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12 July 2006


Cree revenues down after LED production difficulties

Based on preliminary financial results, LED chip and SiC wafer supplier Cree Inc of Durham, NC, USA says it expects revenue for its fiscal fourth quarter (ended 25 June) of about $106.7m (slightly down from the previous quarter's
record $107.7m). This is at the low end of its targeted range of $106-110m due to lower LED sales stemming mainly from production challenges, which limited Cree's ability to meet orders.

Gross margin is expected to be about 42%, below Cree's targeted range of 46-47%, due primarily to lower LED revenue as a proportion of total company sales, a less favorable mix within the LED product line, and incrementally
higher production costs associated with new products.

CEO and chairman Chuck Swoboda had said previously (in April) that unexpectedly high demand from mobile applications meant that chip output was capacity-limited while it was transitioning from 2" to 3" wafers and from
its Durham fab to its new fab in Research Triangle Park, NC and starting up production of high-power products.

"Although we knew this was going to be a transition quarter, it proved to be more challenging than we expected," says Swoboda now. "Despite these near-term challenges, we are making progress in growing our new lighting and power product lines, which are key to driving our future growth."

For fiscal Q1/2007, Cree anticipates that LED chip sales may decline slightly due to a recent slowdown in demand for mobile products, but this should be mostly offset by increased sales of its XLamp LED and Schottky diode products.

Cree will release final financial results for the quarter on 10 August.

Visit: http://www.cree.com