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Printed from the Charlotte Observer - www.CharlotteObserver.com
Posted: Friday, Aug. 08, 2008

Durham firm helps light Olympics

Alan M. Wolf
Published in: Business

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Tiny chips made in Durham are bringing a twinkle to the Beijing Olympics.

As the games' opening today, computerized light shows were centered partly around the iconic Bird's Nest and Water Cube buildings. In keeping with China's push for futuristic technologies at the festivities, those buildings' lights were built using more than 750,000 red, blue and green LED chips made at Cree's factory in Durham.

In addition, Cree LEDs will illuminate massive video boards in Beijing and TV kiosks throughout the Olympics complex.

“We'll be able to leverage this exposure for a long time,” Cree spokesman Chris James said.

It could aid a broader push by Cree, founded by N.C. State alumni 21 years ago, to capture more of the market for energy efficient lighting. Five years ago, Cree's light-emitting diodes were mostly used to illuminate cell phones, signs, car dashboards and other electronics. Now the company'slight-emitting diodes can be found in parking-garage lights in Raleigh, high-end homes in Durham, streetlights in Anchorage and office lights across Asia. LEDs use less power and last longer than traditional light bulbs. They are expensive, but prices are falling.

The Olympics gig started for Cree when a Chinese contractor bidding to build the National Aquatics Center, aka the Water Cube, asked for Cree's help with the lighting, James said. Once the company won that contract last year, other contractors started calling.

The original design of the Beijing National Stadium, or Bird's Nest, included traditional fluorescent bulbs. But once officials saw how LEDs compared with the Water Cube's lights, they ordered them replaced with Cree LEDs, James said.

The buildings were finished in January, but Cree had to change some lighting fixtures during tests. About half of the company's 2,600 worldwide work force is in Durham, where Cree builds chips 24 hours a day, seven days a week.

“One thing we've learned with this exercise in China: the Chinese don't leave many things to chance,” James said.

Cree expands in China

Cree last year bought a Chinese lighting company to expand its foothold in that country. While Cree has sales, marketing and research staff in China, it still makes its chips only in Durham. The chips are built into LEDs, which are then packaged into lights, with some of that work now done in China.

Even without much mainstream marketing — Cree isn't an Olympics sponsor — the company stands to gain from the attention, especially in China, said analyst Harsh Kumar, who follows Cree's stock for Morgan Keegan.

“It's going to shine a lot of light on Cree,” he said.

Cree's challenge will be to transform the exposure into new business, such as contracts with companies installing lights on the new buildings rising in China, Kumar said. China and Hong Kong account for about a third of Cree's business.

Even as sales of its lighting products climb, demand for LEDs used in cell phones and other electronics has slowed, hurting Cree's profit. The company's stock is down about 30 percent in the past year. The company reports its latest quarterly results next week.

Cree plans to highlight its Olympic efforts as it markets its LED lights around the world.

“The contract isn't that big for us, other than the marquee nature of the installation,” James said. “We're happy to have it, but we're looking for even bigger fish.”

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