Fool about Cree:
Cree, Microsemi Align
fool.com
Cree and Microsemi have formed an alliance to produce a new line of silicon carbide Schottky diodes. The deal should mean increased revenue for both companies. It also affirms Cree's dominant position in the promising silicon carbide market.
By Rex Moore (TMF Orangeblood)
May 23, 2001
Cree (Nasdaq: CREE) announced an alliance this morning that accelerates its move into another new market. The world's leader in silicon carbide (SiC) production and technology will now supply SiC chips to Microsemi (Nasdaq: MSCC) for use in a new line of Schottky diodes.
For Cree (featured in the first edition of The Motley Fool Select), the alliance represents a big step into the fast-growing market of power devices. Schottky diodes are used in many products, and feature a very low forward-voltage drop and very fast switching speeds. I may not understand that entirely, but I do understand that SiC's characteristics mean much better diodes for many applications than diodes with conventional silicon chips.
Microsemi intends to capitalize on the alliance by introducing a new line of SiC Schottkys for use in "switching power supplies, down-hole drilling applications, telecommunication rectifiers, and high efficiency charging circuits in implantable cardioverter defibrillators."
As an investor in Cree, I'm certainly happy to see an alliance that will mean increased revenue once the products roll out. But this nugget from the Microsemi press release means much more to me: "Until now Microsemi has relied on university research and development groups to try to develop SiC products for commercialization. This agreement should allow Microsemi to accelerate its SiC program by relying on Cree's SiC manufacturing expertise and bypassing university laboratories."
Those two sentences speak volumes for Cree's position in the silicon carbide world. When it comes right down to it, companies have only one choice if they want quality SiC in commercial quantities. While a few other companies are still trying to work with this enormously difficult material, Cree's R&D lead and dozens of patents are providing it with a very nice -- and profitable -- moat.
For supper last night, Rex Moore had a nice bowl of Schottky diodes on rice... and a wafer thin mint for dessert. At the time of this writing, he owned shares of Cree. View his holdings and the Fool's disclosure policy online. |
