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Technology Stocks : Cree Inc.

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To: EvanG who wrote (10388)7/11/2021 11:15:38 PM
From: slacker7111 Recommendation

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Lou Weed

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II-VI model is very different. They will sell at all levels of supply chain. Wafer, chip, module. Regularly state their goal is to provide competitors a low enough price that they don't even try to develop their own capabilities. If Cree isn't interested they will take it.

Every single customer of Cree wants a viable second supplier. II-VI will have a fairly easy path as a merchant supplier if they can bring 200mm wafers to market in volume with decent yields.

The question for Cree is whether they can establish themselves as a first tier component/module suppliers to the auto companies. I think that a vertically integrated supplier is more likely to be a defensible long-term business model than remaining a merchant supplier of wafers. This is obviously going to cause friction with wafer customers but they will likely be forced to deal with Cree through the next 3-5 years.

If they execute, the transition to 200mm will give Cree an enormous advantage. They should use it to increase their odds of successfully becoming a first tier component supplier.
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