Leading U.S. LED manufacturer Cree announced earlier this month, it will be rebranding its power and RF business as Wolfspeed. In an exclusive interview with LEDinside analyst and assistant manager Joanne Wu, Cree co-founder and CTO John Palmour spoke about the company’s rebranding strategy and current trends in the Radio Frequency (RF) and power market.
Cree rebrands more profitable RF and power business as Wolfspeed
On May 18, 2015, Cree stated in a press release it had submitted a draft registration statement on a confidential basis to the U.S. Securities and Exchange Commission for a potential initial public offering of the subsidiary’s Class A common stock. Four months later the company announced its decision to rebrand its power and RF business as Wolfspeed, a move which Forbes and other media reports noted was a spin-off of its RF and power business.
“Cree did not divest the RF and power business from the company,” said Palmour, who also will be the CTO for Wolfspeed. “Cree scheduled to have a public offering of stock for the Power & RF business to raise capital, while maintaining majority ownership of the stock. The plan will be realized between now to next June (fiscal year 2016).”
Following its earlier announcement in May some industry insiders speculated Cree intends to keep its more profitable RF and power business, and sell its less profitable LED division. According to John Palmour, Cree is separating the Power and RF business and offering a portion of it in an initial public offering.
Despite accounting for merely 8% of Cree’s total revenue (about US $ 123.9 million), a Forbes report first noted the power and RF business had generated the most revenue percentage wise. The Power and RF business posted gross margins of 54.7% YoY during second quarter of 2015, followed by LED products business 31.7% and lighting products 26.0%. The company’s latest financial results show LED product gross profits were down 50% YoY, in contrast the power and RF business was up 12% YoY.
The U.S. Air Force has awarded a follow-on contract of $4.1 million to Cree, a leading wide bandgap semiconductor electronics company. This new funding will enable the qualification of a high-performance power electronic module developed for the F-35 Joint Strike Fighter in the company’s Fayetteville, Ark. facilities. An EE Times report noted the contract as part of the U.S government’s new aircraft design philosophy “More Electric”and “All Electric” to replace costly and large mechanical hydraulic aircraft flight control systems with lighter, more reliable and low maintenance electric motors and drives.
Cree’s future outlook for RF and power industry
Palmour, who has been Cree’s CTO since 2008, also shared his insights on the usage of different substrate materials including GaN-on-Sapphire, GaAs, Si, and Sic substrates in RF and power applications. The pros of GaN on SiC for instance is its thermal conductivity. Palmour noted its high strength on thermal conductivity was capable of delivering best system efficiencies. Moreover, SiC substrates can simplify thermal design.
About 95% of the total GaN market was GaN on SiC, which is 100% of Cree’s Power & RF business. The company currently does not use any GaN on sapphire substrates for its RF products, he added. In the power device sector, Cree has mostly been using SiC on SiC. Both GaN on SiC and GaN on substrates can be applied in wide band gap power semiconductor which is being attempted by other in the industry, added Palmour, but not being done by Cree or Wolfspeed
In regards to future outlook for the RF industry, Palmour was positive about GaN on SiC technology development. Cree is positioning itself in the high power RF wireless telecommunication application sectors, which includes telecommunication, satellite communication, base station, radar and others.
As for the power device sector, Cree is mostly applying SiC on SiC technology, and manufacturing products including Schottky diodes, SiC Power MOSFETS, power modules and others. The company products are mostly being applied in power supply for servers, solar inverters, EV chargers and wide-band gap power semiconductor devices.
