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To: Mike Buckley who wrote (17631)	2/10/2000 9:33:00 AM
From: 100cfm	Respond to of 54805

Mike up so soon?? If I may, If you are a device maker I would think you would not want to be a cree licensee in order to grow your own Sic for the very reason you mention about a competitor coming along with a cheaper process. You would just buy Sic wafers from cree to produce your devices, this way if a cheaper source of Sic comes along you are free to buy it from them. OTOH lets say you did want to grow your own Sic for your devices and a cheaper process came along. I would have to think that you wouldn't switch since it would require a gut of your factory since Cree's Sic growing process is proprietary and any new process would most likely be a totaly different format. You would need new growers and all new mechanical connections and services. Most likely you would lean on Cree to bring the costs in line with the new competition. If cree is unable to do such, then you are screwed as a device producer and Cree gets dethroned as the gorilla. 100

To: Mike Buckley who wrote (17631)	2/10/2000 2:33:00 PM
From: Robert Jacobs	Read Replies (1) \| Respond to of 54805

Mike: First there are no companies making commercial quantities of commercial quality SiC. There are some who aare attempting to break into the market (Sterling a private company) and some make Sic for research purposes where cree looks the other way as to IP infringement on their processes. At the SiC Symposium, John Palmour characterized these efforts as where cree was 6 years ago and falling further behind. As to other processes, according to cree there are none that they know of that do not violate their patents. Neal Hunter has told us that if and when there is an "economic" impact from anyone who is making Sic that violates their patents, and they can tell this from the structure of the wafers, they will then enforce the patents. Meanwhile, the research that is going on only benefits Cree as it provides more potential products and markets for them to address. The advantages of SiC over sapphire have been discussed ad nauseum here. Cree licenses their wafer growing and epitaxil processes to Siemens as auto mfgrs require a second source. They are not a competitor and cree management does not rule out them being a competitor but that would disrupt a far more profitable relationship that the Osram subsidiary has with Cree. (Osram is a "packager" meaning they take Cree's lED chips and packages them into light bulbs or lighting assemblies which are sold to car manufacturers and others to incorporate in a dashboard or electronic display. Once a car manufacturer has designed in and geared up for a product, the switching cost is high unless that product has compelling advantages. As of now, there are no other products that are in quantity production have the cost/performance characteristics of SiC lEDs. On the other hand, the switching cost from sapphire to SiC LED bulbs results in a savings due to the size, cost and standardized package advantage of an SiC LED. Again, one last time: The cost advantage is due to the fact that twice as many chips can be made from one wafer...ergo twice the yield = 1/2 the cost. The size advantage is derived from the conductivity of SiC compared to Sapphire which requires contacts side by side rather than vertical, the red LED standard. This also allows for a smaller sized bulb or package (important in cell phone and small displays). So the value chain is chomping at the bit to standardize on SiC technology...Cree just needs to provide the production for that to happen. The package advantage for those who are not familiar results f