After Osram split the sale of the lighting business and Lumileds was acquired, CREE also had a big deal!

Cree said on Friday that company CEO Chuck Swoboda will leave after 16 years in office, but will remain in office until the new CEO is appointed, and may later serve as a company consultant. Swoboda's decision is related to his recent physical condition.

In the past three months, Cree's share price has fallen 18%, while the S&P 500 index (SPX) has risen 1%.

For CREE, the CEO's replacement is not at a suitable time. In the past few years, market demand has continued to weaken, and the company has been fighting against falling revenues and internal problems. Last year, even the replacement of the company's new software system caused many problems in customer service and had a long-term impact on sales.

But Swoboda has maintained a relatively optimistic view. He believes that now is a good transition time for CREE, the company's three core businesses are entering a new growth cycle.

Some foreign research institutions have indicated that the departure of Swoboda may lead to the spin-off of the next subsidiary, Wolfspeed. The premise of this assumption is that if the next trusted CEO is still the lighting industry background, then it may decide to split.

In February, German chip (wafer) manufacturers Infineon and Cree warned that Cree’s plan to sell the Wolfspeed power and radio frequency (RF) division to Infineon may be difficult to advance because of the US government’s existence. Security concerns.

Infineon said on Wednesday that the US Foreign Investment Review Board (CFIUS) notified the two companies that the deal poses a risk to US national security. Infineon also said that CFIUS has not pointed out any mitigation measures so far.

“In this context, Infineon believes that this previously negotiated transaction is likely to be impossible,” Infineon said, adding that it will continue to work closely with CFIUS and Cree to find a solution.

Cree said in another statement that the two companies are studying other ways to adjust the deal. The statement also stated that there is no guarantee that the new transaction structure will eliminate CFIUS concerns.

At the same time, some analysts expect that because there is no suitable CEO replacement, it may affect the further improvement of CREE's revenue and profitability in the short term.

Cree announced revenue of $342 million for Q3 (as of the end of March) in fiscal 2017, down 7% from the same period last year.

Cree's net loss for the quarter was $0.99 million, or equivalent to a loss of $1.02 per share, which was not as good as $152,000 in the same period last year. Excluding non-existent projects, net profit shrank from $17 million last year to $749,000.

Naturally, the Chinese market is the key to whether CREE can restore new momentum. After all, the Chinese label of LED globalization has become an irreversible trend. Abandoning the Chinese market means giving up the world.

In May of this year, Cree announced a joint venture with Sanan Optoelectronics Co., Ltd., which will operate high-performance, medium-power lighting-grade LED packaging products to serve the expanding North American and South American, European and Japanese markets. It provides services to China and the rest of the world on a sexual basis.

This news caused the LED market to be shocked. This means that Cree has to follow the trend of small and medium power LEDs because the medium power LEDs have lost a lot of market share. It also means that the LED patent licensing network of the world's top five factories has changed. The situation has affected the development of the Asian LED supply chain market and deserves the attention of the industry.

The new joint venture (Cree Venture LED Company, Ltd.) brings together technology and brand leaders in the field of lighting-grade LEDs with world-class LED suppliers. With Cree's superior patent portfolio and global sales channel portfolio, the joint venture will launch a broad portfolio of high-performance mid-power products to serve the global $4 billion mid-power LED market.

Based on this agreement, Cree's LED business can meet the broader needs of general lighting (indoor and outdoor lighting), gardening and other LED markets.

"Cuiru's existing high-power products, coupled with the medium-power products brought by this joint venture, will enable Cree's LED product line to reach an unparalleled width in the industry," said Dave Emerson, Senior Vice President and General Manager, Cree LED “With CRE’s leading position in LED lighting systems, our customers will be able to get the best and most complete product support from Cree’s existing channels.”

The joint venture will be based in Hong Kong and will be headed by TK Ong, who has extensive experience in the LED industry. TK Ong will report to the board of directors of the two companies. Cree owns 51% of the joint venture, while Sanan holds 49% of the shares.

According to the Announcement of Resolutions of the 42nd Meeting of the 8th Board of Directors issued by Sanan Optoelectronics on the 26th, the joint venture company paid US$10 million in paid-in capital, and Cree Inc. invested US$5.1 million in its own monetary funds; The company invested US$4.9 million in its own currency.

In the coming months, Cree and Sanan will conduct more detailed negotiations on the capital contribution and operation of the two parties, with the goal of starting operations in the third quarter of 2017. The joint venture will pay a patent royalty to Corrie.

Cree will make such a decision. It is indeed the market that continues to thrive in the mid-power LED market, and the demand for high-power LEDs in the lighting market is not as good as the growth of medium-power LEDs.

Cree's cooperation with Sanan has been rumored for a long time, but due to Lumileds's previous experience and Cree's own SiC products involving many military and aerospace businesses, the US government will certainly not agree to the merger. Therefore, the way in which the two companies form joint ventures through joint ventures is the best choice for both parties.

In the LED business, patents have become the last market barrier for foreign companies such as CREE.

In March of this year, CREE announced that it has signed a cross-licensing agreement with Ledvance, under which Cree will continue to collect royalties from Ledvance and obtain a royalty-free license for the Ledvance patent portfolio.

In exchange, Ledvance will also receive Cree's license for a patent portfolio of LED bulbs and LED luminaires. Licensed patents cover all aspects of LED lighting, including optics, thermal management, LED power and control, LED light efficiency, and light color and uniformity.

"With the development of intellectual property over the past 29 years, Cree has a strong technology portfolio that is the basis for the design and manufacture of high-performance LED bulbs and LED luminaires," said Brad Kohn, vice president of law and general counseling at Cree. Ledvance's latest licensing agreement is another example of the value of Cree's R&D investment and the breadth and strength of Cree's lighting technology. ”

In addition to Nichia, Cree is also one of the protagonists of the LED industry patent dispute in recent years.

"Cree will not tolerate and actively defend against this blatant disregard of its intellectual property rights," said Dave Emerson, senior vice president and general manager of Cree's LED business unit.

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