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Cree changes plans, will move part of its factory expansion to New York instead of NC

LED products and semiconductor maker Cree is pivoting from part of its plans to build a new billion-dollar factory in the Triangle.

Instead, the Durham-based company will move its planned silicon carbide fabrication facility to New York state, after getting $500 million worth of incentives from New York.

Just in May, Cree said it would pump $1 billion into beefing up its silicon carbide capacity with a new factory at its campus in Durham.

The material is used as a semiconductor for important technologies like 5G wireless and electric vehicles, two areas that will be the focus of increased demand in coming years.

Gregg Lowe, the CEO of Cree, said the move came down to incentives, with New York’s offer being larger than North Carolina’s.

The grant from New York came from the state’s Empire State Development fund, and the money will contribute to roughly $280 million in savings for the 480,000-square-foot factory in Marcy, New York, by 2024.

Cree will create around 600 jobs there, Lowe said.

On top of the incentives, the New York opportunity offered Cree the chance to build a brand new facility, whereas in North Carolina the company would have been retrofitting an existing building — something Lowe called “not ideal.”

However, North Carolina isn’t completely losing out to New York.

The company still plans to expand a different materials factory here in the coming years, which will include nearly $500 million worth of investments.

Tony Copeland, North Carolina’s Commerce secretary, called Monday’s announcement still a big win for North Carolina. The Durham expansion will add 400 jobs, he noted, without the state giving any incentives.

Copeland confirmed Cree asked for incentives, though he declined to say exactly how much. “The state could not have gotten close to (New York’s offer,)“ he said.

Copeland added North Carolina should always be monitoring the health of its incentives program. But he said he didn’t think there was an appetite in North Carolina to pay as much as New York did for the expansion.

“I think all of our incentive [programs] have to continually be looked at and expanded and tweaked,” he said. “ ... I don’t think there is an authorizing environment in North Carolina to pay that kind of money” that New York did.

Copeland also pointed out that Durham remains “on fire,” when it comes to attracting new jobs, listing recent recruitment wins for the state like tech company Policygenius, drug maker Merck and glassmaker Corning.

While the New York plant will be focused on creating silicon carbide wafers and chips, the one in Durham will create the materials that go into the creation of those wafers.

Cree will work with local community colleges to help train some current employees and potential employees for the expansion in North Carolina. Technicians at the North Carolina factory could start out making $30 per hour, Lowe said — about $62,000 a year.

Creating semiconductor chips has become an increasing focus of Cree’s future — a sharp reversal from a few years ago when the company most known for LED light bulbs sought to sell its semiconductor subsidiary Wolfspeed. The company’s LED business has declined in recent years and has been hit by the tariff war between the U.S. and China, the company has said in recent calls with investors.

Earlier this year, the company sold off its lighting fixtures business to better focus on its silicon carbide business and other LED products.

“We are at the beginning of transition from silicon to silicon carbide,” Lowe said in a phone call from New York. “From North Carolina to New York, we are creating a silicon carbide corridor. We are the early stage of ramp up [in silicon carbide] and this investment is about catching it.”

Lowe said the company’s chips stand to be a critical part of the transition to electric vehicles, noting that from 2022 to 2028, the number of electric vehicles on the road will increase significantly. Cree is already a partner with German car maker Volkswagen, which plans to roll out 70 new electric vehicles over the next decade, Lowe said.

The chips are also used in ultra-fast 5G networks as well.

The Durham company has continued to invest in the technology since 2017, when instead of selling Wolfspeed to Infineon Technologies for $850 million as it was planning, it bought a key part of Infineon’s chip business for about $430 million.

The move was somewhat forced on the company after the Committee on Foreign Investment in the United States blocked the plan to sell Wolfspeed on national-security grounds.

A few months after that decision, Lowe, who has a long history in the semicondcutor industry, replaced former longtime company leader Chuck Swoboda as CEO.

“We are fully focused on semiconductors right now,” Lowe said.

Copeland, who has worked with Cree on expansions since the early 2000s, said he has been impressed by the ongoing success of the company.

“They continue to be highly successful with reinventing themselves,” he said.

This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate

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Zachery Eanes is the Innovate Raleigh reporter for The News & Observer and The Herald-Sun. He covers technology, startups and main street businesses, biotechnology, and education issues related to those areas.
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