Cree's 2 divisions are expected to make $1.05 billion for full-year 2020
(1) Wolfspeed $550 million (52.7%),
(2) LED Products $500 million (47.3%)
Note: Cree divested its lighting products segment, which was sold to IDEAL Industries in Q4 '19.
NOTE: Cree reported Q1 '20 earnings earlier this month.
Cree's Business Model
What Need Does It Serve?
Catering to Power and Radio Frequency needs of high-growth industries: Cree designs and produces semiconductor products for power and radio-frequency (RF) applications. Their products are used in electric vehicles, inverters, and military-grade wireless systems.
Manufacturing chips and components used in LEDs: Cree manufactures semiconductor products for use in lighting-class light-emitting diode (LED) products. These are used in traditional lighting, electronic signs and signals, and video displays.
Has Two Operating Segments-
1) Wolfspeed (Power and RF products): Cree's power products are Silicon Carbide (SiC) and Gallium Nitride (GaN) based, and are used in electric vehicles, motor drives, and solar inverters among other applications. Customers are mainly communications equipment providers and solar and power electronic equipment manufacturers.
2) LED Products (LED Chips and Components): The LED segment manufactures chips and components used in the development of LED-based products for lighting, video screens, automotive and specialty lighting applications.
What are the alternatives?
1. Power Segment: Cree's Power Segment faces competition from the likes of Infineon Technologies AG and ST MicroElectronics.
2. RF Segment: Sumitomo Electric Device Innovations, RF Micro Devices, and Nitronex Corporation are Cree's main competitors in this segment.
3. LED Segment: Cree's biggest competitor in this segment is Nichia Corporation.
What is the basis of competition?
In Power and RF, customers care most about the price point and performance. Performance includes factors like form factor and power efficiency.In the LED components segment, customers look at lumens/watt, which is a factor measuring consistency of lighting brightness across a viewing area.
Cree's Revenue has grown 40.2% from $770 million in 2017 to $1.08 billion in 2019, and we expect it to grow even further to around $1.2 billion by 2021, due to strong growth of the Power and Radio Frequency segment (Wolfspeed)
%Change in Total Revenue
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