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To: harvest-1934 who wrote (771)	3/28/1998 11:24:00 AM
From: Eugene M O'Donnell	Read Replies (1) \| Respond to of 10714

Harvest, Interesting analysis. I do agree that CREE is playing in its own sandbox, and can keep most competitors out (this is the benefit of a technological advantage like SiC). There remain two issues: 1. When will CREE get 3" on line? They were a bit late with CBL, did this deflect valuable engineering time from the 3" wafer work? Cost must continually be driven downwards, or survival will not be achieved. 2. How will competitors react? Nichia is not just standing back and resting on their laurels. I am sure they have some innovations in store for this year. The other competitors who are moving into this business are not doing it to lose money, so you can bet they are working hard on innovations of their own. Having said that, the market is expanding, CREE definitely has a fundamental long-term competitive advantage due to the SiC technology which is their bread and butter. I think the future is good long term, and I am looking to buy on weakness. Good trading, GENE