8-K - WOLF - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): October 18, 2020

CREE, INC.

(Exact name of registrant as specified in its charter)

North Carolina	0-21154	56-1572719
(State or other jurisdiction of<br>incorporation)	(Commission File <br>Number)	(I.R.S. Employer<br>Identification Number)
4600 Silicon Drive
---	---	---	---
Durham	North Carolina	27703
(Address of principal executive offices)			(Zip Code)

(919) 407-5300

Registrant’s telephone number, including area code

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.00125 par value	CREE	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 1.01	Entry into a Material Definitive Agreement.

Asset Purchase Agreement

On October 18, 2020, Cree, Inc. (“Cree” or the “Company”) entered into an Asset Purchase Agreement (the “Purchase Agreement”) with SMART Global Holdings, Inc., a Cayman Islands exempted company (“SGH”), and Chili Acquisition, Inc., a wholly owned subsidiary of SGH (collectively with SGH, “SMART”). The transaction, which was approved by both Cree’s Board of Directors and SMART’s Board of Directors, is targeted to close in the first calendar quarter of 2021, subject to customary closing conditions and governmental approvals.

Pursuant to the Purchase Agreement, Cree will sell to SMART, and SMART will (i) purchase from Cree, (a) certain equipment, inventory, intellectual property rights, contracts, and real estate comprising Cree’s LED Products business, which consists of LED chips and LED components, (b) all of the issued and outstanding equity interests of Cree Huizhou Solid State Lighting Company Limited, a limited liability company organized under the laws of the People’s Republic of China and an indirect wholly owned subsidiary of Cree, and (c) Cree’s ownership interest in Cree Venture LED Company Limited, Cree’s joint venture with San’an Optoelectronics Co., Ltd. (collectively, the “LED Business”); and (ii) assume certain liabilities related to the LED Business (collectively (i) and (ii), the “Transaction”). Cree will retain certain assets used in and pre-closing liabilities associated with the LED Business.

The purchase price for the LED Business consists of (i) a payment of $50 million in cash, subject to customary adjustments, (ii) an unsecured promissory note issued to Cree by SGH in the amount of $125 million (the “Purchase Price Note”), (iii) the potential to receive an earn-out payment of up to $125 million based on the revenue and gross profit performance of the LED Business in the first four full fiscal quarters following the closing (the “Earnout Period”), also payable in the form of a unsecured promissory note of SGH (the “Earnout Note”), and (iv) the assumption of certain liabilities. The Purchase Price Note and the Earnout Note, if earned, will accrue interest at a rate of three-month LIBOR plus 3.0% with interest paid every three months and one bullet payment of principal and all accrued and unpaid interest will be payable on each note’s maturity date. The Purchase Price Note will mature on August 15, 2023, and the Earnout Note, if issued, will mature on the third anniversary of the completion of the Earnout Period.

In connection with the Transaction, Cree and SMART will also enter into certain ancillary and related agreements, including (i) an Intellectual Property Assignment and License Agreement, which will assign to SMART certain intellectual property owned by Cree and its affiliates and license to SMART certain additional intellectual property owned by Cree, (ii) a Transition Services Agreement, which is designed to ensure a smooth transition of the LED Business to SMART, (iii) a Wafer Supply and Fabrication Services Agreement, pursuant to which Cree will supply SMART with certain silicon carbide materials and fabrication services for four years, and (iv) a Real Estate License Agreement, which will allow SMART to use certain premises owned by Cree to conduct the LED Business for a period of up to 24 months after closing.

The Purchase Agreement contains customary representations, warranties and covenants, including covenants to cooperate in seeking regulatory approvals. The Purchase Agreement also requires each of the Company and SMART to indemnify the other party for certain damages that the indemnified party may suffer following the closing of the Transaction.

The completion of the Transaction is subject to the satisfaction or waiver of a number of conditions set forth in the Purchase Agreement, including the receipt of governmental and regulatory consents and approvals and expiration of any mandatory waiting period related thereto, and other customary closing conditions. The Purchase Agreement provides for customary termination rights of the parties and also provides that, in the event the Purchase Agreement is terminated in connection with certain specified regulatory-related circumstances, SMART may be required to pay Cree a termination fee of $4 million.

Item 7.01	Regulation FD Disclosure.

On October 19, 2020, Cree issued a press release announcing the execution of the Purchase Agreement. The press release is furnished as Exhibit 99.1 and incorporated by reference into Item 7.01 of this report.

In connection with the announcement of the Purchase Agreement, Cree intends to provide supplemental information regarding the Transaction in connection with presentations to analysts and investors. The slides that will be made available in connection with the presentations are furnished as Exhibit 99.2 and incorporated by reference into Item 7.01 of this report.

The information in this Item 7.01, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that Section. Furthermore, the information in Item 7.01 of this report shall not be deemed incorporated by reference into the filings of Cree under the Securities Act of 1933, as amended.

Item 9.01	Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description of Exhibit
99.1	Press Release ,dated October 1 9 , 2020
99.2	I nvestor Presentation,dated October 19, 2020
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

Cautionary Statements Regarding Forward Looking Statements

This report contains forward-looking statements involving risks and uncertainties, both known and unknown, that may cause Cree’s actual results to differ materially from those indicated in the forward-looking statements. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about the anticipated benefits of the transaction, including future financial and operating performance. Actual results, including with respect to Cree’s ability to complete the transaction on time or at all and Cree’s ability to realize the full purchase price, could differ materially from these forward looking statements due to a number of factors, including, but not limited to, risks associated with divestiture transactions generally, including the inability to obtain, or delays in obtaining, required regulatory approvals, issues, delays or complications in completing carveout activities to allow the LED Business to operate on a standalone basis after the closing, including incurring unanticipated costs to complete such activities; the ability of the LED Business to generate sufficient revenue and gross profit in the first full four quarters post-transaction close to result in payment of the targeted earnout payment or any earnout payment; the ability of SMART to pay the notes used to finance the transaction; risks associated with integration or transition of the operations, systems and personnel of the LED Business, each, as applicable within the term of the post-closing transition services agreement between SMART and Cree; unfavorable reaction to the sale by customers, competitors, suppliers and employees; the risk that costs associated with the transaction will be greater than Cree expects; risks relating to the COVID-19 pandemic that might delay or otherwise impact Cree’s ability to complete the transaction or transition operations and employees as Cree anticipates; and other factors discussed in Cree’s filings with the Securities and Exchange Commission (SEC), including its report on Form 10-K for the fiscal year ended June 28, 2020, and subsequent reports filed with the SEC. These forward-looking statements represent Cree's judgment as of the date hereof. Any forward-looking statements included in this report are as of the date made and Cree does not intend to update them if its views later change. These forward-looking statements should not be relied upon as representing Cree’s views as of any date subsequent to the date of this report.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

CREE, INC.
By:	/s/ Bradley D. Kohn
	Bradley D. Kohn
	Senior Vice President and General Counsel

Date: October 19, 2020

Document

Exhibit 99.1

Cree, Inc. to sell LED Business to

SMART Global Holdings, Inc. for up to $300 Million

Upon closing, creates a pure-play global semiconductor powerhouse focused on providing disruptive technology solutions to high-growth segments including EV, 5G and industrial applications

•Transaction represents a key milestone in Cree’s transformation to focus on silicon carbide and gallium nitride devices, as well as materials

•Consideration includes $50 million upfront payment; $125 million seller note and up to $125 million earn-out

DURHAM, N.C. October 19, 2020 – Cree, Inc. (Nasdaq: CREE) today announced that the Company has entered into a definitive agreement to sell its LED Products business unit (“Cree LED”) to SMART Global Holdings, Inc. (Nasdaq: SGH) for up to $300 million, including fixed upfront and deferred payments and contingent consideration.

Under the terms of the agreement, which has been approved by the Company’s board of directors, Cree expects to receive an initial cash payment of $50 million upon closing and $125 million to be paid upon maturity of a seller note issued by SMART to Cree due August 2023. Cree also has the potential to receive an earn-out payment of up to $125 million based on the revenue and gross profit performance of Cree LED in the first full four quarters post-transaction close, also payable in the form of a three-year seller note.

“We are pleased to announce the sale of our LED Products business to SMART, which represents another key milestone in our transformational journey to create a pure-play global semiconductor powerhouse,” said Cree CEO Gregg Lowe. “This transaction uniquely positions us with a sharpened strategic focus to lead the industry transition from silicon to silicon carbide and further strengthens our financial position, which will support continued investments to capitalize on multi-decade growth opportunities across EV, 5G and industrial applications. SMART has a strong platform and a solid track record of successfully acquiring and integrating technology businesses.”

Cree LED has one of the industry’s widest portfolios of highly efficient LED chips and high-performance LED components and represents one of the strongest brands in the industry. SMART is a global leader in specialty memory, storage and high-performance computing solutions serving the electronics industry for over 30 years. Leveraging SMART’s diverse customer base and global operations, Cree LED will be well positioned to continue to deliver industry leading products.

“We are thrilled to welcome Cree LED to the SMART family,” said Mark Adams, President and CEO of SMART Global Holdings. “As the leader in LED lighting technology with a highly respected brand and expansive patent portfolio, Cree has a track record of delivering best-in-class solutions and I am very excited about the opportunities that lie ahead for Cree LED as part of the SMART portfolio of products.”

The transaction is subject to required regulatory approvals and satisfaction of customary closing conditions, and is targeted to close in the first calendar quarter of 2021. Following the closing of the transaction, SMART will license and incorporate the Cree LED brand name into the SMART portfolio of businesses.

In connection with the transaction, Morgan Stanley & Co. LLC is acting as financial advisor and Smith Anderson is acting as legal advisor to Cree.

Conference Call and Webcast Information

Cree’s management team will host a conference call to discuss the transaction as well as the Company’s strategic transformation and an updated long-term financial outlook, and host a question and answer session. The conference call will be available to the public through a live audio web broadcast via the internet. For webcast details visit Cree’s website at investor.cree.com.

Date:<br><br>Time:<br><br>Webcast:	October 19, 2020<br><br>8:00am Eastern Time (ET)<br><br>https://investor.cree.com/financial-events-presentations

About Cree, Inc.

Cree is an innovator of Wolfspeed^®^power and radio frequency (RF) semiconductors and lighting class LEDs. Cree’s Wolfspeed product families include silicon carbide materials, power-switching devices and RF devices targeted for applications such as electric vehicles, fast charging inverters, power supplies, telecom and military and aerospace. Cree’s LED product families include blue and green LED chips, high-brightness LEDs and lighting-class power LEDs targeted for indoor and outdoor lighting, video displays, transportation and specialty lighting applications.

For additional product and Company information, please refer to www.cree.com.

Forward Looking Statements

This press release contains forward-looking statements involving risks and uncertainties, both known and unknown, that may cause Cree’s actual results to differ materially from those indicated in the forward-looking statements. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about the anticipated benefits of the transaction, including future financial and operating performance. Actual results, including with respect to Cree’s ability to complete the transaction on time or at all, Cree’s targeted earnout payment and plans to grow the Wolfspeed business, could differ materially due to a number of factors, including but not limited to, risks associated with divestiture transactions generally, including the inability to obtain, or delays in obtaining, required regulatory approvals, issues, delays or complications in completing carveout activities to allow Cree LED to operate on a standalone basis after the closing, including incurring unanticipated costs to complete such activities; the ability of Cree LED to generate sufficient revenue and gross profit in the first full four quarters post-transaction close to result in payment of the targeted earnout payment or any earnout payment; the ability of SMART to pay the note used to finance the transaction; risks associated with integration or transition of the operations, systems and personnel of Cree LED, each, as applicable within the term of the post-closing transition services agreement between SMART and Cree; unfavorable reaction to the sale by customers, competitors, suppliers and employees; the risk that costs associated with the transaction will be greater than Cree expects; risks relating to the COVID-19 pandemic that might delay or otherwise impact Cree’s ability to complete the transaction or transition operations and employees as Cree anticipates; and other factors discussed in our filings with the Securities and Exchange Commission (SEC), including our report on Form 10-K for the fiscal year ended June 28, 2020, and subsequent reports filed with the SEC. These forward-looking statements represent Cree's judgment as of the date of this release. Except as required under the U.S. federal securities laws and the rules and regulations of the SEC, Cree disclaims any intent or obligation to update any forward-looking statements after the date of this release, whether as a result of new information, future events, developments, changes in assumptions or otherwise.

Cree® and Wolfspeed® are registered trademarks of Cree, Inc.

Cree Investor Relations Contact:<br><br>Tyler Gronbach<br><br>Cree, Inc.<br><br>VP, Investor Relations<br><br>Phone: 919-407-4820<br><br>investorrelations@cree.com	Cree Media Contact:<br><br>Joanne Latham<br><br>Cree, Inc.<br><br>VP, Corporate Marketing<br><br>Phone: 919-407-5750<br><br>media@cree.com

exhibit99_2

Positioning Cree for Long-Term Growth – Divestiture of LED Products Business October 19, 2020 CREE CONFIDENTIAL & PROPRIETARY © 2020 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.

Forward-Looking Statements & Non-GAAP Measures Note on Forward-Looking Statements This presentation includes forward-looking statements about Cree’s business outlook, future financial results and targets, product markets, plans and objectives for future operations, and product development programs and goals. These statements are subject to risks and uncertainties, both known and unknown, that may cause actual results to differ materially, as discussed in our most recent annual report and other reports filed with the U.S. Securities and Exchange Commission. Important factors that could cause actual results to differ materially include risks associated with divestiture transactions generally, including the inability to obtain, or delays in obtaining, required regulatory approvals; issues, delays or complications in completing required carve-out activities to allow the LED Products Business to operate on a stand-alone basis after the closing, including incurring unanticipated costs to complete such activities; the ability of the LED Products Business to generate revenue and gross profit in the first full four quarters post- closing sufficient to result in payment of the targeted earn-out or any earn-out payment; [Buyer]’s ability to make fully and timely payments under the promissory note(s) issued to Cree at closing and for the earn-out payment, if achieved; risks associated with integration or transition of the operations, systems and personnel of the LED Products Business, each, as applicable, within the term of the post-closing transition services agreement between [Buyer] and Cree; unfavorable reaction to the sale by customers, competitors, suppliers and employees; the risk that costs associated with the transaction will be greater than we expect; risks relating to the COVID-19 pandemic; the risk that the economic and political uncertainty caused by the ongoing trade dispute between the United States and China may negatively impact demand for our products; risks related to international sales and purchases generally; the risk that we may not obtain sufficient orders to achieve our targeted revenues; price competition in key markets; the risk that we may experience production or ramp-up difficulties that preclude us from shipping sufficient quantities to meet customer orders or that result in higher production costs and lower margins; our ability to lower costs; the risk that our results will suffer if we are unable to balance fluctuations in customer demand and capacity, including bringing on additional capacity on a timely basis to meet customer demand; product mix; risks associated with our factory optimization plan and construction of a new fabrication facility, including design and construction delays and cost overruns, issues in installing and qualifying new equipment and ramping production, poor production process yields and quality control, and potential increases to our restructuring costs; risks resulting from the concentration of our business among few customers, including the risk that customers may reduce or cancel orders or fail to honor purchase commitments; the risk posed by managing an increasingly complex supply chain that has the ability to supply a sufficient quantity of raw materials, component parts and finished products with the required specifications and quality; risks relating to confidential information theft or misuse, including through cyber-attacks or cyber intrusion; our ability to complete development and commercialization of products under development, such as our pipeline of Wolfspeed products; the rapid development of new technology and competing products that may impair demand or render our products obsolete; the potential lack of customer acceptance for our products; risks associated with acquisitions, divestitures, joint ventures or investments generally; risks associated with ongoing litigation; the risk that our products fail to perform or fail to meet customer requirements or expectations, resulting in significant additional costs or lower demand for our products; and other factors discussed in our filings with the Securities and Exchange Commission (SEC), including our report on Form 10-K for the fiscal year ended June 28, 2020, and subsequent reports filed with the SEC. 2 CREE CONFIDENTIAL & PROPRIETARY © 2020 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.

Forward-Looking Statements & Non-GAAP Measures The forward-looking statements in this presentation were based on management’s analysis of information available at the time the presentation was prepared and on assumptions deemed reasonable by management. Our industry and business is constantly evolving, and Cree undertakes no obligation to update such forward-looking statements to reflect new information, future events, subsequent developments or otherwise, except as may be required by applicable U.S. federal securities laws and regulations. Note Regarding Non-GAAP Financial Measures This presentation includes certain non-GAAP financial measures and targets. Cree's management evaluates results and makes operating decisions using both GAAP and non-GAAP measures included in this presentation. Non-GAAP results exclude certain costs, charges and expenses which are included in GAAP results. By including these non-GAAP measures, management intends to provide investors with additional information to further analyze the Company's performance, core results and underlying trends. Non-GAAP results are not prepared in accordance with GAAP and non-GAAP information should be considered a supplement to, and not a substitute for, financial statements prepared in accordance with GAAP. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures to their most directly comparable GAAP measures attached to this presentation. Please see the Appendix at the end of this presentation. 3 CREE CONFIDENTIAL & PROPRIETARY © 2020 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.

LED Divestiture – Next Step In Creating Semiconductor Powerhouse Allows company to focus on industry transition to silicon carbide Creates a pure-play global semiconductor powerhouse for silicon carbide and gallium nitride devices, as well as materials Bolsters Cree’s efforts to penetrate $10B opportunity device pipeline and focus on higher-growth and higher-margin Wolfspeed business Drives more focused execution on capacity expansion, R&D, and sales and marketing investments required to meet the market opportunity Represents a key milestone in Cree’s transformational journey 4 CREE CONFIDENTIAL & PROPRIETARY © 2020 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.

Transaction Summary LED Products divestiture accelerates Cree’s ability to create long-term shareholder value • SMART Global Holdings (NASDAQ: SGH), a global leader in specialty memory, Acquirer storage and high-performance computing solutions serving the electronics industry for over 30 years • SMART has a strong track record of acquiring and successfully integrating businesses • Total considerations of up to $300M consisting of fixed and contingent payments • $175M upon closing including initial cash payment of $50M and $125M in 3-year Transaction seller note Considerations • Seller note matures August 2023 • Up to $125M earn-out based on revenue and gross profit performance in first full four quarters post-close • Targeted to close in first quarter of calendar year 2021 Closing • Subject to customary closing conditions and regulatory approvals 5 CREE CONFIDENTIAL & PROPRIETARY © 2020 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.

Focus on High-Growth Wolfspeed Business Powering the next generation of semiconductors with superior silicon carbide technology Materials Power RF • Maintaining leading global • Converting high voltage (>600V) • Driving value with vertical market share power market to silicon carbide integration and technology • Expanding capacity to through focused ecosystem and leadership accelerate industry transition distribution partnerships • Supporting Communication from silicon to silicon carbide • Expanding leadership position in Infrastructure customers with • Using scale to drive innovation, Automotive and increase focused product and worldwide quality and cost reduction revenue diversity with Industrial application improvements and Energy • Serving Aerospace and Defense • Investing in R&D, sales and markets with select distribution marketing to gain scale partnerships Materials Long-Term Agreements $10B Device Pipeline Opportunity (post LED Products divestiture) Worth ~$1B Fast Growing End Markets Automotive Communications Industrial Energy 6 CREE CONFIDENTIAL & PROPRIETARY © 2020 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.

Updated FY24 Target Operating Model Post-Divestiture Building a high-growth, high-margin, and significant cash generating business FY2024 FY2024 Previous Model Current Model Target Model Assumptions As of 11/20/19 As of 10/19/20 • Wolfspeed BEV Adoption to ~5%, 5G roll out Revenue $2.1B $1.5B • Growth continues beyond FY2024 Wolfspeed • Revenue CAGR of at least 30% 30%+ 30%+ Growth Rate • OPEX scaled for growth • FCF at ~20% GM% 44%-47% 50%-54%* (Non-GAAP) OPEX% ~22% ~25% (Non-GAAP) Key Considerations • Significant capacity expansion in NY & NC EBIT% 22%-25% ~25% • Successful execution on additional device and FCF% ~20% ~20% material opportunities • Lower wafer costs and yield improvement *Excludes ~2% to 3% impact of corporate items • China opportunity has been judged down 7 CREE CONFIDENTIAL & PROPRIETARY © 2020 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.

Wolfspeed – Positioned for Long-Term Growth FY22 represents inflection point as EV deployments commence and MHV Fab comes online ~$1.5B $1.5B MHV Fab Ramps CY22 $1.0B Accelerated Growth $0.5B Inflection Investing for Point Growth $0.0B FY2020 - 2021 FY2022 - 2023 FY2024+ Transform Ramp Execute ü Device design wins ü BEV adoption ü Accelerated BEV adoption ü Materials LTAs ü Charging Infrastructure ü Widespread 5G usage ü Invest in R&D / Sales ü 5G deployment ü Further penetration in ü Capacity expansion ü Industrial & Energy Industrial & Energy Battery Electric Vehicle (BEV) 8 Long-Term Agreements (LTA) CREE CONFIDENTIAL & PROPRIETARY © 2020 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.

Transition to Pure Play Semiconductor Powerhouse Well-positioned to support Wolfspeed growth Strong balance sheet $1B+ in liquidity to support CAPEX / capacity expansion, R&D, and Sales and Marketing investments FY2021 peak CAPEX investment year at ~$0.4B subject to variability depending on Mohawk Valley build schedule and timing of reimbursements from New York • ~$10M to ~$15M/Qtr. costs will convey to SMART Global Holdings at close • Expect modest increase in OPEX throughout 2021 to support continued investment in Wolfspeed (R&D and Sales and Marketing) 9 CREE CONFIDENTIAL & PROPRIETARY © 2020 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.

Our Path Forward Pure-play semiconductor powerhouse well-positioned to benefit from significant growth opportunities Expanding our leading position Executing well against our with strong barriers to entry during transformational strategy to the market transformation from become a powerhouse silicon to silicon carbide semiconductor company focused on silicon carbide and GaN Growing and diversified pipeline Investing to expand capacity to supported by secular trends in support substantial growth attractive end markets including opportunities in silicon carbide EV, 5G and Industrial materials and devices 10 CREE CONFIDENTIAL & PROPRIETARY © 2020 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.

Appendix - Non-GAAP Measures Reconciliation FY24 Non GAAP Margin Gross Margin Reconciliation FY2024 FY2024 Previous Model Current Model GAAP GM% 43%-46% 49%-53% Stock based compensation 1% 1% Non-GAAP GM% 44%-47% 50%-54% GAAP OPEX% 24% 30% Stock based compensation 2% 3% Amortization of intangibles 0% 1% Other 0% 1% Non-GAAP OPEX% 22% 25% * "Previous Model" refers to financial model presented at November 2019 Investor Day Non GAAP Opex Reconciliation FY2024 FY2024 Previous Model Current Model GAAP OPEX% 24% 30% Stock based compensation 2% 3% Amortization of intangibles 0% 1% Other 0% 1% Non-GAAP OPEX% 22% 25% * "Previous Model" refers to financial model presented at November 2019 Investor Day 12 CREE CONFIDENTIAL & PROPRIETARY © 2020 Cree, Inc. All rights reserved. Cree®, the Cree logo, Wolfspeed®, and the Wolfspeed logo are registered trademarks of Cree, Inc.