News Article

Cree Maintains Ramp Despite Taiwan Slump

The GaN LED maker invests up to $18 million to boost output over the next quarter.

Cree will upgrade all of its leading LED products to 4-inch diameter SiC substrates by June 2009, even as Taiwanese chip makers complain of overcapacity.

This comes as the company increased revenue from its first fiscal quarter 2009, ended September 28, by 24 percent over the same time last year to $140.4 million.

Sales of high-output XLamp packaged LEDs continue to expand at more than 10 percent each quarter. Demand for LR6 general illumination downlights, which each feature twelve XLamps, was so great that supplies failed to keep up.

Consequently Cree will spend up to $18 million increasing output and efficiency at its Durham, North Carolina, headquarters, and Huizhou, China, sites. This includes enabling more facilities to accommodate larger wafer diameters than the current 2-inch standard.

“We remain focused on activities to help improve margins over the next year, including the transition of LED chip production to 4-inch wafers," said CEO Chuck Swoboda.

“We re on track to have pretty much all the major product lines fully converted by end of fiscal year."

The latest quarter s sales generated $5.9 million in profit, down from $8.4 million in the previous period. However these continued profits, and revenues that are expected to exceed $142 million next quarter, appear to validate the company's focus on LEDs for lighting.

Leading LED performance
The GaN chip-making industry has seen a great deal of investment in production facilities over the past year, driven by general lighting and backlighting for flat-panel displays.

This expansion has centered on Taiwanese companies but, according to Swoboda, these firms are now struggling to compete with Cree s advanced and aggressively patent-protected technology.

“There is definitely excess capacity in Taiwan right now," he said. “They re clearly having trouble accessing certain markets, either from a performance or an intellectual property standpoint."

Swoboda says Cree s superior technology has shielded it from the current economic downturn that is being felt by its Taiwanese competitors.

“They are reporting pretty big declines," says Swoboda, “both month-to-month and year-over-year, at least in the most recent data. Their business is more linked to the consumer segment, so I think they ve seen the impact more than we have at this point."

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