Capacity squeeze at Cree as chip demand ramps
LED chip and SiC wafer supplier Cree hit a revenue high of $107.7 million in the quarter that ended on March 26, but was limited by capacity constraints across production of high-brightness LEDs, XLamp products and Schottky diodes.
Ramping LED demand for mobile applications caught the Durham, NC, company by surprise said CEO Chuck Swoboda in an investor call to discuss the latest results. "It caught us a little off guard and we weren't well positioned for the spike," he explained.
Cree is still transitioning from 2-inch to 3-inch wafer production, and Swoboda said that 83% of its LED chips were now produced in the larger format, along with 65% of its SiC wafers.
Some relief to the current constraints should soon be felt as Cree switches production from its fab in Durham to its new facility in Research Triangle Park, although this transition will impact volumes in the short term.
Swoboda indicated that the ramp in demand had been sudden, and had appeared only in the last 4-6 weeks. A similar squeeze caused by mobile demand is affecting some suppliers of GaAs-based RF components (see related story).
The CEO also said that the development of Colorwave, Cree's LED backlighting product for large-scale TV and monitor screens, was progressing nicely and that the company should meet its target of seeing a commercial deployment within the current calendar year.
Cree made a net profit of $24 million in the quarter, compared with $20.7 million during the equivalent period last year. It expects to post sales of between $106 million and $110 million following the current quarter.
