Cree’s $1B investment in SiC – YOLE’S INSIGHTS

An article written by Hong Lin, PhD. Senior Technology & Market Analyst at Yole Développement (Yole)  –  Cree’s CEO has just announced an investment of US$1 billion over the next five years to increase both SiC and GaN materials capacity in order to transform Cree into a semiconductor powerhouse.

The US$1 billion investment will be used for:

•             Plant expansion to generate up to a 30-fold increase in SiC wafer fabrication capacity and a 30-fold increase in SiC materials production to meet the expected market growth by 2024

•             The five-year investment leverages an existing building (“North Fab”) and includes refurbished 200mm equipment to build a state-of-the-art automotive-qualified production facility

•             Investment: US$450 million for North Fab; US$450 million for materials mega factory; and US$100 million in other investments associated with growing the business

This US$1 billion investment is in line with Cree’s strategy during the last 15 months, in developing its transformation path (see previous YOLE’S INSIGHT articles: Feb. 2019 – April 2019). If we look back at its investor announcement in 2018, Yole Développement (Yole) estimated a US$975 million investment from 2018 to 2022 , based on the hypothesis of linear revenue growth from FY 2017 to FY 2022 (More in Cree-Wolfspeed’s Strategic & Competitive Analysis performed by Yole).

Today’s announcement is a continuation of its strategy and, in our understanding, the announcement itself is proof of the critical shortage of SiC wafer, both in n-type and semi-insulating wafers. 

At Yole, we believe that this is a move to re-assure both automotive players and telecom players that are afraid of an extended short supply of SiC wafers, thus delaying adoption of SiC.

For more information about the CAPEX investment necessary, we invite you to read our Power SiC report.

About the author: 

Hong Lin, PhD works at Yole Développement (Yole), as a Senior Technology and Market Analyst, Compound Semiconductors within the Power & Wireless division since 2013. She is specialized in compound semiconductors and provides technical and economic analysis.