Cree and Taiwanese LED firm Lextar Electronics have entered into a supply agreement for sapphire-based LED chips. As part of the agreement, Cree will invest approximately $83 million (50.1 million) to purchase 83 million Lextar shares. The companies have agreed a royalty-bearing license agreement for certain Cree LED chip and component intellectual property. Upon closing of the investment, Cree will own approximately 13 per cent of Lextar.
"We are excited to be strengthening our relationship with Lextar to enable growth in LEDs and lighting,” said Chuck Swoboda, Cree chairman and CEO.
"Working with Lextar to supply high-quality, mid-power LED chips enables Cree to focus its resources on the high-performance, high-power LED chips that differentiate Cree LEDs in the market. This approach provides the operational and financial flexibility to help Cree achieve the best return on our people and invested capital.”
Dr David Su, chairman and CEO of Lextar, added: “Lextar has established a strong technology position and customer base in the mid-power backlighting LED segment, while Cree has had outstanding performance in the high-power LED component and lighting markets.
"We are very excited about this new cooperation with Cree. We strongly believe this new collaboration will increase the competitiveness of our products and technology, enabling both companies continued growth in the LED lighting market. Furthermore, the cross license of LED chip and component intellectual property will afford both Cree and Lextar the benefits from our product and technology development, thereby strengthening our mutual competitiveness in the global LED industry.”
The agreement has been approved by the boards of directors of both companies and is set to close in Cree’s second quarter of 2015, subject to the approval of Lextar’s shareholders and the Taiwan Investment Committee, and other customary closing conditions.
