Cree to invest $1B in Durham for ‘mega factory,’ chip manufacturing, will add jobs

DURHAM – Cree, seeing opportunity to capitalize on its chip expertise, says it will invest $1 billion in its Durham facilities and related expansion projects.

The semiconductor and LED firm made the announcement early Tuesday. The international tech conglomerate also said it will be adding an unspecified number of jobs.

Gregg Lowe (Cree image)

“The expanded campus also creates high-tech job opportunities and will serve as an advanced manufacturing workforce development initiative,” the company said. “Cree plans to partner with state and local community and four-year colleges to develop training programs to prepare its workforce for the long-term, high-quality employment and growth opportunities the new facilities will present.”

Over the next five years, Cree (Nasdaq: CREE) said it will pour resources into growing its Wolfspeed silicon carbide and GaN on silicon carbide chip business.

“We continue to see great interest from the automotive and communications infrastructure sectors to leverage the benefits of silicon carbide to drive innovation. However, the demand for silicon carbide has long surpassed the available supply,” said Cree CEO Gregg Lowe in the announcement.

“Today, we are announcing our largest-ever investment in production to dramatically increase this supply and help customers deliver transformative products and services to the marketplace.”

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. He sees billions in potential sales opportunities as manufacturers and networks upgrade to new tech.

“This investment in equipment, infrastructure and our workforce is capable of increasing our silicon carbide wafer fabrication capacity up to 30-fold and our materials production by up to 30-fold compared to Q1 of fiscal year 2017, which is when we began the first phase of capacity expansion,” Lowe explained.

“We believe this will allow us to meet the expected growth in Wolfspeed silicon carbide material and device demand over the next five years and beyond.”

The investments include:

$450 million for its North Fab production facility
$45 million for materials mega factory
$10 million in other investments

In explaining the chip fabrication expansion plans, Cree noted:

“The plan delivers additional capacity for its industry-leading Wolfspeed silicon carbide business with the build out of an existing structure as a 253,000 square-foot, 200mm power and RF wafer fabrication facility as an initial step to serve the projected market demand. The new North Fab is designed to be fully automotive qualified and will provide nearly 18 times more surface area for manufacturing than exists today, initially opening with the production of 150mm wafers. The company will convert its existing Durham fabrication and materials facility into a materials mega factory.”

A CEO priority

Last week in a conference call with Wall Street analysts, Lowe said the company would soon make expansion news.

“When completed, this expansion will support our efforts to help customers make the transition from silicon to silicon carbide and GaN using Wolfspeed technology,” he said.

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.