Ideal Industries will pay approximately $310 million for the Cree Lighting business unit, while Delta Electronics is acquiring SSL manufacturer Amerlux, and parts of the Echelon business recently acquired by Adesto are being shuttered.
We have had a slow start to 2019 on the LED and solid-state lighting (SSL) technology front, but not so when it comes to business — it’s not just on college basketball courts where March madness transpires. Cree has announced that it will sell its lighting business unit to Ideal Industries — a company with a long heritage in electrical power control and management, but not in lighting. In a similar but smaller deal, Delta Electronics, a supplier of power supplies and thermal management systems, is acquiring architectural luminaire maker Amerlux. Meanwhile, Internet-of-Things (IoT) specialist Echelon was acquired by Adesto Technologies last fall, and now the parent says it will discontinue the Echelon Lighting Solutions business unit.
Next chapter for Ruud legacy
Cree bought Ruud Lighting and Ruud’s BetaLED subsidiary (an early pioneer in LED-based outdoor lighting) during the summer of 2011, paying in the neighborhood of $525 million to firmly enter the lighting space while previously having been focused on LED and other compound semiconductor manufacturing. The move was controversial at the time because one of the leading manufacturers of packaged LEDs for general lighting applications was clearly planning to compete with its own customers. We acknowledge that Philips Lighting and Lumileds (both part of Royal Philips at the time) and Osram Opto Semiconductors and Osram Lighting were arguably doing the same thing, but the situation at those companies had evolved organically as LEDs went from only being viable in specialty roles such as traffic signals to suddenly being seen as the future of general lighting. Cree saw its move as a way to accelerate its stated goal of converting all lighting products to SSL technology.
The Ideal acquisition will include all of the Cree Lighting commercial, industrial, and consumer products ranging from indoor to outdoor luminaires and the Cree lamps that were at the forefront of consumers beginning the transition to LED lighting that continues to this day. The Cree lamps launched in the spring of 2013 with both Cree and Philips breaking the $15 price point for 60W-equivalent A-lamps.
But Cree has clearly shifted its course in the past two years, especially with Greg Lowe taking over as CEO. The focus has been back to the semiconductor roots and more focus on the Wolfspeed power semiconductor business unit as opposed to LEDs for future growth — a unit that Cree almost sold a few years back.
Cree’s forward focus
“Cree has made significant progress over the last 18 months in sharpening the focus of our business to become a semiconductor powerhouse in silicon carbide and GaN [gallium nitride] technologies,” said Lowe. “Over that timeframe, we have grown Wolfspeed by more than 100%, acquired the Infineon RF business, more than doubled our manufacturing capacity of silicon carbide materials, and signed multiple long-term supply agreements, which, in aggregate, are in excess of $500 million. With the addition of today’s lighting divestiture news, Cree is well positioned as a more focused semiconductor leader.”
Wolfspeed products are vital in applications such as 5G cellular, electri vehicles, and other specialty applications.
Ideal has said it will offer jobs to most of the 1300 employees working for Cree Lighting, the bulk of whom still work in Racine, WI, where Ruud was originally based. The move will approximately double the number of employees working for Ideal. For Ideal, the move also helps explain the recent hiring of John DiNardi, formerly of Hubbell Lighting, to a new position at Ideal as group president of technology. DiNardi had run the Hubbell Technology and Components Division and had managed the evolution of smart lighting technologies inside Hubbell.
Still, the integration of an SSL business into a company such as Ideal runs counter to recent trends in the lighting sector. Of course, not all situations are the same, but Philips pushed its Philips Lighting unit out as an independent company. GE has agreed to sell its Current lighting business. And most recently, we learned that Eaton will separate its Eaton Lighting business unit into an independent, publicly-traded company.
Under the Cree leadership, Cree Lighting has delivered a number of technology advances that extend far beyond helping to redefine the lamp. Cree’s SmartCast controls technology was one of the first connected lighting systems to achieve some level of plug-and-play simplicity. Later, the company added support for IoT capabilities in SmartCast while also supporting connectivity options from third parties. Cree also developed its own edge-lit planar lighting technology called WaveMax that the company has successfully and innovatively used in indoor and outdoor luminaires. Now Ideal will own those innovations.
Delta and Amerlux
Moving to the Delta acquisition of Amerlux, that deal also runs counter to recent trends. It’s most similar to the Eaton acquisition of Cooper Lighting that has clearly not delivered the results expected by the Eaton parent company. For sure, Eaton thought its power and energy management businesses would have synergies with lighting as each moved toward an IoT future.
“As a world-class corporate citizen committed to enabling energy conservation and lower carbon emissions for mankind, Delta continues to broaden its solutions portfolio to improve the energy efficiency, security, and comfort of buildings and cities,” said Delta CEO Ping Cheng. “Lighting is an integral focus for Delta because, in the IoT era, it is an ample source of crucial data for the optimization of smart automation systems. Amerlux has a strong reputation in the field of architectural LED lighting, which we believe will enhance Delta’s profile as a total solutions provider. The combined offering of our companies will deliver substantial advantages to our customers and channel partners. Amerlux’s existing facilities in Oakland, New Jersey will continue to produce interior and exterior lighting products, and the current management and employees of Amerlux will remain in place.”
For Amerlux, the difference could be its size. The company likely needed capital and resources to develop more complex products and compete in an IoT future. “We are delighted to become part of Delta as this will help Amerlux become a total lighting systems provider,” said Chuck Campagna, Amerlux CEO. “Delta’s comprehensive portfolio of products and solutions in the areas of smart building automation and energy management can be integrated with Amerlux’s line of LED luminaires. By complementing strengths from both sides, we will be able to provide enhanced value to our customers and further our position in the smart lighting market.”
Adesto and Echelon
The news involving Adesto Technologies and Echelon is far different from the other acquisition-related stories here. Adesto and Echelon announced the deal in the summer of 2018 and it closed in September. Both companies had a history of developing enabling technologies for IoT or connected applications in settings such as building automation, industrial control, telecommunications, and medical devices.
Echelon, however, had attempted in recent years to move upstream from ICs, protocol stacks, and development tools that underlie product development to try and supply complete top-to-bottom connected lighting technologies up to and including lighting CMS (central management system) platforms for indoor and outdoor applications including smart cities. Echelon saw lighting as an application with significant growth potential that could consume the company’s enabling components and perhaps open new business channels.
Adesto clearly intends to remain focused on enabling product development. It has apparently tried to sell off Echelon products such as the LumInsight CMS technology to a lighting-focused vendor, but said that deal will not go forward. Instead, Adesto will discontinue offering those products that were developed to enable Echelon to sell complete lighting systems and services. But Adesto will continue to offer Echelon ICs and the LON (local operating network) network and protocol that has long been utilized in factory automation and similar applications. Indeed, Adesto recently announced the standardization of the ANSI/CTA 709.7 LON IP protocol that will allow LON data to pass over Wi-Fi and Ethernet networks, thereby speeding deployment in building and industrial automation applications.