July 13, 2004...Lumileds Lighting U.S., LLC of San Jose, California USA has announced the settlement of litigation against Epistar that began in August of last year (ref our coverage). The resulting allegations and counter allegations centered on USA Patent No. 5,008,718, which is owned by Lumileds. The terms of the settlement were not disclosed, but Lumileds did report that the two companies have agreed to dismiss all claims and counterclaims in the lawsuit. In addition, as part of the settlement agreement, Lumileds is granting a limited license to Epistar that will enable that Taiwan manufacturer to "practice several patents in the field of absorbing-substrate AlInGaP LEDs." This particular patent, which dates back to the late 1980s at Hewlett Packard, from which Lumileds was originally spawned, is a key process that can produce a variety of colors including deep red, yellow, and green. Lumileds is noted for not only their outstanding white LEDs, but their full line of HB-LEDs in all colors (ref: our current editorial Lumileds Ramping for more perspective, revised from an original July 8th post).

Lumileds had also originally taken the dispute over patent number 5,008,718 first to United Epitaxy Company (UEC) and also to Citizen Electronics and Citizen's subsidiary, Cecol, basing their allegations on the fact that Epistar was importing and selling Epistar's AlGaInP LEDs. Those disputes were settled out of court. While the financial terms of the agreement with Epistar were not disclosed. Mike Holt, Lumileds CEO said, simply, “We are pleased that Epistar has acknowledged the value of this intellectual property.” Mike Holt also underscored in the brief news release, using similar language to that selected repeatedly now by Nichia (which is considered the nearest competitor in GaN-based white LED brightness and pleasing color to Lumileds), that "Lumileds holds more than 100 patents in the area of high-brightness LEDs and continues to pioneer the development of solid-state lighting technology. We will continue to enforce our intellectual property rights.." But typical of Lumileds, which has traditionally positioned themselves in a manner fitting their true leadership status in championing the field for everyone involved in it, Mike adds "... and to lead the industry in the enabling of never before possible lighting solutions.” Like we said in the revised close of the Lumileds Ramping editorial, "The fledgling Solid State Lighting (SSL) industry is literally lighting up the world! And it wouldn't have happened without the exceptional breadth and depth of our supply infrastructure."

Celeritek Sells Defense Business to Teledyne for $33 Million Cash

July 12, 2004...Celeritek Inc. of Santa Clara, California USA has sold the defense-related end of their business to Teledyne Wireless Inc., a subsidiary of Teledyne Technologies Incorporated of Los Angeles, California. Following the transaction, Teledyne currently intends to relocate the business from Santa Clara, California and consolidate it with Teledyne Microwave in Mountain View, which is close in proximity to Santa Clara in Northern California's famed Silicon Valley. The amount received for the business by Celeritek from Teledyne will be $33 in cash and as part of the deal, Celeritek will continue to supply GaAs components to the new entity. Commenting on behalf of Teledyne in praise of Celeritek's business, Robert Mehrabian, Chairman, President and CEO of Teledyne Technologies said, "Celeritek's defense electronics division is an excellent strategic fit with both our Teledyne Microwave and Teledyne MEC Vacuum Electronics business units. Celeritek is one of the defense industry's largest suppliers of specialized amplifier products," pointing out that Celeritek's solid state amplifiers and complex microwave subassemblies utilize design and manufacturing technology similar to our existing Teledyne Microwave business and are complementary with Teledyne's line of high power helix traveling wave tubes used on military, electronic warfare, radar and communication applications. "This acquisition would allow us to offer our defense customers a broader portfolio of microwave products and capabilities. In addition, we expect to obtain significant synergies through the consolidation of Celeritek's defense business with our current military microwave subassembly operations in Mountain View, Calif."

So where does this leave Celeritek? The company was one of the earliest in the III-V microwave business, and has been through various ups and downs over the years, but always under the direction of the company's founder Tamar Husseini, who continues to serve as Chairman, President, and CEO. "The divestiture of our defense electronics subsystems business will allow us to focus on designing and manufacturing high performance GaAs semiconductor components," said Tamer. "The transaction will also provide us with substantial financial resources and an important new customer for our semiconductor operations." Celeritek's defense electronics division had sales of $19.7 million for its fiscal year ended March 31, 2004. Teledyne Technologies expects the acquisition of Celeritek's defense electronics division to be neutral to earnings in 2004. If completed, the acquired business would be operated as part of Teledyne Microwave. The transaction is subject to the approval of Celeritek's shareholders (who have proved to be a very vocal and sometimes factionalized group in the past), as well as other customary closing conditions. All of Celeritek's directors and their affiliated investment funds that hold Celeritek shares, including SACC Partners LP, who collectively hold or control the vote of approximately 1.2 million shares (approximately 9.3% of outstanding shares) of Celeritek stock, have entered into voting agreements with Teledyne under which they have agreed to vote in favor of the transaction. Jefferies Quarterdeck, a division of Jefferies & Company, Inc., served as financial advisor to Celeritek and provided a fairness opinion to Celeritek's board of directors in connection with the transaction. Needham & Company, Inc. served as financial advisor to Teledyne. Company news release

European Solid State Lighting Project to Investigate Silicon Substrates for Blue Spectrum LEDs

July 12, 2004...An exciting Solid State Lighting (SSL) research project (which, by definition, means blue spectrum LEDs as the means of producing white light) is getting underway in Europe that involves Aixtron AG of Aachen, Germany. It is a three year project targeting the improvement of this critical group of advanced LEDs via the use of silicon substrates. It will be conducted by the Laboratory of Semiconductor Optics, Stepanov Institute of Physics of the National Academy of Sciences of Belarus and is funded by the International Science & Technology Center in Russia (ISTC). The target of this new project is to improve the white LED performance and to explore silicon as a low cost alternative for substrates. As the SSL community is well aware, virtually all blue spectrum LEDs currently use either sapphire or silicon carbide substrates, which are smaller and more expensive than silicon. By employing silicon, the presumption would be to drastically reduce the LED costs which the European group highlights as a precondition for the introduction of LEDs in general lighting applications.

The group also points out that, "Worldwide, all major industrial nations run development programs for SSL based on the technology of LEDs and that SSL can save a significant amount of energy when replacing conventional incandescent lamps and, furthermore, its extremely long lifetime makes replacement of lamps nearly obsolete. Starting an LED project in Belarus is an important milestone in order to establish this promising new technology also in this region." Prof. Dr. Michael Heuken VP of Aixtron's Corporate Research & Development commented that, "We are delighted to participate in this interesting and challenging research project and looking very much forward to a good cooperation with our colleagues from the Laboratory of Semiconductor Optics of the Stepanov Institute in Belarus and the ITHE of the RWTH Aachen. We are convinced that this project will push the LED technology in Belarus forward." Company news release

USA Sapphire Substrate Maker, Rubicon Technology, Featured on CNN's Lou Dobbs Show

July 8, 2004...Score one for the good guys, which the famed CNN financial guru, Lou Dobbs, does in his "Made In America" segment, and the "good guys" this time were our own guys. The Thursday evening, July 8th spot was longer than the usual, extremely well done and featured one of our major compound semi industry sapphire suppliers, Rubicon Technology of Chicago, Illinois. Rubicon was featured primarily because it takes very good care of its 125 employees, and also because it makes a substrate for one of the most exciting fields in the world... the solid state lighting industry, which is destined... as we here in the compound semi community well knows... to replace conventional forms of lighting with solid state, blue spectrum LEDs, the vast majority of which are grown on sapphire substrates. The hook that enticed the Lou Dobbs show to send ace producer, Lisa Sylvester and crew to Rubicon's home base in Chicago... besides the fact that this thriving, privately held company does all its own manufacturing in the good old US of A, but it sends 90% of its product to Asia. Lisa and crew came in and shot excellent footage of the Rubicon plant for hours and interviewed Rubicon's senior management, Chris Moffitt, President/CEO and Joe Cox, VP of Operations. Bruce Rylance, VP of Sales and Marketing, was... as usual, on travel.

With the high caliber international exposure CNN's Lou Dobbs Show generates, Rubicon Technology automatically becomes a company the investment community, as well as the customer base will keep an especially close eye on. Business is so good right now... and with blue spectrum LEDs catching on so well in all application areas, there's no sign that pace will let up in the near, or far future... that Rubicon is currently "sold out" of product and increasing their capacity and output as quickly as possible to keep up with demand. And... they're in major hiring mode. One of the points that Lisa made in her report was that Rubicon was selected for the "Made in America" slot because it provides excellent stock options and 100% health coverage. In return for treating their people so well, Rubicon gets its pick of high caliber USA talent required to produce top notch sapphire crystals and substrates. The Nitride world is extremely dependent on good substrates, which is what Rubicon obviously provides. And now the general public knows a bit more about what that business is all about. What's in store next for Rubicon Technology? Possibly an IPO, so they can ramp further, and faster. With the kind of exposure they just received from CNN, all we can promise for now is... Stay Tuned...

New Focus to Roll Out Over 100 New Products at SEMICON West

July 12, 2004...New Focus, Inc. of San Jose, California USA, now a division of Bookham Technology plc of the UK, will introduce more than 100 new products this week at SEMICON West. The wafer processing section of this huge show will take place at the Moscone Center in San Francisco from July 12-14, the final manufacturing will take place in the San Jose Convention Center down the Peninsula from San Francisco. The New Focus booth will be in San Francisco at Moscone in booth number 5102 in the North Hall. Their product lineup will include a number of motion control and opto-mechanical lines that have been designed to function with high reliability in high vacuum (10-9 torr) and extreme ultraviolet (157nm) environments. According to Nadim Maluf, VP of Marketing at New Focus. “SEMICON West provides us with the opportunity to meet with many of our most important customers. New Focus has the operational knowledge, the depth of engineering capabilities, and a world class manufacturing facility that can efficiently address the outsourcing requirements of semiconductor equipment manufacturers.” It will also be a good opportunity to ask the New Focus team, which was considered a classic Silicon Valley startup, how they like being now owned by the Brits. For details on what will be shown, consult the company news release.

Fairchild and Changhong Flexing "Green Power"

July 8, 2004...The kind of story that always ranks good coverage in our pages is one that focuses on bettering the environment, and the announcement of Fairchild of South Portland, Maine USA teaming with one of China's largest consumer products manufacturers to establish a joint technology laboratory does just that. Fairchild Semiconductor, which specializes in high performance products that optimize power (and does so with a significant emphasis on compound semi based materials), has announced the opening of a joint product development laboratory with Sichuan Changhong Electric Co., Ltd. - one of the largest manufacturers of consumer devices in mainland China. The new lab enables the companies to collaborate on product development using Fairchild's leading edge power components, which are being designed into a broad range of Changhong products, including color TVs, LCD TVs, PDP TVs, rear projection TVs, DVDs, set-top boxes and air conditioners. Fairchild and Changhong have had a close relationship for several years. This project extends that cooperation.

"The first phase of our joint development will focus on green power technology," said Zheng Guangqing, executive vice president of Changhong. "With energy conservation critical to our 60 million customers and to the overall environment in China, we are dedicated to creating new products that balance energy savings and power minimization while still delivering the highest quality. As a leader in green power, we look forward to continuing our work with Fairchild to meet requirements that include low output voltage, high performance, efficient control of power supplies and quick reaction to changes in current." Changhong is known for technical innovation, quality products and significant production capabilities. Fairchild products designed into Changhong consumer devices include Green Mode Fairchild power switches, advanced power MOSFETs, interface switches, diodes, logic devices and rectifiers. More details are in the company news release.

Nottingham University Spins Applications with Veeco GEN III MBE System

July 8, 2004...If you haven't heard about "spintronics" you soon will. That's a general term for defining a promising new class of semiconductor electronics, so says Veeco and Nottingham University in the UK. Nottingham has just purchased a GEN III molecular beam epitaxy (MBE) system from Veeco's St. Paul, Minnesota arm in the USA. The R&D system will be used to investigate multiple materials for spintronic applications. "At Nottingham University we are investigating a number of different material systems, some of which may have Curie temperatures above room temperature (critical for usable end product applications)," said Professor Tom Foxon. "The GEN III system's 14 source ports will enable us to investigate many possible alternative materials without changing MBE sources." So what differentiates spintronics from conventional semiconductor devices? While the conventional types operate by controlling the flow of electrons and holes based on their "charge," spintronics uses the fundamental property of electron "spin" for novel device applications such as: ferromagnetic metallic alloys for read heads and magnetic random-access memory; integration with microelectronics technology to produce ultra-fast switches and microprocessors; and large-scale quantum computing. So there you have it. The latest "spin." Details are in the company news release.

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The McDonald Report
Commentary & Perspective...

Lumileds Ramping

Aixtron's Unique Positioning for Entry Onto the Nasdaq

If you have questions about the solid state lighting and compound semiconductor industries or have news or views to share, I'm Jo Ann McDonald, Editor of LIGHTimes and CompoundSemi News.
Feel free to contact me directly, anytime.
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+1-325-463-5345

From time to time Jo Ann may comment on companies in which she holds a modest investment - be sure to read her disclosure at some point in time...