Cree said on Monday that it has sold its LED product division for up to $300 million. The company sold its LED business to SMART Global Holdings, a transaction that took place more than a year after Cree sold its lighting business to Ideal Industries, and the transaction fees will be paid in installments over the next three years.
Cree said that after the transaction is completed, its 275 employees in Durham will transition to SMART. However, as the new boss intends to open an office in Durham, these employees are expected to stay in the city. At the same time, SMART, which mainly focuses on computer and server memory products, is leasing space in Cree's Durham campus.
For most people, Cree is known for making LED bulbs. But under the leadership of CEO Gregg Lowe, who joined the company in 2017, the company has been paying more attention to semiconductor manufacturing. Cree believes that semiconductors have higher growth potential than lighting. The company is currently investing US$1 billion to expand its silicon carbide manufacturing capabilities. After the state provided Cree with a huge stimulus plan last year, much of the investment went to the new plant in New York. However, it is also expanding its facilities in Durham.
Silicon carbide is used as a semiconductor for important technologies such as 5G wireless and electric vehicles. These two areas will become the focus of demand growth in the next few years. Lowe told "N&O" magazine last year that Cree is already a partner of German car manufacturer Volkswagen, which plans to launch 70 new electric vehicles in the next ten years.
Cree CEO Gregg Lowe said: "We are pleased to announce the sale of our LED product business to SMART. This is another key milestone in our transformation journey to build a pure global semiconductor power." "This transaction provides us with A unique strategic focus to lead the industry’s transition from silicon to silicon carbide and to further strengthen our financial position, which will support continued investment to take advantage of the decades of growth opportunities in electric vehicles, 5G and industrial applications. SMART has A strong platform and a good track record of successfully acquiring and integrating technology businesses."
Cree LED has one of the industry's broadest product portfolios of high-efficiency LED chips and high-performance LED components, and represents one of the most powerful brands in the industry. SMART is a global leader in dedicated memory, storage and high-performance computing solutions, serving the electronics industry for more than 30 years. Using SMART's diversified customer base and global operations, Cree LED will have the ability to continue to provide industry-leading products.
"We are very happy to welcome Cree LED to the SMART series," said Mark Adams, President and CEO of SMART Global Holdings. "As a leader in LED lighting technology, with a respected brand and a rich portfolio of patented products, Cree has a good track record in providing first-class solutions. I am very excited about the opportunities that Cree LED faces as part of SMART. "
Why everyone is optimistic about Cree
As mentioned earlier, Cree is a supplier of SiC and GaN materials and related products. Semiconductors are usually made of silicon, but silicon chips have many disadvantages, such as low band gap energy, low thermal conductivity, and limited switching frequency. This is the reason for the popularity of SiC and GaN. They solve these shortcomings.
SiC and GaN are two wide band gap semiconductors with better thermal conductivity, higher switching frequency and higher temperature, which can withstand higher voltages. Therefore, using SiC and GaN when making devices can make the chip smaller. Lighter, faster, more efficient and more reliable. These properties are ideal in many applications, especially in power applications. For example, SiC and GaN are widely used in 5G base stations, especially power amplifiers and RF chips.
The demand for SiC and GaN is likely to increase in the future. For example, some forecasts look at the silicon carbide market growing at a compound annual growth rate of 19.3% to 2025 due to demand from power electronics and electric vehicles. This bodes well for suppliers including Cree.