Cree Inc. SWOT and PESTLE Analysis

Strength

1. Complete vertical integration of Gallium Nitride (GaN) Radio Frequency (RF) market allows minimized net cost: Cree Inc. provides specialized wide bandwidth semiconductors, light-emitting diodes (LEDs), radio frequency (RF) devices, power devices, etc. These products are manufactured with the use of silicon carbide (SiC) and gallium nitride (GaN) materials. These materials help produce products used in signals, power suppliers, lights, inverters, microchips, and wireless systems. The Wolfspeed segment of the company focusing on the production of the said materials is completely vertically integrated. The product line manufacturing facility in North Carolina has been expanded to fulfill future capacity requirements and is automated to minimize net operating costs. Cree also has another facility in New York to manufacture SiC. The materials, product technology, application center, business scaling, and other related systems are fully vertically integrated at these facilities. Infineon’s RF division acquisition allowed the company to expand its production capabilities significantly.

2. Capacity leadership position with material substrate and facility expansion: Cree has expanded its silicon carbide (SiC) and gallium nitrate (GaN) facilities to meet future capacity demands. The current expansion levels with the acquisition of Infineon’s RF division make Cree a semiconductor material supplier leader. The newly opened New York SiC wafer fabrication facility is highly automated and has an efficient, scalable capacity to meet increasing demands. The existing Durham, North Carolina facility holds capacity leadership in the material substrate and episcopal expansion. Cree is set to invest $720 million in the coming years for SiC capacity expansion of 350k square feet facility. The expansions have added 30 times more capacity for SiC wafer fabrication and material production and a 25% increase in output than the previous capacity.

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Weakness

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Opportunity

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Threats

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Political

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Economic

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Social

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Technological

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Legal

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Environmental

1. EU semiconductor industry commits to use responsibly sourced minerals: The European semiconductor industry committed to using raw materials sourced ethically and sustainably in the 14th forum on the responsible mineral supply chain at the Organisation for Economic Co-operation and Development (OECD). The world semiconductor council has agreed to create a conflict-free supply chain of raw materials for the products made for the downstream electronics industry. The conflicted mineral materials classified are tin, 3TG, cobalt, tungsten, and gold from the conflicted regions such as Congo. Cree has also committed to creating supply chains free from unethical activities, human rights violations, child labor, and environmental destruction. Cree has formed an internal due diligence framework along the OECD guidelines to monitor the supply chain for high-risk minerals. It is also reporting minerals used in Conflict Minerals Reporting Template (CMRT) through responsible mineral initiatives.

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