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Technology Stocks : Wolf speed
WOLF 18.34-1.6%1:36 PM EST
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To: Jim Oravetz who wrote (6180)6/19/2002 11:21:50 AM
From: slacker711  Read Replies (3) of 10714
 
Growth in this market has slowed big time from just a year ago.

I think this is one area where Cree's management has it right. The story for Cree isnt the overall growth of the market but the penetration of LED's within the existing market. Last year, color handsets accounted for 100% of Japanese handsets and perhaps 20% of Korean handsets. The rest of the world had very few color models.

In contrast, we are going to see handsets with color displays hit every single country within the next six months. These are not only going to be high-end models but also mass market models (which I define as retail prices in the $150-$200 range). By the second half of next year, I think we will start to see color displays even in the low-end.

We are talking about going from 10% to 30% of a 400 million unit market in a fairly short period of time. Also the initial 10% of the market that was color was primarily made up of Japanese handset manufacturers....which seem more likely to have used Nichia or Toyoda Gosei. As Motorola, Nokia, Samsung, and Siemens move into the market, I think Cree's apparent cost advantage could be decisive.

Of course, the caveat to the above is that Cree needs to maintain some sort of pricing power. It doesnt do much good to triple LED volumes if you have to cut prices by two-thirds.

Slacker
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