| To: slacker711 who wrote (10384) | 7/11/2021 9:49:58 PM | | From: EvanG | | | | if they ultimately plan on selling 200mm wafers to competitors in '23, then threatening that they won't is likely a game of leverage. Not much different than STM and ON touting their internal supply or Infineon's press releases touting GTAT.
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.
STM will be close to pulling even with Cree in SiC revenue this year, kind of wonder if that is causing friction.
Think Infineon is using GTAT boules because they want to use their cold split technology. Not that the cold split thing makes sense to me, but they think it is a major advantage. |
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| To: EvanG who wrote (10385) | 7/11/2021 11:15:38 PM | | From: slacker711 | | | | 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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| To: slacker711 who wrote (10386) | 7/12/2021 12:41:02 PM | | From: EvanG | | | | 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.
In a low growth environment with few players remaining I would agree but that could take decades. Expanding players will mean lower margins and lower market share. It is about surviving to be one of the few which helps if their are partners.
If they execute, the transition to 200mm will give Cree an enormous advantage.
I highly expect that not long after 200mm goes into mass production that 300mm is demonstrated. If Cree wants an advantage they need to not be outgunned on EBITDA by everyone of their competitors and that means making money, something they have consistently been unable to do. |
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| To: EvanG who wrote (10387) | 7/12/2021 2:17:30 PM | | From: slacker711 | | | | I highly expect that not long after 200mm goes into mass production that 300mm is demonstrated. If Cree wants an advantage they need to not be outgunned on EBITDA by everyone of their competitors and that means making money, something they have consistently been unable to do.
We are in limbo with Cree right now. The valuation is ludicrous based on current results and extremely rich based on the FY'24 guidance given in Nov '19. It will probably be 24 month before we can even begin to see what the results look like with the ramp of the Mohawk fab.
In other words, it is going to be a while before we can prove or disprove your skepticism.
FWIW, I doubt that they are going to fund much of their next fab. They received $500 million in subsidies before semis were considered a national priority by every region. |
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| To: slacker711 who wrote (10388) | 7/12/2021 7:54:54 PM | | From: EvanG | | | | FWIW, I doubt that they are going to fund much of their next fab. They received $500 million in subsidies before semis were considered a national priority by every region.
Cree needed to raise $500 million in February for the current fab. STM is investing $1.8 billion to $2 billion in CAPEX this year, which includes pulling forward their SiC substrate efforts. Just saying that size investment barely dents their finances and they didn't need to dilute their shareholders.
It will probably be 24 month before we can even begin to see what the results look like with the ramp of the Mohawk fab.
Gregg Lowe keeps making it sound like it will be early next year. Think 24 months would be a surprise to most investors. |
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