Cree, the most popular once led leader, divested t

2022-08-15
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What enlightenment does Cree, the former leader of LED, have for the development of compound semiconductors in China

on March 15, 2019, Cree announced that it would sell its LED lighting division to American ideal industries for us $310million. The businesses sold by Cree include those that cannot be controlled in this way); Adopt exchange servo electromechanical and ball screw to control commercial LED lighting fixtures and enterprise lighting solutions. Through this business divestiture, Cree company continues to focus on compound semiconductor RF and power, which is the market for non active control professional experimenters to meet the market demand of 5g communication and new energy vehicles. The analysis of the development strategy of Cree in the field of compound semiconductor has enlightenment for the development of compound semiconductor industry in China

I. background and reasons for Cree to sell LED lighting business

(I) led lighting market has become a red sea of competition

on the one hand, LED lighting is no longer a highland of technological competition. The 2014 Nobel Prize in physics was awarded to three scientists, Yoshio akazaki, Hiroshi Amano and Takeshi Nakamura, in recognition of their invention of the blue light emitting diode (LED) for lighting. The breakthrough of gallium nitride (GAN) material makes led become a revolution to change the way of human lighting. In more than 20 years after the invention of blue LED, the cost performance of LED lamps has been continuously improved, and even followed the "haitz law" similar to "Moore's law". At present, the cost of LED lighting has been reduced by more than 90%, and the luminous efficiency has been increased by 30 times, making the performance and cost of LED fully meet the lighting demand, and the market penetration of alternative light sources is close to 50%. LED lamps have changed from the highland of technological competition to mature general commodities

On the other hand, cost control and market development have become the core competitiveness of LED lighting enterprises. LED manufacturing links tend to be standardized and universal, and the added value is getting lower and lower. Ge, OSRAM, Philips and other international traditional lighting leading enterprises have sold and divested LED lighting business. In addition, the core invention patents laid out by leading enterprises in the early stage are gradually out of the protection period, and Chinese led enterprises that master chip manufacturing capacity and strong application market have become the main force of the industry. San'an optoelectronics, Huacan optoelectronics, Mu Linsen, and OPP lighting have become representative enterprises. According to CSA data, the overall output value of semiconductor lighting in China exceeded 700billion yuan in 2018, and the chip production capacity exceeded 12million pieces/month (equivalent to 4 inches)

(II) Cree is no longer in the semiconductor lighting market.

Cree was once a leader in the progress of LED technology. Relying on the advantages in the field of SiC materials, Cree has repeatedly broken the record of luminous efficiency of LED lighting with its unique technical route of "SiC substrate led". Cree increased the luminous efficiency of led to 303lm/w in 2015, breaking its record of 276lm/w set in 2013. However, the luminous efficiency of lm/w can meet the needs of most lighting scenes, and high luminous efficiency cannot continue to improve the added value of products. In addition, the manufacturing cost of LED based on the "sapphire substrate led" technology route continues to fall, and Cree's competitive advantage in the LED market is increasingly weakened. The lighting business revenue of the company has declined by nearly 40% in the past three years. In 2017, Cree chose to establish a joint venture with domestic San'an optoelectronics company, giving up the low and medium power LED market in a disguised form

Figure 1 operating revenue of Cree company in fiscal year (unit: millions of dollars)

data source: company financial report, CCID think tank sorting and prediction

(III) emerging application markets drive the growth of compound semiconductor industry

in addition to excellent light-emitting performance, compound semiconductors also have characteristics of fast switching speed, high voltage resistance, good heat dissipation, etc. compared with Si devices, they have better performance in the field of RF and power devices

in new energy vehicles, the use of SiC power devices can reduce the volume of the charging device by 80%, the weight by 60%, and the energy loss by 25%. Tesla Model 3 has adopted SiC MOSFET as the switching device of inverter to replace IGBT device. In mobile communication base stations, the use of Gan RF devices can meet the communication efficiency in higher communication frequency bands, so that the users covered by each base station can be increased by 2 times, and the data transmission rate of a single user can be increased by 10 times. Huawei has begun to batch use Gan RF devices in 4G communication base stations to replace LDMOS devices. In addition, SiC and Gan devices have also been replaced in photovoltaic, wind energy, household appliances and other application markets, so the loading market space is controlled by deformation in the experiment

in 2018, the global market size of SiC power devices was about 450million US dollars, and the global market size of Gan RF devices was about 500million US dollars. Five years later, the market size is expected to reach 2billion US dollars and 1billion US dollars respectively

(IV) Cree plans to focus on the development of compound semiconductor business

Cree was founded in 1987. Its early technology came from North Carolina State University in the United States. Its content mainly includes: upper and lower limit position shutdown experiments, sample breaking shutdown experiments, and overload automatic shutdown experiments. Cree released the first commercial SiC substrate material in 1991 and the first industrial Gan on SiC RF device in 1998. Cree released the world's first commercial SiC power device in 2002 and the world's first SiC MOSFET power device in 2011. Cree acquired the Gan device company nitres in 2000, the GaN substrate and epitaxial Business Department of ATMI in 2004, and the SiC substrate company intrinsic semiconductor in 2006

in September 2015, Cree split its power & RF division into an independent "wolfspeed" company. The newly established wolfspeed company is the world's largest supplier of SiC substrate materials, a reliable supplier of Gan RF devices for U.S. military radar, and the world's top three SiC power device enterprises. It is estimated that the sales volume of wolfspeed will reach US $590million in 2019, which is 3.3 times that of 2015 when it was split

Figure 2 wolfspeed's operating revenue in fiscal year (unit: US $million)

data source: the company's financial report, CCID think tank's collation and prediction

II. Cree's layout strategy in the field of compound semiconductors

(I) extending the value chain with SiC materials as the core

Cree is the world's largest supplier of SiC substrate materials. In 2018, Cree doubled the production capacity of SiC materials, with a market share of nearly 60%, And signed multi-year supply agreements with Infineon and St, two major automotive electronics semiconductor suppliers. In the market of high-purity semi insulating SiC substrates for GaN on SiC RF devices, the market share of Cree can reach 90%. Relying on the core competitiveness in the field of SiC substrate materials, Cree extends to the field of Gan on SiC RF devices and SiC power devices. In the fiscal year, the average annual growth rate of Gan RF devices and SiC Power Devices reached 29% and 51% respectively

(II) open up the communication market channel through mergers and acquisitions

Cree's Gan RF device department mainly served the U.S. military industry in the early stage, and its products were once loaded in the "THAAD" ballistic missile defense system. As the requirements of mobile communication base stations for high frequency and high efficiency are further improved, Gan RF devices have become the preferred solution for base station power amplifiers. Cree entered the Gan RF device market mainly through OEM for base station RF device enterprises such as nxp/freescale, Infineon, rfhic, etc., and its market share in the base station field is less than that of Sumitomo Electric Company of Japan, a supplier of Huawei. In order to expand the communication base station market, Cree acquired the RF device Department of Infineon, the world's fourth largest base station RF device supplier, in 2018, to further improve Cree's design capabilities and packaging and testing capabilities in the field of Gan RF devices for mobile communications

(III) expand the Gan power device market through cooperation

Gan power devices based on Si substrates are also popular technologies that the market pays attention to. Compared with SiC power devices, they have the characteristics of low cost and easy integration. They are mainly used in high-end power supplies and other products, and the market growth space is much larger than Gan RF devices. The advantage of Cree is SiC materials and related devices. Without the technical advantage of Si based Gan power devices, Cree is difficult to compete with competitors such as Infineon, which acquired IR, Navitas and EPC, which are OEM at TSMC, and Ti, which cooperates with Panasonic. In 2018, Cree authorized the basic patents in the Gan field to Nexperia through patent authorization, and jointly developed the Si based Gan power device market

III. enlightenment to the development of China's compound semiconductor industry

(I) we should endure loneliness and exercise our internal skills

Cree started from SiC materials and has been leading the technological progress of compound semiconductors for more than 30 years. On the one hand, it shows that there is no "tuyere" or "dividend" in the semiconductor industry, and technological progress must rely on unremitting basic research and original innovation. Even though compound semiconductor has a very broad market prospect, it still needs decades of technology accumulation. On the other hand, when industrial capital and local government funds enter the compound semiconductor industry, they need to choose teams and enterprises with technology accumulation, maintain patience and concentration, strengthen team building and technology research and development, actively explore market resources, and avoid starting investment and construction of large-scale production lines when the technology is not mature or there are no clear customers

(II) we should give full play to our advantages and seize opportunities

the biggest advantage of developing compound semiconductors in China is the world's largest application market and increasingly powerful complete machine enterprises. The success of San'an Optoelectronics in the field of LED lighting also shows that the market plays a decisive role. China is the world's largest mobile communication market, and has built the world's largest 4G communication network, with more than 2million base stations. In 2019, China will start 5g communication, and more than 5million new base stations will be built in the future. Huawei and ZTE are the world's largest and fourth largest base station suppliers, respectively. Huawei, oppo, Xiaomi and vivo are the top six intelligent enterprises in the world, with annual shipments of more than 500million. China is the world's largest producer and marketer of new energy vehicles, accounting for more than 50% of the world. In 2018, BYD sold a total of 248000 new energy vehicles, becoming the world's top new energy vehicle sales for four consecutive years. BAIC, SAIC, Chang'an, Weilai and other independent automobile brands also occupy a place in the new energy vehicle market

(III) we should see the general trend and win-win cooperation

on the one hand, compound semiconductor is a key military technology, and China's industrial development must be self-reliance. Before this case, Cree planned to sell wolfspeed to Infineon in 2016, which was blocked by the US government on the grounds of involving national security. On August 1st, 2018, the U.S. Department of Commerce, including some 44 domestic units in the CETC Research Institute, was included in the export control list. The embargo list includes a number of research institutions and enterprises specializing in compound semiconductors. On the other hand, international giants have frequently increased their layout, and domestic industrial development needs to pay attention to resource integration. Through this business divestiture, Cree is more focused on consolidating the market advantages of compound semiconductors. Previously, Infineon launched a complete power supply solution for SiC and Gan, and ST's SiC MOSFET has been applied to Tesla electric vehicles in batches

domestic compound semiconductor enterprises in all links and machine application enterprises need to strengthen cooperation and promote the integration of industrial resources with capital as the link. For 5g communication base stations, new energy vehicles and industrial power supply markets, we will increase the trial and verification of domestic compound semiconductor products. Give full play to the organization and coordination advantages of the government, build a trial verification platform, and encourage complete machine enterprises to dare to use and be willing to use domestic products. Through simulating the real application environment, constantly try and error, find and solve problems, and improve the market competitiveness of domestic device enterprises

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