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Cree Buys Virginia Firm In Bid To Create Bigger, Better Silicon Chips

Posted June 26, 2006

— Light-emitting diode and semiconductor manufacturer


is acquiring Intrinsic Semiconductor, a privately held developer of silicon chips, in a stock and cash deal worth some $46 million.

Cree (Nasdaq: CREE) said Monday it was acquiring all stock and options. The deal will cost $43.5 million in cash for stock and another $2.5 million to purchase options.

Cree shares traded up 37 cents at $23.86 after the deal was announced.

Intrinsic, which was founded in 2002, is based in Dulles, VA.

The company has developed silicon carbide chips without so-called micropipe defects using a process it calls ZMP. Micropipes are "voids" that can permeate silicon carbide material as it is grown.

"Intrinsic has developed the first commercially available, zero micropipe SiC (silicon carbide) substrates using their ZMP technology," said Chuck Swoboda, chairman and chief executive officer of Cree. "We believe the combination of Cree's technology and manufacturing expertise with Intrinsic's ZMP technology will accelerate the commercialization of low-defect 100mm and 150mm (4-inch and 6-inch size) substrates."

Intrinsic produces 2-inch and 3-inch SiC wafers for high-frequency and high power device applications based on SiC and gallium nitride (GaN) technologies. Development is underway for 4-inch wafer production, according to Intrinsic's website.

Intrinsic's technology will be a boost to Cree beyond LED chips, Cree's CEO said.

"These substrates should not only support our cost roadmap for LEDs, but more importantly, they should also enable us to more rapidly commercialize higher-power devices for motor-control applications and hybrid vehicles," Swoboda explained in a statement.

Cree believes Intrinsic will enable the company to speed up development of larger-diameter high-quality silicon carbide wafers for use in semiconductor devices requiring high power as well as helping to produce LEDs at lower costs.

"We are extremely pleased to be joining the Cree team," said Cengiz Balkas, president and CEO of Intrinsic. "The contribution of Intrinsic's ZMP process to Cree's existing world-class SiC technology and high-volume manufacturing capability represents a unique opportunity to make a new generation of cost-effective SiC devices available sooner than had previously been envisioned."


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