Canaccord Adams analyst Jonathan Dorsheimer Thursday warned that Cree Research (NASDAQ:CREE) is seeing order pushouts from Seoul Semiconductor, a customer which accounts for 14% of sales in the June 2007 fiscal year. He says the problem relates to Seoul Semiconductor’s ongoing litigation with Nichia over LED-related patents.
Dorsheimer says pushouts at Seoul Semi “could adversely impact the company’s December quarter results.”
“We believe a negative verdict could create a domino effect, adversely impacting Cree by $20 million annually,” he wrote in a research note Thursday. “If [Seoul Semi] wins, we estimate Cree could see a modest boost in sales.” However, he also thinks a win in the case could result in Seoul Semi sourcing some components to Taiwan-based manufacturers, “creating a more competitive environment for Cree.” In short, he says the litigation has limited upside for Cree, but significant downside.
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