US-based Cree will spend US$85 million to restructure its LED device business through reducing total production capacity for LED chips. The move is mainly due to negative impact price competition from China-based LED makers, according to Digitimes Research.
Cree will reduce LED production capacity by merging two LED factories in North Carolina, and two LED factories in China, and aims to hike its utilization rate to 80-90% in fiscal 2016 (July 2015-June 2016), Digitimes Research indicated.
Cree focuses LED production on high-power LED chips used in LED street lamps and commercial LED lighting products. However, with capacity expansion by China-based LED makers, mid-power LED chips are increasingly being adopted for LED street lamps, and mid- and low-power chips for commercial LED lighting, resulting in shrinking demand for high-power LED chips. To cope with the situation, Cree will increase outsourcing of low- and mid-power LED chips.