INDUSTRY STOCKS
IPG Photonics and RF chipmaker second and third, due to share price gains of around 25 percent between the ends of April 2012 and 2013).
Most of the increase in Cree’s valuation has occurred this year, and has been driven by two announcements: the unveiling of the company’s second fiscal quarter results, which came out on 22 January; and the release of Cree’s competitively priced LED light bulbs on 5 March.
The latter announcement, which helped to propel the share price beyond $50, is evidence that the company is executing its plan to not just be a provider of LED chips – but also to be a producer of solid-state lighting and a driver of its widespread adoption. Cree is now selling warm-white emitting bulbs through the US hardware chain Home Depot. They deliver outputs that are equivalent to 40 W or a 60 W incandescents, and retail for $9.97 and $12.97, respectively. Bulbs are backed by a ten- year warranty and have very impressive efficiency figures: the 60W-replacement delivers 800 lumens and consumes just 9.5 W, while the 40W-replacement produces 450 lumens and draws just 6 W.
Cree’s partnership with Home Depot shows that it is focusing on the domestic market. This makes sense, given that the US lags many other countries in the uptake of the compact fluorescent, a bulb that provides a sterner test to the LED lamp in terms of efficiency, and therefore running costs.
The size of the US market for LED light bulbs was highlighted by Cree CEO Charles Swoboda in a conference call on 23 April 2013 that discussed third fiscal quarter earnings: “There are currently more than 5 billion bulbs in people’s homes across the United States, which could benefit from an upgrade to LED.” To spur sales of this product, Cree will soon launch a national media campaign to promote the company’s brand and its new product. “We believe this investment will drive sales of the LED bulb and further position Cree as the leader in LED lighting,” claims Swoboda.
Diversification into the lighting business is just one part of Cree’s plan for its future. Another aim is to grow sales of products based on the company’s SC³ LED technology, which employs advanced SiC technology and features advancements in LED chip architecture, phosphors, and package design.
THE LED INDUSTRY is struggling, with supply outpacing demand by a significant margin. Prices of chips are falling fast, and it’s a struggle for manufactures to turn a profit.
Given these testing conditions, you might expect that it would be unwise to invest in an LED chipmaker. But that’s not the case if you have spent the last 12 months backing the right horse: Cree. Over that period shares in the US firm have shot up by more than 80 percent, a rise in valuation that outperforms that of the other leading III-V public companies by more than 50 percent (for details, see the share price leader board on p39, which places vertically-integrated laser systems manufacturer
According to Swoboda, SC³ LEDs enable higher-density designs, novel optics and a lower cost-per-lumen. These devices have been deployed in Cree’s latest CXA series of LED arrays that can deliver more than 10,000 lumens, and can be used for outdoor area lighting and high-bay lighting. In addition, this class of LED has set a lab efficacy record of 276 lumens-per-Watt, for a device driven at 350 mA and producing a correlated colour temperature of 4401 K.
Another goal for Cree is to be a leader in RF and power electronics, and drive a new generation of applications for these products. Efforts in this direction are well underway, and include a recent launch of a second-generation SiC MOSFET. This is claimed to deliver industry-leading power density and switching efficiency at half the cost-per-amp of the company’s previous generation of devices. Cree’s success on various fronts can be seen in its recent financial results. Second quarter earnings for the three months up to December 30, 2012, included record
June 2013
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