APEI Acquired by Cree, Will Remain at Tech Park

The University of Arkansas-affiliated Arkansas Research & Technology Park in south Fayetteville has registered some significant achievements since opening in 2004.

The most significant, perhaps, came on July 9. That was the day Cree Inc., a global public company and a market leader in silicon-carbide (SiC) power and radio frequency (RF) products, announced it had acquired the largest of the research park’s 35 companies, privately held Arkansas Power Electronics International Inc. (APEI), which specializes in advanced, high-performance electronics for a variety of customers and applications, including the defense, aerospace and hybrid/electric vehicle markets.

The APEI team has changed its name to Cree Fayetteville Inc., and will continue to be based at the ARTP, operating as part of Cree’s Power and RF business unit, the segment that makes components used in equipment for the power and telecom industry.

“I think it’s a major milestone for the research park,” said Phil Stafford, president of the University of Arkansas Technology Development Foundation, which manages the research park. “Having worked with APEI for nearly 12 years now, it is particularly gratifying to see a company develop their technology and grow their business and be recognized by a global leader in power and electronics like Cree. I think this could be a real turning point for the research park.”

Mike Preston, named in March as the new director of the Arkansas Economic Development Commission, agreed, adding that the deal underscores the strength of the UA’s incubator system.

“This successful acquisition is truly a win-win as it provides APEI a significant amount of new capital that can be used to expand research opportunities while keeping good-paying jobs in Arkansas,” he said. “It’s encouraging to have a global leader like Cree recognize the innovative work of APEI. We look forward to sharing this success story.”

Although financial terms were not disclosed, Cree co-founder and chief technical officer John Palmour said the deal was beneficial for both companies.

“We’re excited to move forward,” he said.

Alex Lostetter, president and CEO of APEI, will continue as vice president in charge of the Fayetteville location, tasked with keeping the site running at full capacity, bringing in money, developing new technology and expanding the manufacturing.

APEI, founded in 1997 by Bill Schirmer and Kraig Olejniczak, has grown to include 50 employees who occupy 30,000 SF across three buildings.

Lostetter, who has a Ph.D. in microelectronics from the UA, started part time at APEI in 1999, and by 2002 was promoted to chief operations officer after Olejniczak left to become dean of the college of engineering at Valparaiso University in Indiana.

In 2003, Lostetter became president, CEO and majority owner. 

“We’ve tried to work very hard over the past 15 years or so to grow a business from scratch and develop globally recognized, leading technology,” he said. “We know we have great things to bring and this gives us a better opportunity to get them out there.”

Palmour said the acquisition creates a significant opportunity for expansion at the research park.

“We’re looking to grow,” he said. “The ARTP is a really nice set-up and a nice site. There are good facilities to which we can expand and we see no reason to change that. Our goal is to stay there and grow jobs in the future.”

Palmour said Cree, headquartered at the edge of the Research Triangle Park in Durham, North Carolina, and APEI were familiar with each other, having worked together successfully on a few government research programs. Perhaps the most notable collaboration was with APEI’s high-performance, silicon carbide-based plug-in hybrid electric vehicle battery charger. 

Cree was a subcontractor on the project, and it earned recognition in R&D Magazine’s list of the world’s top 100 technological product innovations in 2013. The R&D 100 awards are known as the “Oscars of Innovation.”

Power Boost

Palmour said the acquisition will help strengthen Cree’s market-leading position for SiC power electronics, bolstering its smallest business segment — Power and RF — with additional intellectual property and applications expertise from APEI, regarded in the industry as a leader in wide bandgap power research and development.

Combining the two companies will help accelerate the market for high-performance, SiC power modules. It’s a market, Lostetter said, that is bursting with potential, but as a small business, APEI lacked the financial resources to address it with much of an impact.

“It requires a fair amount of money of capital investment, and that’s difficult for a small company to make,” Palmour explained. “We have a lot of money in the bank and a lot of interest in driving the business forward. We had the capability to add the financial horsepower to get behind things that we both want to do.”

Earlier this year, Cree announced it was spinning off its Power and RF business as a separate company, supported by an initial public stock offering. The Power and RF business, according to Cree financial statements accounted for only $107 million of the company’s $1.65 billion revenue in fiscal year 2014.

Cree, which has 6,800 employees worldwide, was formed in July 1987 by researchers from North Carolina State University and went public in February 1993. In addition to three offices in North Carolina, it has a manufacturing facility in Racine, Wisconsin, and a research center in Santa Barbara, California. There are foreign operations in Sweden, Italy, Canada, Germany, Japan, Malaysia, Hong Kong and China.

Besides Power and RF, Cree also operates a lighting products unit and a light-emitting diodes (LED) unit, the company’s largest and most well-known. Cree is considered one of the world’s top manufacturers of LEDs, which are semiconductor devices that turn electricity into light.