DESIGN&ELEKTRONIK: Gregg, since end of September 2017 you are serving as CEO of Cree. What is your mission?
Gregg Lowe: We have an incredible opportunity with our silicon carbide and gallium nitride technology to dramatically change the power industry. At a high level, our vision is to do the same with silicon carbide with regard to silicon as CMOS did with regard to bipolar some 30 years ago. We want to convert the power industry from silicon to silicon carbide.
We have reached now the tipping point where we are starting to see an acceleration of the adoption of silicon carbide driven by electric vehicles, renewable energies like photovoltaic, as well as 4G and 5G base stations. I think we are living in very interesting times for power electronics, especially when you are in silicon carbide.
The company has three business segments. Its largest business is lighting, followed by the LED business, and the smallest business is Wolfspeed, the power and RF part of Cree, with roughly 220 million dollars of revenue in our fiscal year 2017 (Lighting had a revenue of some 700 million, LED of 550 million; editor’s note).
Within 4 years we want to make Wolfspeed actually the largest business inside of Cree. Our plan is to quadruple its revenue by 2022 to some 850 million dollars.
This brings to my mind the picture of the ugly duckling turning eventually into a beautiful swan.
I like your picture. The focus of our company has completely changed. It is capitalizing the opportunity we have for growth with silicon carbide.
As lighting and LED is becoming more of a commodity business, power electronics will drive the growth for the whole company, won’t it?
That’s for sure. As I told before we are at a tipping point where the demand for silicon carbide is starting to grow exponentially. All major car manufacturers have announced an investment of over 100 billion dollars to convert the power train from combustion engines to electrified ones.
As far as I know the number one cost impact with an electric vehicle is the battery. So with silicon carbide car manufacturers can shrink the battery for having the same driving range or extend the driving range with the same battery. This is a very obvious value proposition.
Let’s talk briefly on the financial results. The last three financial years Cree lost revenue from 1.6 billion dollars to 1.4 billion, and generated a net loss of nearly 100 million in the financial year 2017. And if I sum up the first three quarter results of the financial year 2018 and the guidance for Q4 the annual revenue will be some 1.4 to 1.5 billion. What are you saying to the Board of Directors and to your shareholders in this respect?
We have been very clear with our shareholders, with our Board and with our employees: The focus of the turnaround is driving the growth of the Wolfspeed business. So Wolfspeed will have a higher percentage of the total business. Additionally Wolfspeed has a higher gross profit and a higher bottom-line profit, and this in turn will help us to increase profitability. Eventually the company revenue in 2022 will be roughly 2.4 billion dollars and the operating profit will be roughly 20 percent, a significant increase in profitability.
So far our shareholders are excited about this. We have said to them that by 2022 the Wolfspeed business will be some 850 million dollars, lighting some 700 million, and some 800 million with LED. And our customers are excited about this, because we are investing and extending our capacity in silicon carbide.