Cree’s power and RF division, which it plans to spin out as a publicly-traded company, is announcing Wednesday that it is carving out a separate identity by rebranding itself as Wolfspeed.
“We needed to create our own identity because we have a very different set of customers,” said Frank Plastina, who will become CEO of the business now called Wolfspeed after the spinout is completed. “Cree is now, no question about it, a lighting and LED company.”
“That’s one of the reasons for the spinout,” Plastina continued. “There was no overlap of customers between us and the Cree lighting business.” Cree will retain a majority ownership stake in the business after Wolfspeed is spun out, which is expected to happen by mid-2016.
Wolfspeed’s power components are used in computer servers, uninterruptible power supplies and for solar energy, among other applications. Its radio frequency transistors and integrated circuits are used in radar and telecommunications systems.
Wolfspeed accounted for just 8 percent of Durham-based Cree’s revenue for the fiscal year that ended in June, but it’s nonetheless a substantial, growing business that generated $123.9 million in revenue – up 15 percent from a year earlier. Its gross margins also are significantly higher than Cree’s core businesses.
The “Wolf” component was picked not only for its “very aggressive, very strong connotation” but also for the allusion to N.C. State University, whose sports teams are known as the Wolfpack. Cree was founded in 1987 by a group of N.C. State University scientists and alumni who “to this day have a love for that school and everything it represents,” Plastina said.
In addition, “speed is what we do,” Plastina said. “We do things at higher voltages, higher frequencies, higher temperatures. So speed kind of encompasses all of that R&D effort we’ve been working on for 28 years or so.”
Plastina, the former president and CEO of telecommunications company Tekelec, was named the future CEO of Wolfspeed when the spinout was announced in May. In the meantime, he’s interim executive vice president of Wolfspeed.
Other top executives at Wolfspeed include John Palmour, a Cree co-founder who is chief technology officer; and John Kurtzweil, who is vice president of finance. Kurtzweil was Cree’s chief financial officer from 2006 to 2012 and most recently was CFO at Extreme Networks.
“Everything we do traces back to Palmour’s earliest ideas and inventions,” Plastina said. “He clearly is the father of this technology.”
A member of Cree’s board since December, Plastina said that choosing to join Wolfspeed “was such an easy decision.”
“It’s such a disruptive technology,” he said. “It’s such a compelling growth story that I was very eager to become a part of it.”
Wolfspeed will remain at its current location on a 55-acre site on Cornwallis Road, near the intersection of T.W. Alexander Drive in Research Triangle Park, after the spinout.
Cree announced Tuesday that the U.S. Air Force awarded a $4.1 million contract to what is now Wolfspeed for continued work on a high-performance power module developed for the F-35 Joint Strike Fighter jet. The module is designed to replace bulky hydraulic flight control systems with lighter, more flexible electronic systems.
The contract is a follow-up to earlier contracts awarded to Arkansas Power Electronics International, a 50-employee company in Fayettevillle, Ark., that Cree acquired for an undisclosed sum in July. APEI is now known as Wolfspeed Fayetteville.
Whereas Wolfspeed makes semiconductors for power applications, APEI packages those semiconductors into a power module “that does a specific thing for a specific purpose,” Plastina said.
“We think that’s a very natural market for us to be in, but we needed more designers and technical expertise to make that happen,” Plastina said.
Acquiring APEI, he added, “gave us that R&D capability overnight that we can tap into and become a major modules provider.”