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To: unclewest who wrote (13322)	12/26/1999 12:10:00 PM
From: BDR	Respond to of 54805

<<cree is widely believed to be very close to a commercially viable blue laser.>> The first part of this article discusses Cree and LEDs: 30 Aug 99, Audio Week CREE READIES BLUE LASER Cree Research will introduce blue laser diode chip for DVD and other optical storage applications in 2001, capping 6-year development effort, CFO Cynthia Merrell said. Blue laser, which uses shorter wavelength to increase storage capacity of optical disc drives, is being developed for head-mounted displays under $2.5 million contract with Bothell, Wash.-based Microvision. Latter has option to renew contract for another year in May 2000 at $2.5 million and is designing head mounted displays that can access Internet, Merrell said in interview at N.Y. Society of Securities Analysts semiconductor conference last week. While Microvision project is first application for blue laser technology, Cree's eventual goal is to license it to DVD player and DVD-ROM manufacturers. Cree is working to fabricate blue laser diode from gallium nitride and related materials deposited on silicon carbide substrate. Commercial lasers typically have 1,000-10,000-hour useful operating life. "My guess is we would not give away the technology before a packaging or distribution venture, but it's too early to say right now how we're going to roll that out," Merrell said. Cree has had discussions with CE manufacturers on blue laser technology, but "they [manufacturers] want to see a sample before we talk," she said. First commercially available blue lasers are expected to hit market in 2001, with industry sales rising to $2 billion by 2006, Merrell said. Cree's blue laser technology was developed as part of joint venture with Philips, but companies parted ways in 1997 after 2-year effort. Cree also recently released new high-brightness light emitting diode chips (LEDs) developed using its silicon carbide wafer technology. Brighter LEDs are being designed primarily for applications ranging from auto dashboards to backlighting for wireless phones where 2 high-brightness versions can replace 6-8 being used to illuminate keypad, Merrell said. LEDs account for 51% of Cree's total revenue with high-brightness models, which were introduced in May, producing half of that figure. High-brightness LEDs cost 25-30 cents each, while standard is 10-13 cents. Cree has signed supply agreement for high-brightness LED with "Top 4" cellular phone manufacturer, although Merrell declined to identify company. It also is negotiating renewal of pact with Siemens' Osram Opto subsidiary that expires in Sept. Merrell declined comment on status of talks. Contract, first signed in 1996, is for blue LED chips. Cree will start manufacture of 3" silicon carbide wafers used in LED and laser applications in fall with goal of moving to 4" in 2000, Merrell said. Oak Technology plans to start single chip for DVD players in mid-2000 combining servo and MPEG decoding functions, Pres.-CEO Young Sohn said. While revenue from DVD application currently is "trivial," that will change with introduction of integrated "solution" consisting of single "megachip" surrounded by discrete ICs, Sohn said. As part of major restructuring earlier this year, Oak Technology dropped PC audio IC business and is focusing on CD-RW, CD-ROM and DVD technologies, he said. It recently introduced controller for 8x write, 32x read CD-RW drives that are expected to ship in fall at $399. Overall, CD-RW drives are projected to sell 13 million units this year, Sohn said. In fiscal year ended March 31, CD-ROM and CD-RW-related products accounted for 57% of revenues. Also moving toward chip integration is Silicon Storage, which plans to introduce SRAM/flash memory IC by mid-2000 for communications applications including cellular phones. Chip will combine 16 Mbit of flash with 1 Mbit SRAM, Silicon Storage Vp-CFO Jeffrey Garon said. United Microelectronics will manufacture combo IC, he said. Motorola also has signed licensing agreement with Silicon Storage for its kflash memory manufacturing technology and plans to start production using 0.25-micron process by 4th quarter. Silicon currently uses 0.33 process.

To: unclewest who wrote (13322)	12/26/1999 3:41:00 PM
From: Mike Buckley	Read Replies (1) \| Respond to of 54805

aunteast, :) I still haven't taken the time to study CREE, but I've got an initial reaction based on your response to my questions. The company appears at first glance to be playing a royalty game and a gorilla game at the same time. The royalty play is the technology that makes LEDs from SiC crystals and wagers. The gorilla play is the technology that makes the crystals and wafers. I wonder if CREE's strategy in making end-user product (LEDs) isn't similar to QCOM's initial strategy in making base stations and handsets. Though the company is competing with its own customers, it might be necessary to validate the efficacy of their SiC crystals and wafers. Just some thoughts. Thanks for taking the time to answer my questions. --Mike Buckley

To: unclewest who wrote (13322)	12/30/1999 10:14:00 AM
From: FLSTF97	Read Replies (2) \| Respond to of 54805

Good outline on Cree. I want to toss in a few comments. Forget about the military microwave opportunity. The commercial potential on the microwave application is truly staggering. Consider that these devices may allow building very inexpensive relays that could be pasted unobtrusively on the sides of building or existing telephone poles. It is becoming increasingly difficult to find sites for Towers (not to mention that they cost $250K and up) because nobody wants them in their back yard. The power output may not be as high as traditional antennas, but they should be cheap enough to distribute far more widely (not to mention more quickly) and thereby get adequate coverage. This alone could be an enabling/ discontinuous invention that makes wireless communications ubiquitous. On the patent side, I've reviewed some as mentioned in an earlier post. I like what I see. They have patents on certain critical steps in building the device, in particular the oxidation needed for isolating layers. Can you end round these patents? Probably, but I'm betting at considerable additional costs. I see these as the most valuable ones since I think the market for non Led devices dwarfs that of LEDs in value. Another future market would be blue solid state lasers. These need orders of magnitude increases in lifetime to be commercial (but that was also the case with flash memories in the 1980's). When (I'm sure its when and not if) these are commercial they would find immediate uses in fiberoptic data transmission (read bandwidth) and data storage(read CD's,DVD, EO, etc.) Selling the raw wafers is a smart move as it will help develop the value chain, which frankly I find hard to define (excepting the military interest). I think that once they commercialize the microwave devices, a large value chain could rapidly erupt especially if the scenario I presented above plays out. We can argue that there is a value chain built around the current LED's but that doesn't excite me much. What is the value of these LED's to NOKIA? Maybe 20 minutes more battery life? A small change in battery technological could wipe that out. Perhaps there is a marketing reason that has more value (people like blue-green better?) Have they crossed the chasm? In terms of LEDS I think we can answer: Yes. In terms of being able to make SiC wafers: Yes...but that in and of itself is directly of value only to the jewelry application. (BTW does anybody know the market size for fake diamonds, as this is arguably a better fake?) In terms of any of the other applications mentioned: No way. Are they in a tornado? I think they are in a dust storm with the LED's. For me the application is too trivial, I want to see them being driven swept along as an essential element of the communication whirlwind or the highpower/hightemp applications (motors, actuators, etc.) On the other hand I think they have a lot of the pieces of the puzzle and it is just a matter of putting them together. As a disclaimer I wish to say that I don't know much about SiC markets and devices per se, but I do have several decades (geez I'm getting old)of experience with semiconductors and when I was younger and hairier I did get a degree in Ceramic Science so I once knew something about SiC. Of course none of that is likely to make me correct about Cree! I should also mention that I hold a small but soon to be moderate position in Cree. Fatboy