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May 11, 2004...4am Wednesday, Taiwan Time... The report just in to our editorial offices here in Texas from Taiwan as conference attendees get a little shuteye before the closing day of Blue 2004 on Wednesday, is that our keynote speaker Chuck Swoboda, President and CEO of Cree Inc. of Durham, North Carolina USA "knocked their socks off" (to use an apt American phrase) with his candid and lively talk to the +192 attendees at the closing talk of the first full day of the conference. Given the location of the event, the audience obviously included many Asian LED manufacturers who are already shipping a great deal of product to the market.

Chuck deftly combined humor with seriously putting the audience on alert that Cree won't be a bit shy about defending its impressive blue spectrum IP portfolio... right down to the level of the retailer chains. The barbed humor was displayed when this +6 foot 4 inch, self assured and highly confident business leader picked up a childrens' shoe from WalMart that sported flashing blue lights and said... "WalMart may have a problem." Then he showed an LED-based flashlight from another big retailer, and a USB cable with a blue LED in the end, continually repeating his mantra... "They might have a problem."

His message was, if you don't have licenses for all the aspects of the blue or white LED, that LED itself might have a problem as it works its way into the retail scene. Cree essentially drew a line when Chuck underscored that, like the other pioneering leaders in blue spectrum development, citing Nichia's recently posted statement on its white LED patent position (the subject of our April 11th editorial). The part of the statement relating to the retail sellers reads: "As a matter of course, those who manufacture, import, use and/or sell white LED's using such fluorescent substances or any products incorporating such white LED's are strongly warned to pay close and unremitting attention not to cause any infringement upon those basic patents held by Nichia." Chuck specifically noted Nichia's recent patent infringement litigation against Sharper Image as filed in Northern California US District Court (Case # C 04 1360 demanding a jury trial). Cree's own LED IP portfolio now includes a key white LED patent it acquired from ATMI that precedes most all others in this quickly growing field. (Ref: our editorial coverage, April 21st which links you to the full text of the patent. Obviously we were right on target pointing out the potential importance of this key patent, filed back in 1996).

Chuck pointed out that, typically, that isn't a desired approach, but that Cree is referring to the retail part of the food chain, which doesn't target the packagers, who are possible customers of Cree's. Like Nichia, the new policy would instead be directed at the end retailers, like Walmart, who then look back at the shoe (or flashlight, etc.) manufacturer and say, "Prove to me you are using fully licensed parts". That policy will, presumably, force the packagers to change sources to product manufacturers carrying valid licenses.

Chuck Swoboda impressed the audience and held them almost spellbound, without a soul leaving the room even though they'd been there since early morning. This highly intelligent man did it by livening things up when stating that he thought the current estimate of a 30% market climb was too conservative, given some of the emerging applications in automotive lighting and LED backlights for large scale LCDs. Nothing like delivering a message of "more business even faster" to get everyone excited. He also held their interest presenting his view of industry trends, which underscored that consolidation is in the wings. As stated in the press release Cree issued on Chuck's talk, he was quoted as saying... "A combination of factors is driving the industry down the path to consolidation and based on what we have seen in the past, I believe that the companies which are financially strong, possess clear access to comprehensive IP portfolios and have world-class technology and development resources are likely to emerge as winners."

He also made it a point to emphasize that consolidation in the GaN-based blue spectrum sector was natural, given the history in the AlGaP arena to back it up, and that the market we're looking at is somewhere between huge and gigantic! The resulting applause said it all. It was the keynote talk we've all been waiting to hear, and obviously, the keynote talk of the year. Tune in for more hot from the conference reports in the days ahead from Bob Walker, Alan Thompson and Tom Griffiths, who are there in Taiwan, helping make it happen.

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Chuck Swoboda's Talk at Blue 2004 Was a Smash Hit