Cree, Inc. to Acquire Nitres, Inc., a Leader in Nitride Semiconductor Device Development

Company to Launch Solid State Lighting Subsidiary

Durham, NC. Cree, Inc. (Nasdaq: Cree), the world leader in the development and manufacture of semiconductor materials and electronic devices made from silicon carbide (SiC), today announced it has signed a definitive agreement to acquire privately held Nitres, Inc., a leader in research and development of nitride-based semiconductor devices. Under the terms of the agreement, Cree will acquire all of the outstanding and vested shares of Nitres stock in exchange for approximately 1.5 million shares of Cree common stock in a pooling of interests transaction. In connection with the transaction, Cree will issue approximately 350,000 unvested Cree shares in exchange for unvested Nitres shares and assume all outstanding Nitres stock options and warrants which will be exercisable for approximately 150,000 shares of Cree common stock.

Cree and Nitres plan to combine the strength of the two companies by leveraging Nitres research and development resources and world record nitride LED efficiency with Cree s manufacturing expertise and SiC platform. Nitres has developed a unique design for light emitting diode (LED) structures and has demonstrated nitride-based LEDs in the ultraviolet-to-blue range (400 to 410 nm peak wavelength) with a quantum efficiency of 20%, which is believed to be the highest ever reported. As commercialization efforts progress, their novel technology is expected to complement Cree s SiC device manufacturing process and enable development of new solid state light engines for commercial applications.

Nitres has also developed nitride-based microwave devices with the world s highest reported power density, complementing Cree s demonstration of the highest reported total power for nitride devices. These resources will be combined with Cree s substantial effort to deliver microwave commercial products by helping to expand its future product line into higher frequencies as compared to the company s current SiC devices.

As a result of the acquisition, Nitres, Inc. will become a wholly-owned subsidiary called Cree Lighting Company, a California corporation. The transaction is expected to be completed by the end of May 2000. As a result of the transaction, Cree expects to take a one-time fourth quarter charge of approximately $3.5 million. Excluding the one-time charge, Cree does not expect this transaction to be dilutive to analysts current consensus estimates.

F. Neal Hunter, chairman and chief executive officer of Cree, Inc. stated, "We re extremely excited about acquiring a company that is highly compatible and operationally synergistic with our own business. We believe Cree s low-cost platform combined with Nitres demonstrated performance capabilities in high brightness nitride LEDs positions Cree to become the only supplier of both a super high efficiency and low cost LED solution. Nitres also brings some of the world s premier nitride-based microwave device results and R&D talent to Cree. These resources will help with the acceleration of our commercialization of nitride-based microwave devices."

Fred A. Blum, president and chief executive officer of Nitres said, "The combination of Cree and Nitres will create new opportunities in solid state lighting and fortify Cree s leadership position with technologically advanced products. The merged company will be capable of delivering competitive products across the entire nitride device industry."

Nitres, Inc., of Westlake Village and Goleta, California, was founded in 1997 with the mission of developing and commercializing nitride-based semiconductor materials and device technology. Nitres has established itself as a technical leader in semiconductor device development with a strong foundation in nitride-based materials and devices. The company is conducting research under contracts funded by the U.S. Commerce Department (NIST), Air Force, AFOSR, BMDO, and the Office of Naval Research.

North Carolina based Cree, Inc. is the world leader in development and manufacturing semiconductor materials and electronic devices made from silicon carbide. The company uses proprietary technology to make enabling compound semiconductors such as blue and green LEDs, SiC crystals used in the production of unique gemstones and SiC wafers that are sold for device production and research. Cree has new product initiatives based on expertise in SiC, including radio frequency and microwave transistors for use in wireless infrastructure and radar, blue laser diodes for optical storage applications and high power devices for power conditioning and switching. For more information on Cree visit the company s website at http://www.cree.com.

This press release contains forward-looking statements involving risks and uncertainties that may cause actual results to differ materially from those indicated. Actual results could differ materially due to a number of factors, including the ability of the conditions to closing to be satisfied, the ability of the combined businesses to be integrated with Cree s current operations, the ability to continue Nitres research and development successfully, the ability to commercialize products, the costs of commercialization and production efforts, the actual costs of combining the businesses and other factors discussed in Cree s filings with the Securities and Exchange Commission, including its report on Form 10-K for the year ended June 27, 1999, subsequent quarterly reports and the registration statement on Form S-3 dated January 3, 2000.

Contact:
Fran Barsky,
Investor Relations Manager of Cree, Inc.,
919-313-5397, or fax, 919-313-5452