DURHAM – Cree’s stock declined 10 percent overnight Wednesday after its latest earnings report but that’s not stopping a very bullish CEO from expanding the company.

“Cree’s technologies are helping to power some major transitions in our economy,” Lowe declared Wednesday. “Whether it’s the automotive industry’s transition to electric vehicle or the telecommunications sector’s move to faster 5G networks, we are at the forefront of change.”

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In a conference call after the earnings news, Lowe talked at length with analysts about Cree’s growing Wolfspeed power and semiconductor business. Named Cree’s CEO in September 2017, he has made Wolfspeed – a business unit Cree (Nasdaq: CREE) tried to but couldn’t sell under his predecessor due to regulatory concerns -the key to the Durham company’s future, agreeing to sell off its lighting business. And once that deal closes Lowe said the company will near $1 billion in cash assets.

Now comes more growth.

“And to meet the growing demand for silicon carbide and GaN solutions, next week at the PCIM [conference for power electronics, intelligent motion, renewable energy, and energy management] show in Germany, we will outline our plans to further expand capacity,” Lowe told analysts.

“PCIM is the premier conference for power semiconductors and I believe our customers will be excited to hear about our continued investments. When completed, this expansion will support our efforts to help customers make the transition from silicon to silicon carbide and GaN using Wolfspeed technology.”

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He disclosed no further details. Cree recently disclosed a $250 million deal related to Wolfspeed.

“As you may recall, we have already signed several long-term deals with major customers, including STMicro, Infineon and others, which represent over $500 million in revenue,” Lowe noted.

And Wolfspeed is roaring, according to the CEO

“Wolfspeed achieved record results again in Q3, as revenue increased 72% year-over-year. Wolfspeed gross margins surpassed our targets and showed improvement year-on-year and quarter-on-quarter, as the team continues to do an excellent job of balancing the challenges of rapidly increasing capacity, while maintaining yield. Wolfspeed is now our largest business and represents two-thirds of our gross profit from continuing operations.”

Opportunity pipeline of $5B-plus

However, Lowe is extremely upbeat about the semiconductor side of Cree, noting how advances in wireless technology such as 5G and in autonomous car technology are driving future growth.

“In RF, the wireless telecommunications market is rapidly moving towards GaN, which enables faster 4G and the transition to 5G. This is driven by GaN’s inherent ability to provide wider bandwidth, higher frequency and higher efficiency and the outlook is very promising,” Lowe explained.

“Recent reports suggest momentum is building for 5G rollouts in North America, China, Latin America and South Korea. As such, we are in the process of adding GaN production capacity to meet the increasing demand we are seeing. We will work very hard to expedite this capacity addition, but we anticipate demand exceeding supply for the next few quarters.

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“Car manufacturers continue to announce new investments in electric vehicle platforms and are increasingly interested in our silicon carbide technology. Our sales funnel is building nicely and we now have an opportunity pipeline, which is greater than $5 billion. Customer interest spans the globe as we are engaged in Europe, Asia and North America with many OEM and Tier 1 customers who have a strong interest in our silicon carbide technology.

“As I’ve mentioned in many of our previous calls, our path towards our long-term goals will not be a straight line. We have a lot of moving parts and we face a lot of challenges with the significant ramps ahead of us. Our production and our customer ramps will be lumpy. That said, our conviction about the transition from silicon to silicon carbide, coupled with the adoption of GaN technologies, is stronger than ever.”

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