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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: DownSouth who wrote (8019)	10/11/1999 1:05:00 PM
From: FLSTF97	Respond to of 54805

[long post] For CREE I found over 40 patents relating to SiC semiconductors and ways to produce them. Since life is too short, I cherry picked those to review that I thought might have fundamental barriers to competitors. Before that summary I just want to review CREE's product (or potential products). They are highly concentrated on products formed from or in conjunction with a ceramic material, SiC. These include blue light emitting diodes. The significance is that you need blue to make white light and there are very few materials know to exhibit this trait. This could lead to very large markets such as replacing the every day light bulb (patents are likely to expire before this happens IMO). There may also be applications in communications like using the higher frequencies to push more data down fiber optics. I'm not an expert in this area (ok JDSU lovers tell us the potential of this), but would think that this could be a reasonable market with good margins. One could also conceive of very bright flat panel displays using just pixels of SiC leds in various colors. Might be some niche markets (military) that would justify the costs for robustness and longevity. More interesting I think would be high temperature, high power, and high frequency applications. These are more pervasive than people realize. Take an automobile. The underhood environment is murder for typical Si chips. Chips out of SiC could operate at cylinder wall temperatures (now that's what I call an embedded microprocessor!)The application list could even include telecommunications (maybe eliminate wave guide feeds to the antenna with a local high power SiC emitter in the say x band). Now I have no real idea what kind of products CREE really sells today nor in what quantities. But this last segment cuts across segment where Motorola, Vitesse, Int. Rectifier, and many others play in. My guess at this juncture is that the real valuable market for CREE lies in this area so I will ignore discussion about blue led's, displays, and gemstones in the patent area. In my opinion(I reserve the right to reverse myself based upon new info of course!) the most valuable groups of patents are: 1)All relating to insulating films, layers and structures. 2)Growth mechanisms to avoid nitrogen or other impurity contamination. 3)All device specific designs/ manufacturing techniques (excepting the blue diode ones even if that is the bulk of today's revenues.) Insulating films. Inorganic semiconductors need high quality insulating films to function. This type of device is very sensitive to a dopant (aluminum to be exact) migrating into the oxide film and diminishing its function.CREE solves this by using a sacrificial layer devoid of Al. The only way that is apparent to me at this time of circumventing CREE's patents in this area would be to deposit the film. This is definitely possible,but it is also generally more expensive than an oxidation process (I'm not sure how this compares to Cree's process of a combined deposition followed by oxidation.)I saw other patents for creating these insulating layers but none that specifically addressed the problem. Impurity contamination during CVD (chemical vapor deposition) This is a must for anyone seriously playing in these products. I didn't find anything analogous to Cree's patents in this area, but I haven't searched exhaustively either.These patents may be most of the reason Cree builds their own systems (the other being that most commercial systems are geared toward silicon wafer processes at much lower temperatures.)The thing I really like about these patents is that the problem wasn't even recognizable until other problems had been solved and I would consider nitrogen contamination first order effects. 3)Device & Structure Patents Companies like IRF basically only exist because of one early patent. CREE has several that seem to address problems very specific to the SiC cousins of their Si complements.SiC semiconductors are enabling for high temperature and some high power applications. This could create new applications that were not previously possible or only at prohibitive costs. Bottom line is that looking mostly at CREE's patents (and not contrasting to competitions') it seems like they have the tools to make something of themselves. I think for most applications the blue LED market could be a huge commodity business, but may be in jeopardy of a broadside (organic LED's?) by less expensive materials. Conversely, there is far less likely to be displacing technologies in the high temp/ power. IMO I've just scratched at the surface so I wouldn't recommend that anybody run out an buy this stock (just yet!) Fatboy