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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Robert Jacobs who wrote (17629)2/10/2000 9:12:00 AM
From: Mike Buckley  Read Replies (2) of 54805
 
Robert,

Q: Are there high switching costs?
A: Yes...for SiC packagers

First, what is an SiC packager? Is that a company that grows the SiC or is that a company that makes an SiC-based device?

I understand the competitive advantages you mentioned that SiC has over saphire. Unless I misunderstood you, that doesn't address all switching costs.

Let's assume I'm a device maker. I'm licensing CREE's technology to make the best darned blue LEDs on the planet. A year from now a competitor comes up with a technology that does the same thing with the same (no better, no worse) quality. But because they've got to compete with CREE, they approach me about licensing their technology to me at a lower cost. As a device maker who has already made investments in factory equipment and personnel training that make it possible to use CREE's technology, will I incur a lot of costs to switch to the competitor's technology, or will that be a relatively inexpensive switch?

The similar question applies to companies growing SiC using CREE's technology.

--Mike Buckley
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