New Cree Guidance Speculated to Exit Consumer Lighting and Emphasize RF Solutions

Cree on October 17 released a webcast reporting its 1Q18 financial results. The next-day financial report showed a decrease of 3% YoY in the LED chip maker’s revenue. Gregg Lowe, Cree CEO, stated with faith that the company will implement new strategies in the next few months. Cree is speculated to invest heavily in its chip business and to exit the consumer lighting market. Its stock jumped 16% on Wednesday after the new CEO announced the new guidance. 

(Image: Cree)

Cree’s 1Q18 financial results led its stock to dip by 6% on Tuesday. However, it was pushed back up by 16% following the announcement of the guidance for 2Q18.

It is speculated Cree would concentrate its investment on Wolfspeed, the stand alone provider of SiC and GaN power and RF solutions, which contributed 31% of the overall gross margin even if just accounting for less than one-fifth of the entire 1Q18 revenue. 

Cree claimed the capacity for wafer and power production would double by the end of 2018. The executive board anticipated the sizes of GaN and SiC power markets will both grow within the next five years to USD 1 billion from USD 300 million and USD 500 million respectively due to the rise of electric vehicles, solar power storage systems, and 5G communication technology.

On the other hand, the less-than-expected sales of consumer lighting has analysts project that Cree would eventually exit the market. 

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