through -- I'm assuming it's all flowing through COGS. And when we look at your non-GAAP gross margin guidance of 31.5% to 33.5% for Q1 here, does that reflect inclusion of those start-up costs? Or are you stripping those out? Just wanted to clarify that. And then I had a follow-up.
Neill Reynolds -- Chief Financial Officer
No, good question, Brian. No, just to be clear, we're going to exclude those costs from our non-GAAP results going forward. And those are just going to represent things like you've got depreciation and labor and facilities and other things. Now we're at a point where the base build is just about complete with the fab or into the cleanroom.
So there will be a lot of costs that really won't be related to our current revenues. So, we'll pro forma those out going forward, just to kind of give a better view of what the margins look like in the business. As we progress through the year, what you'll see is more of a kind of Durham-based kind of margin model as we get through fiscal year '22 as you think about ramping the fab and qualifying it in the first half of next year calendar year. And then as we move forward from there, we'll start bleeding that in a kind of an apple-to-apples basis once we start to impact that kind of ramp-up phase.
Operator
Thank you. Our next question comes from the line of Samik Chatterjee from J.P. Morgan. Your line is now open.
Samik Chatterjee -- J.P. Morgan -- Analyst
Hi. Good afternoon. Thanks for taking my questions. So, I had a couple.
The first one, I wanted to see if you can give me a bit more visibility about fiscal '22 revenues and how material the Mohawk ramp will be to it. And particularly, if you compare to the second half versus first half, what we've seen this year in fiscal '21 of about like 17% increase half on half. Like how different or how similar does it look to this year? And how material is Mohawk in that? And I have a follow-up as well. Thank you.
Neill Reynolds -- Chief Financial Officer
Yeah. Thanks for the question. And let me just be clear on Mohawk Valley. So in Mohawk Valley, we're going to be ramping the fab in the first half of the calendar year as you get into calendar 2022.
And what that means in the first part of that, we kind of think about that kind of March quarter sort of an internal qualification. And then as you move into the June period, then you start to view about doing customer qualifications and then transitioning to revenue out beyond that. So as you think about 2022, there's kind of de minimis impact from revenue from Mohawk Valley. But I think just kind of getting down to a few things here, I think you should clarify a little bit on the revenue, let me just unpack how this kind of plays out.
You kind of mentioned a few pieces there. So first of all, as you look at just 4Q just looking back, the revenue in the quarter came in just above the midpoint of the guidance range. And while demand continues to accelerate in some of these businesses, particularly in power, we were slowed by the COVID-19 outbreak in Malaysia, and it was roughly $3 million to $5 million of revenue that was left unfulfilled in the quarter, OK? So, we would have done $3 million to $5 million more had it not been for the COVID-19 outbreak at our contract manufacturer in Malaysia. And despite that, I thought we saw pretty good growth.
As you look into -- looking forward into 1Q, the demand continues to be strong, particularly in devices and power, which will continue to fuel, I think, strong quarter-over-quarter and year-over-year growth. However, at the midpoint of what we've baked in, another kind of $5 million to $7 million of revenue impact from Malaysia. So, said another way, we probably could have committed to more revenue in Q1 period had it not been to the Malaysia situation. So, we also widened our revenue range for that as well.
So again, even with that, we do expect to see some good revenue growth. Now with that, I also think it's important that we kind of step back and just kind of look at the macro level here Gregg kind of talked a little bit earlier. As we discussed in the prepared remarks, the slope of the demand curve for silicon carbide solutions, particularly on devices, has dramatically increased, and it's ahead of what we previously thought. We thought the inflection point, as we talked about investor day and since then, was kind of '23, kind of '24 time frame.
And right now, we're seeing that pulling all the way into fiscal 2022. And to give you an idea, this year alone, we'll see more than $100 million of customer demand on the revenue line unfulfilled in this year. And the demand levels we're seeing in '23 and '24 plus have steepened as well. And I'll say it -- you heard a couple of questions on industrial and automotive.
This demand, I'd say, is relatively broad-based. For instance, while automotive devices continue to be relatively small, the revenue for that in Q4 alone grew more than 100% versus last year. So I think this device situation has really shifted to a supply side type of channel. So we just need to drive more capacity out of our current footprint in North Carolina just to keep up with the demand inflection that's really pulled all the way into this year and until we get Mohawk Valley kind of up and running.
So I think the revenue markers that we're seeing now, as evidenced by the pipeline, the design-in, is really pulling in pretty heavily right into the current period.
Operator
Thank you. Our next question comes from the line of Karl Ackerman from Cowen. Your line is now open.
Karl Ackerman -- Cowen and Company -- Analyst
Yes. Good afternoon, gentlemen. I have two questions, please. For my first question, I was curious -- it's more of a clarification.
But much do you have remaining of the $1.3 billion in long-term materials contracts? Or I guess are we saying that the $1.3 billion is future orders? And then secondarily, on materials. Is the absence of material contracts on 200-millimeter today just driven by maybe more mature yields on 150 than 200? Just help me think about -- us think about the opportunity of 200-millimeter materials contracts as well.
Gregg Lowe -- Chief Executive Officer
I'll take that. So first off, in terms of the $1.3 billion, I don't have an exact answer for you, but I would say most of it is future, is my guess. So I think that's pretty -- I think that's pretty solid. So we've gone through some of it, obviously, but we still have probably a substantial portion of the $1.3 billion is revenue to come, is -- I don't have the exact number, but I'm pretty sure that's pretty close.
And then basically, that $1.3 billion is really all on 150-millimeter. So that's been the focus of that. And then in terms of 200, we're really just concentrating right now on ramping our own facility on that at this point.
Karl Ackerman -- Cowen and Company -- Analyst
Understood. Appreciate that. If I may, for my follow-up, you did record over a $70 million expense driven by the modification to your long-term plans for Durham. I was hoping you could discuss that.
I guess, are you seeing less wafer capacity demand on 150-millimeter than previously expected? Or is it driven by the need to fill Mohawk or the desire to fill Mohawk sooner? Thank you.
Neill Reynolds -- Chief Financial Officer
Yeah. Thanks for the question. First of all, there's really no demand related to this. The demand is very, very strong.
So the write-down of the building -- and first, let me say, we've actually found a different solution than that building that we currently have on campus. And we're currently expanding materials capacity for 200-millimeter in that new building as we speak. So there's a significant amount of investment going in. As we said, in Q4, we just determined that we just no longer needed a shell.
A lot of people are familiar with that, we had a shell on campus. And that's partially completed building was built to support the LED business back in 2015. So we look for a lot of different ways to use the facility, either from a wafer fab or materials perspective, but we found a more optimal kind of expansion plan for materials in Durham -- on the Durham side. And then with the addition of the assurance of supply being top of mind for our customers, we'll think about additional potential materials capacity down the line outside of the Durham campus.
Operator
Thank you. As a reminder, you may ask a follow-up question if needed. Our next question comes from the line of Gary Mobley from Wells Fargo. Your line is now open.
Gary Mobley -- Wells Fargo Securities -- Analyst
Hey, guys. Thanks for taking my question. I know you haven't filed your 10-K yet but in terms of trying to think about the materiality of STMicro as a customer and thinking about the $500 million in silicon carbide material supply agreement signed back in 2019. Has all of that $500 million been shipped in the last 18 to 24 months, and thus the need for an incremental $300 million to augment that relationship? And then in terms of thinking about some of the capacity constraints that are limiting your power business, should we think about that as being perishable demand given that perhaps others can fill it? Or is this just going to continue to remain in your backlog until you can solve those capacity constraints? Thank you.
Gregg Lowe -- Chief Executive Officer
Thanks for the questions, Gary, and I'll take them. So first off, I don't want to get into a lot of detail on our contracts with any of our materials customers. I think I can just go back to the comment that I made earlier is if you take a look at the total pipeline or the total materials contracts, the long-term agreements of $1.3 billion, the vast majority of that is still to be fulfilled. And I'd probably just leave it that way.
I don't want to get into any one specific customer, but I think you can kind of directionally understand that. And then in terms of the opportunity, of course, Neill mentioned there's $100 million worth of opportunity that will go unfulfilled this year. And of course, our customers would prefer to see that fulfilled. I've spent a lot of time talking to customers.
And the thing that I think resonates with them the most is that in five months, we will be processing material in the world's largest silicon carbide fab. We will be processing material that will be going through the qualifications. And then they will be getting material to qualify, etc. Just recall, a lot of our really -- the demand really takes off in '23 and '24.
So they see that we are expanding capacity, that we made a decision two years ago to expand capacity, and that capacity is coming online really just in five months now, when you think about it, first part of calendar 2022. We've had customers recently visit the New York factory, and the feedback we've gotten is super positive on that. They see the pilot line that we've got running up there, and they like that because it's sort of getting the production lines kind of ready to go with the pilot line and then kind of transitioning that to the factory as it begins to open. So I think the customers see that we've got this pretty substantial amount of investment we're doing.
They appreciate it, and they're really sticking with us on that. And to kind of put things in perspective, we had a field of mud in March of 2020. And in the first quarter of '22, we will be producing product and qualifying product. That's pretty quick.
And this is in a time where the semiconductor industry, in general, had a ton of capacity issues. And if you decided today to start with a field of mud and build a factory, I think there's zero possibility you'd be up and running in two years. I would say it's at least a year in addition to that and maybe even longer. So, I think the bottom line is that they see that we're making the investments, and that these investments are a big light at the end of the tunnel for them.
Operator
Thank you. Our next question comes from the line of use Vivek Arya from Bank of America Securities. Your line is now open.
Vivek Arya -- Bank of America Merrill Lynch -- Analyst
Thanks for taking my questions. I had two as well. For the first one, I'm curious that you're seeing very strong demand signals, but how is that translating into the pricing environment, right, versus what you thought 90 days ago? Or asked differently, what is the level of confidence in achieving your long-term gross margin outlook, right? And as the customers come and tour the facilities and they look at what you'll be producing there, how are you doing that trade-off between the pricing versus having the certainty of these long-term contracts?
Gregg Lowe -- Chief Executive Officer
Yeah. I think in terms of pricing, what I would say is the vast majority of what we do are long-term deals, and that's both materials, as well as on devices. And so the pricing is kind of set. So we have a pretty good view as to what's going on there.
We obviously know what's happening with our cost models as well. And as Neill mentioned, there's pretty dramatic cost reductions coming online as we move into Mohawk Valley. We don't really price our business as a kind of a spot market kind of thing. So, we don't really get into the -- into that kind of thing.
And so we'd much rather have long-term agreements with folks, and they can count on us for putting the capacity in place and having an understood pricing curve. And then we can count on them for having the demand coming our way. So, it's more like that, I would say.
Vivek Arya -- Bank of America Merrill Lynch -- Analyst
Got it. And for my follow-up maybe for Neill, I believe you said you're looking at a higher capex level for fiscal '22. I was hoping you could give some more color around that. What is driving that higher capex? And then importantly, when does that translate into upside to your longer-term model? Like what is the benefit of this additional spending that you're planning to do next year?
Neill Reynolds -- Chief Financial Officer
Yeah. First of all, as we said -- thanks for the question. First of all, as we said, the demand as we kind of look at the slope of the demand curve, not just this year but into '23 and '24, has certainly steepened. And I think our revenue trajectory as we get out to those time frames is really just going to be a function of how much capex we can bring online and how fast we can translate that into revenue.
So, I do think, as you look out at the time, that's exactly what we're trying to do is kind of get out into and above where we're at today. Now it's going to be a function of how well we can execute that and bring it online. So I'm not necessarily saying we can be the change in those numbers today, but I think we're anticipating and seeing the steeper demand curve. So if you look at 2021 fiscal, we spent $566 million of capex, which is our peak year.
We're bringing that down to $475 million this year, but we'll also see a significant amount of reimbursements from the state of New York. And as the year moves on, given that steepening demand curve, we'll start to see some benefits from that, hopefully, as we get out into a year from now. And what type of cost that is, I mean probably if you go back to January and the capex plan that we laid out when we launched 200-millimeter, this is largely the same plan. What we're trying to do is capture the capacity and the revenue in such a way by pulling in that same plan anywhere we can to drive more capacity.
So some of that was going over '23 and '24. Some of that was materials expansion for facilities and things like that. So you can think about it as being -- maybe pulling in roughly $100 million maybe versus what we anticipated before. But with the expectation that as we get out to '23 and '24, we can meet a higher revenue level than we had anticipated previously in the $1.5 billion plan.
Operator
Thank you. Our next question comes from the line of Colin Rusch from Oppenheimer. Your line is now open.
Colin Rusch -- Oppenheimer & Co. Inc. -- Analyst
Thanks so much, guys. Can you just give us an update on the preparedness of the supply chain and your suppliers to support your ramp as you get into here in the back half of the next fiscal year?
Gregg Lowe -- Chief Executive Officer
Yeah. So, I can probably hit that. Neill is very actively engaged in this as well. Basically, from the beginning of the pandemic, we've had a weekly supply chain update in terms of where things are and what crunch points are happening, and so forth.
Our team has done a fantastic job on this, and we've stayed close with all of our suppliers in the supply chain, obviously, throughout the pandemic. The feedback we're getting from these folks is very positive in terms of how we've handled the situation, both from day 1 when everything went into lockdown and there was no business kind of going on, and how we were very even-handed in terms of dealing with them. And then as things have kind of roared back, they've been very, very supportive of us in this transition. Neill, I don't know if you want to add any additional color from your point?
Neill Reynolds -- Chief Financial Officer
Yeah. So, I think in terms of the supply base, one thing I think that we've been fortunate enough to have affected was growing that very early, knowing that the capacity expansion and the revenue requirements we need to draw there early. So I think we placed orders either on equipment or other things out in the long term to get those types of things in place. As Gregg mentioned earlier, I think that would be a difficult -- more difficult expansion if we were starting that today.
So, as you look at working with the suppliers, I think, again, I think we've partnered with the suppliers very, very well. And I also think that we've gotten ahead, I think, in many cases, of maybe longer lead times that are out there right now. And so we don't really see an impact from it in terms of the scheduling of the capacity expansions we've been working on. In fact, as I mentioned earlier, we're actually pulling things in, in any area we can, and we are seeing the capability to do that.
Colin Rusch -- Oppenheimer & Co. Inc. -- Analyst
Excellent. And then just following up in terms of the design-ins and the rate at which they're happening, can you just talk about the duration of working through those design-ins and that process? And are they accelerating any noticeable rate versus where we're at, call it, six months or a year ago?
Gregg Lowe -- Chief Executive Officer
It seems -- well, first off, every opportunity kind of has a life of its own. And so you'll see -- obviously, the last quarter, we were super pleased with having $1 billion of design-in, but it's not one of these things where it's kind of always up into the right. Sometimes, a lot of decisions are made in a quarter. And sometimes, decisions get made for -- get delayed for whatever reason.
Last quarter, obviously, was a super positive quarter for us. The last year was phenomenal at $2.9 billion. So, we feel pretty good about that. So, if they kind of take a life of their own, what I would say though is we're certainly seeing the design-ins that we have, the expectation from the customers in terms of ramp, is what's been pulled in and is steeper than we originally anticipated.
So it's obviously a good problem to have, and it's one we're working on pretty hard right now.
Operator
Thank you. Our next question comes from the line of Edward Snyder from Charter Equity. Your line is now open.
Edward Snyder -- Charter Equity -- Analyst
Great. Thanks for the follow-up. Gregg, I was a little confused by your answer on the question about perishable demand for materials. You've got a lot of large customers in the material business like ST Infineon, which are also competitors in device.
I know you've had -- you must have had conversations about how they feel about you building the largest, most automated sync sick device fab that's not going to be competitive to them. Can you maybe you can characterize the tenor of those and help explain how they're going to benefit from the materials business? Because that's your Durham side of the business. You're not going to grow materials in New York, and that could ramp independent of your device business -- device fab New York. So, a, what's preventing the materials business from ramping faster if that's a limit to your customers; and b, how do they feel about this monster fab you're building?
Gregg Lowe -- Chief Executive Officer
And Ed, just a couple of things. First off, on the perishable demand. I thought I was answering that relative to devices. And as Neill kind of mentioned, it was the development business that has the $100 million worth of unfulfilled demand for next year.
So that's really from a device perspective. And so I think when those device manufacturers see what we're doing with New York -- when those device customers see what we're doing in New York, they're pretty pleased with the amount of activity that we've got going on there and the development and so forth. In terms of materials, as I mentioned, Ed, we anticipate by 2024, that our materials business will be somewhere in the order of $600 million, to device business $900 million. And so we know that a lot of folks are trying to build materials on their own.
But I think the $1.3 billion and a couple of expansions and extensions that we've seen are kind of turning into -- I think it's -- I think people are just realizing this is more difficult than they originally anticipated. And again, our attitude is we've got great relationships with these folks. I have ongoing conversations with them. We treat them as real customers.
There's not sort of a bin 1 for what we do and bin 2 for everybody else. We try to give them the best materials we can. And that's primarily because we're trying to convert the power market from silicon to silicon carbide. And as a big supplier of materials, having a good relationship with folks that are going to help us do that is a really important thing.
So, I think the way I would characterize it, Ed, is I think people -- the materials customers see that their opportunity as a device supplier is growing very, very rapidly because the entire market is growing rapidly. And there's really no sign of it as some toting out anytime in the coming decade really. So I think it's mostly just a realization that this stuff is harder to do than they probably anticipate and the fact that we treat them well as a customer.
Edward Snyder -- Charter Equity -- Analyst
Great. And maybe, Neill, if I could, a housekeeping. Did you say the $475 million in capex is gross or net of New York State payment?
Neill Reynolds -- Chief Financial Officer
That's a net of New York State payments.
Edward Snyder -- Charter Equity -- Analyst
Great. Thank you.
Operator
Thank you. Our next question comes from the line of Ambrish Srivastava from BMO. Your line is now open.
Ambrish Srivastava -- BMO Capital Markets -- Analyst
Hi. Thank you for letting me get on the call. I had a question, Neill, on the start-up costs. And both you and Gregg are from the semi industry.
It's kind of unusual to see start-up costs being pro forma-ed out, especially since $60 million out of the $80 million is cash charge. Can you just help us understand the thinking behind that? And then my kind of related follow-up question is, since you're performing -- pro forma-ing that cost out, does that imply then that gross margin bottoms out in the second quarter of the current fiscal year? Thank you.
Neill Reynolds -- Chief Financial Officer
Thanks, Ambrish. And of course, before we took that decision, we did some benchmarking on that. I think if you kind of study that, we've seen other companies do that as well. I think the second thing really is on the start-up cost is given the size of the company we are today versus what we're going to be out in the future, weighing down the margins and then trying to explain them to all of you with that start-up cost being in that was not really generating revenue in such a significant piece, that it'd just be easier to kind of report on it every quarter, let you know what we're doing, be very transparent about it, and then be able to kind of look and see where we go from there.
And sorry, Ambrish, what was that second question?
Ambrish Srivastava -- BMO Capital Markets -- Analyst
Yeah. The second question was, should we think that gross margin then bottoms out in the second quarter of the current fiscal year?
Neill Reynolds -- Chief Financial Officer
Yes. Look, I think that we're going to see some improvement. A lot of this is going to be dependent upon what happens in -- with the Malaysia contract manufacturers. As I said earlier, about 1 point of impact happened in 4Q.
We'll see another point of impact in the 1Q quarter just related to that. And we are making improvements in our Durham factory. So I think if you think about what's going on in Durham and its deepening demand that's happening right now, a lot of that's supply disconnect. If you think about a revenue standpoint, we're not -- what we're saying here is if we can get more capacity online, we can do more revenue.
So, our revenue forecast for the year hasn't changed. It's just we've got higher demand and we want to get more output out of Durham in the meantime. So, I think what will happen here -- and if you take a step back, in Durham alone, we put in over 100 tools in the last year to support higher demand. And we just need to get to improve that factory output and kind of support that kind of demand curve.
And as Gregg mentioned earlier, we've added new leadership to get better focus on that and really improved the North Carolina footprint. For example, Missy Stigall, who you heard in the prepared remarks, is someone we recently hired. She was running a day and chase set up for TI that produced a significant -- significantly more amount of wafers than our Durham fab does. So given that most of the capacity improvements and you think about bottoming of the margin, that we've got to drive to fulfill that incremental demand will come through yield and cycle time performance in a footprint, as we drive to higher revenue, we anticipate that the margins will come along with it.
So that kind of all goes together. So fulfilling this additional demand, driving those things, it feels like we've kind of hit bottom. We should see some improvement as we get to 2Q. And then as you get in the back half of the year kind of hit that mid-30s, kind of plus or minus, that is excluding those start-up costs, as I mentioned earlier.
Operator
Thank you. Our next question comes from the line of Harsh Kumar from Piper Sandler. Your line is now open.
Harsh Kumar -- Piper Sandler -- Analyst
Yeah. Hey, guys. Congratulations on that strong design-in pipeline. Gregg, I had a quick question.
I was -- I've seen a lot of companies define things differently. I was hoping that you could explain to us how you guys categorize design? And these are -- are these orders that are on the books that are just basically fully committed at this point? Or is there something else to it? And yes. I'll go with that and then come back for a second.
Gregg Lowe -- Chief Executive Officer
Yeah. Typically, it's -- well, the way it works is it's something that flipped over to design-in when a customer has awarded us the business. Many times, that's in the form of an award letter or something like that. But it's an official document that comes from the customer that says, we have evaluated all of our different suppliers and you've won this particular project.
And so it's a customer design award, if you will. And then they talk about the ramping of it and when they need initial qualification parts and all of that. To go from that award letter to production depending on the end equipment can be several years. In automotive, it's typically four years.
And during that time, you're shipping initial samples to them. They're putting them in their bills. They -- whatever challenges they have, you're working with them on it from an engineering perspective and so forth. That is pretty typical for what semiconductor companies define as design-ins.
It's very familiar to me in terms of the other companies that I've worked at, and I think most people kind of consider it the same way.
Harsh Kumar -- Piper Sandler -- Analyst
So I just wanted to follow up on that. But then the opportunity pipeline, do you know the number going in when you win a design line, how big that order is going to be? Or is that something you kind of estimate?
Gregg Lowe -- Chief Executive Officer
No. It's -- the customer tells us it's going to be x millions of units, and then we multiply it by the price that we did. And so we know how much it turns into. And obviously, all of that is subject to the accuracy with which the customer thinks their product is going to ramp.
And that can have some variability, but that's super normal, Harsh, in this environment. So I think what we're doing in terms of design-in is pretty much straight down the fairway with the way other people would describe it as well.
Harsh Kumar -- Piper Sandler -- Analyst
Understood. Very helpful. Thank you, Gregg.
Operator
Thank you. Our next question comes from the line of David O'Connor from Exane BNP. Your line is now open.
David O'Connor -- Exane BNP Paribas -- Analyst
Great. Thanks for taking my question. Maybe, Gregg, if I can go back to the wafer supply agreement. Given the transition that we're seeing in the industry from the 150-millimeter to the 200-millimeter, I'm just wondering why 200 millimeters were not part of this expanded wafer supply agreement, given that it's going to stretch into the back part of the decade? And just in addition to that, the $1.3 billion in agreements, is still a five-year time frame still the right way to think about that? Thanks.
Gregg Lowe -- Chief Executive Officer
Yeah. So, on the second question, yes, kind of half a decade is about the right ZIP code, if you will. Some of them are obviously a little bit longer. And the one we just announced then gets into the second part of this decade here with ST.
And just in terms of -- just to remind everybody, all the deals that we've done are 150-millimeter. And we're really focused on just ramping our internal capability at this point on 200. So it's more of a decision just to stay focused on that.
David O'Connor -- Exane BNP Paribas -- Analyst
Got it. And maybe just one quick follow-up for Neill, on the opex, how we should model that into the next fiscal year. Anything that you have to call out there? Thank you.
Neill Reynolds -- Chief Financial Officer
Yeah. Thanks, David. As you get into the opex, I think similarly, you could think about that accreting at a couple of million dollars a quarter, and the investment areas remain the same. It's primarily in R&D as it relates to bringing new products to market in addition to the 200-millimeter development work that's going on.
And in sales and marketing, where we're investing in to help us bring home more of these, grow the pipeline and grow the design-in levels as we continue to do. And those are the areas that we're investing in. So, you can think about it maybe a couple of million a quarter as you get out to the end of the year.
Operator
Thank you. At this time, I'm showing no further questions. I would like to turn the call back over to Gregg Lowe for closing remarks.
Gregg Lowe -- Chief Executive Officer
Well, thanks, everybody, for your engagement and questions, and participation in the call today, and we look forward to talking to you over the next quarter. Thank you.
Operator
[Operator signoff]
Duration: 76 minutes
Call participants:Tyler Gronbach -- Vice President of Investor Relations
Gregg Lowe -- Chief Executive Officer
Neill Reynolds -- Chief Financial Officer
Jed Dorsheimer -- Canaccord Genuity -- Analyst
Edward Snyder -- Charter Equity -- Analyst
Joe Moore -- Morgan Stanley -- Analyst
Pierre Ferragu -- New Street Research -- Analyst
Craig Irwin -- ROTH Capital Partners -- Analyst
Brian Lee -- Goldman Sachs -- Analyst
Samik Chatterjee -- J.P. Morgan -- Analyst
Karl Ackerman -- Cowen and Company -- Analyst
Gary Mobley -- Wells Fargo Securities -- Analyst
Vivek Arya -- Bank of America Merrill Lynch -- Analyst
Colin Rusch -- Oppenheimer & Co. Inc. -- Analyst
Ambrish Srivastava -- BMO Capital Markets -- Analyst
Harsh Kumar -- Piper Sandler -- Analyst
David O'Connor -- Exane BNP Paribas -- Analyst
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