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And this time, it's not from me. :-)

I received this in an email from someone who isn't (yet) registered, and asked his permission to post it here. (I did some slight editing for readability.) Any comments are welcome:

==========
re: post 2575 on TMF,

I haven't played with foolish theory much but, I think
that a lot of the problem in defining CREE
within the parameters discussed is that CREE has
potentially captured so much, so early that it
is very difficult to compare. I think of CREE as
being a conglomerate that is already showing
many of it's eventual business segments, as opposed to
a GE that started with few areas and broadened out
through luck, timing, and an excellent management
history.

CREE, through luck, timing, beneficial gov
interference (rare example), and seemingly high
quality
management has captured a place in the marketplace
roughly equivalent to an imaginary situation
in which Intel had invented the process to economically
produce silicon wafer(with IP rights), and had an
immediate and mature, but growing market to sell to.

If broken down into different business segments, it's
surprising how powerful each of these businesses
may become;

CREE Materials: The only company in the world
producing "virtually defect free" electronic grade
silicon carbide wafers (The quote is from Pengally at
Key West, this week re
stated by hunter in Boston, they refer to the two inch
substrate), a material that the electronics
industry has recognized as a superior material and
aggressively sought after for nearly fifty years.
Westinghouse demonstrated a 3 inch SiC crystal
several years before CREE..they now buy from CREE,
Same thing with Northrup Grummon. ABB, and
Siemens have been trying for a long time..they buy
from CREE. I think that some of these companies
could produce. Just not at a good price, and not
without infringing on CREE's patents. Hunter
believes that they are at least 6 years ahead of any
competition. CREE also has done work with
AlN and diamond film on SiC. The "holy grails" of the
semi materials industry were, and still are;
bulk single crystal diamond, bulk single crystal SiC,
bulk single crystal AlN, and diamond films.
Pretty much in that order.

CREE Lighting: CREE sells LED chips for less than the
material cost for sapphire based chips.
Hunter says that while it may be difficult, they
intend to deflate the price of nitride based
LED's by %50 in the next year while maintaining
current profit margins. All this while improving
brightness to be the brightest in the world (Hunter
again). Because the majority of applications
for b/g/w LED's are extremely price dependant, the
greater share of the market that all the other
players are supposedly drooling over cannot be reached
until LED chips are sold for less than 10
cents apiece and produce at least 10L per watt. In a
research report, Banc of America opined that
CREE was close to 10 lumen per watt. CREE's cost of
SELLING a LED chip to include SG&A is about
18 cents. According to UTCI (the only sapphire based
company to ever give a public estimate) the
material cost alone of a single chip, for them is "20
- 40 cents", per the CEO. The only current,
credible threats are a sudden breakthrough in bulk
single crystal GaN growth, or GaN Pendeo epi
on Si. Thus far, bulk GaN isn't working, and by the
time Nitronex gets GaN on Si chips to market
(if ever), CREE will be selling b/g/w chips under 10
cents. To be successful (and not a temporary cash
cow), this portion must
sell at commodity levels but, CREE is on the growth
ramp with this future commodity and can divest
it after it matures as a very large company on it's
own, or keep it as a slow growth cash cow for
an even bigger conglomerate.

CREE Microwave: In the intermediate term, by far the
most potentially explosive segment. Of
current substrates, SiC has the best demonstrated
lattice match for GaN, and dissipates heat very
well, allowing higher temp operation. GaN is needed
to push the frequency bands above current
materials and, it is needed now. GaN on SiC allows
all of the high power infrastructure to have
fewer components, thus making them smaller, more
reliable, and cheaper. Also, with current
comparable technology, the push to higher freq bands
will require GaN in the handsets/PDA's also.

CREE Power: Perhaps the most important segment for
CREE but, most of CREE's growth may very well
happen before this becomes their killer product line
(market willing). While initial products
may be available very shortly, mass use by utilities
may be a couple of years out (they have a
tendency to only upgrade as the old equipment breaks
down), current "growth" attempts by utilities,
and a potential oncoming energy crunch may speed this
somewhat. A very important caveat; electric
vehicles could benefit greatly from SiC, and Detroit
may move faster than the utilities (while a
great deal of this advantage belongs under "CREE
Lighting").

CREE Logic: (hasn't been formed by the company, yet).
Exceptionally non volatile memory.
SiC may offer benefits with complex logic circuits as
engineering demands increase, as some of
the love affair with computers that need to babied
somewhat declines, and the demand for very
robust semi's that will operate reliably without being
cooled even when embedded in cars that sit
in the sun in Georgia during the summer. Not to
mention simple logic chips embedded directly in
the engine/motor, transmission, aircraft engines, etc.

Each one of these separate companies easily support
current market valuations, IMO. CREE is a
super conglomerate in the making. It is now their
game
to lose.
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