Gregg Lowe, CEO of Cree and Wolfspeed “Wolfspeed is no more our Ugly Duckling”

"Our Challenges at Lighting are self-inflicted."

What have been the issues with the traditional business segments lighting and LED? Did you get into conflict with some of your LED customers as Cree is also manufacturing lighting products, being in a direct competitor of them?

The issue with lighting was not so much the competitive aspect but self-inflicted problems. We created our own problems by having quality issues, reliability issues and so forth. Our focus with the lighting business is very simple: We want to fix these issues, and we have largely done so. And the next step will be to combine the manufacturing of the LED and the Wolfspeed business segments so that we will have the ability to move some manufacturing capability into the Wolfspeed direction. So you see it’s all about growing the Wolfspeed business.

When you left Freescale after the merger with NXP in 2015 you said that the best strategy and the best products are not enough for being successful. You have to engage with each individual employee. You said that they must be proud of their work. Is this again a big part of your turn-around strategy at Cree?

The very first week at Cree I did a survey of all our employees. I asked them what they liked about the company, what they didn’t like, and what they would change. A lot of the things we are doing right now are engaging with our employees and listening to them. I want to have a management mindset that is focused on setting the direction and getting any obstacles out of the way of our employees so that they can accomplish great things.

We are beginning to see the first fruits of these efforts. The rate of people leaving Cree is decreasing. We still have a long way to go, but within a very short amount of time more of our employees are excited about what we are doing; and more of them are engaged in what we are doing. We have been very clear with them with regard of redirecting the company.

I believe very strongly that a good strategy is not enough. You have to have employees who are motivated, excited and proud their work.

Did you hire personnel?

Yes. We have hired several new executives. All of them were coming from the semiconductor industry, for example from Texas Instruments, Freescale and Analog Devices.

As the revenue declines also the expenses for R&D decline as they are fixed 10 percent of the revenue. Do you think you have to increase the percentage of R&D expenses?

Although the percentage might not change, the absolute R&D expenses will grow as we grow the Wolfspeed business. Likewise the ratio of R&D expenses between the three business segments within Cree will change as Wolfspeed will overtake the other two segments revenue-wise. To be very direct, if we quadruple the revenue of Wolfspeed, we also quadruple its R&D expenses.

Do you think canceling the acquisition of Wolfspeed by Infineon was good or bad for Cree?

For Cree this was absolutely great. The opportunity to grow the business is very substantial with Wolfspeed being a part of Cree. If you recall, when signing the deal in August 2016 electric vehicles weren’t quite there. Selling Wolfspeed wasn’t a bad idea back then. But we are very fortunate that it didn’t happen, because now we have a great opportunity for growth.

Cree and Wolfspeed themselves made some acquisitions over the past years. I remember the acquisition of the module specialist APEI and just recently Infineon’s RF business. Are you looking for more acquisitions?

We have shown in the past that we are interested in growing our business by acquisitions, and I would anticipate that acquisitions will be a part of our future strategy.

Regarding the acquisition of Infineon’s RF business we announced in March 2018 we are still digesting it. So far we’ve done a great job integrating that team into Cree. All those Infineon employees have signed up, and they are excited to be a part of Cree.

Why did you acquire Infineon’s RF business?

There is a great growth opportunity for gallium nitride on silicon carbide in the mobile communication infrastructure, starting with 4G, but of course extending to 5G. Wolfspeed has been a strong supplier of the GaN technology, but we didn’t have the packaging technology in house. Infineon has this advanced packaging technology which is very important for RF. So now we are able to combine these two center pieces offering to our customers a complete solution for their RF power applications.

I remember talking to John Palmour, Wolfspeed’s CTO, two years ago here at PCIM regarding the spin-out of Wolfspeed. He said to me that this gives Wolfspeed the possibility to raise capital by itself. But at the end Wolfspeed didn’t go public and is still 100 percent a part of Cree. Do you newly plan an IPO of Wolfspeed?

Our focus right now is growing the business. We believe that we can organically quadruple the Wolfspeed business within 4 years, acquisitions might be a part of the strategy. But an IPO of Wolfspeed is not on my mind right now.