TrendForce's Optoelectronics Research Office pointed out that in recent years, Chinese manufacturers in the LED industry have rapidly risen due to their production capacity and cost advantages. International LED manufacturers such as Nichia, OSRAM OS, Lumileds, and CREE have continued to lose their market share. In addition, in the past two years The global economic environment is not good, so that the traditional LED industry giants are facing the dilemma of enterprise change, asset sale or sale.
Looking back from 2013 to 2014, the annual revenue of CREE's LED packaging and lighting business exceeded US$1 billion; the LED business revenue ranked second only to Nichia Chemical, ranking second in the world. However, in recent years, due to the low price competition of Chinese manufacturers and the slowdown in the growth of the LED lighting market, its LED business revenue in 2019 was only US$480 million, and its ranking dropped from the top three in the world to eighth.
Involving sensitive technologies in the US aerospace and military industries, the transaction price of CREE LEDs is therefore limited.
According to TrendForce's analysis, CREE sold its LED business at a transaction price of only US$300 million this time, which is much lower than that of Lumileds and OSRAM OS. The main reason is that the United States has many jurisdictions and restrictions on the sale of technology companies in recent years. In addition to playing the role of LED lighting supplier, CREE’s WolfSpeed’s silicon carbide (SiC) business is a key component of the third-generation semiconductor, which is in line with the US aerospace technology and military industry. Close cooperation in the field and master a large number of sensitive technologies. The main advantage of CREE's LED technology is that its SiC substrate can greatly improve the overall performance. In addition, LED-related technology and patents and SiC technology are difficult to separate, so that it can only rely on reliable buyers in the United States, and the transaction amount is therefore Restricted.
LED supply chain will continue to move to Asia, CREE may find chip foundry partners in the future.
Under the pressure of its competitors to cut prices in the past, CREE has gradually outsourced its LED business to China's Tiandian, Taiwan's Lunda and other technologically better LED foundry partners in recent years. TrendForce said that even if the company changes ownership, CREE is still an important customer of its foundry partners and will not adjust the operating structure in the short term. Therefore, the trend of shifting the foundry supply chain to Asia has not changed. In addition, the new shareholders do not have the need to develop SiC substrates, so they may adopt a more flexible business strategy. It is expected that there will be the possibility of looking for chip resource partners in Asia in the future. (Text: TrendForce TrendForce Consulting)
