Winding Down the Wolfspeed Saga, an Executive Leaves and an Experiment Ends

Feb. 23, 2017
After the company experimented with an initial public offering and a $850 million sale, Wolfspeed's chief executive is stepping down and leaving Cree.
(Image courtesy of Imec).

Now that Cree has scuttled the sale of Wolfspeed, the company is absorbing the brand into its main business and paring back the executive positions it created to run the power and radio frequency unit.

In a regulatory filing, the company said on Wednesday that Frank Plastina, Wolfspeed's chief executive and an executive vice president within Cree, has stepped down. Plastina, who had been tapped to run the business in late 2015, will leave Cree by July.

Plastina has served on Cree's board since 2007 and joined as the executive vice president of the power and radio frequency business, which is based in Research Triangle Park, N.C., in June 2015. Before that, he founded an angel investment firm called Arc & Company.

"Frank Plastina was brought into Wolfspeed as CEO to lead the separation of the business into an independent company.  Now that Cree is reintegrating Wolfspeed as a division of Cree, this role is no longer required," a Cree spokesperson said. "We thank Frank for his effort and contributions."

It is not clear if other executives whose positions are being eliminated will leave the company. The spokesperson said that Cengiz Balkas, the chief operating officer of Wolfspeed, will take over leadership of the business as general manager.

The announcement is a subdued end for the Wolfspeed experiment. The initial plan was for Cree to spin off the unit into a separate company, with Cree's co-founder John Palmour as the chief technology officer and Plastina as the chief executive. Cree said that it wanted to give its main lighting business the breathing room it needed to thrive.

But at industry events, Wolfspeed representatives asked reporters if other companies had thought about making an offer for the company. Last year, the German chip supplier Infineon threw its name out.

​Infineon struck a deal to buy Wolfspeed for $850 million, bolstering its stable of advanced semiconductors used in power management and wireless equipment. The deal fit with the vision of chief executive Reinhard Ploss to expand in fields like electric cars and the infrastructure behind 5G communications.

But earlier this month, Cree reported that the deal was on the rocks. Top regulators in the United States withheld their blessing for the deal, likely because they were worried about losing Wolfspeed's expertise in gallium nitride, which is considered vital for new antiballistic missile radar. It has been at the center of other recently abandoned deals.

Wolfspeed is also a major manufacturer of gallium nitride for the Department of Defense, which orders chips for classified projects. Cree said it had been unable to work out a deal with Infineon to appease regulators, though it also sells chips based on silicon carbide, which is widely used in power electronics and lighting.

The Wolfspeed business was a bright spot on Cree's troubled balance sheet, bringing in revenues of $173 million in 2015. Now that the deal has been canceled, Infineon is paying Cree $12.5 million in severance fees. The German chipmaker had planned to close the deal by the end of 2016.

“We are disappointed that the Wolfspeed sale to Infineon could not be completed,” said Chuck Swoboda, Cree's chief executive, in a statement. “In light of this development, we are going to shift our focus back to growing the Wolfspeed business," he added.

Nancy Friedrich contributed reporting.

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