DURHAM, N.C. — Semiconductor company Cree said Monday that it has sold off its LED products division for up to $300 million, a move that caps a years-long move of divesting from its LED and lighting business.

The company is selling its LED business to SMART Global Holdings, in a deal that will give Cree staggered payments over the next three years. The deal comes more than a year after Cree sold its lighting business to Ideal Industries.

Cree said 275 of its Durham-based employees will transition to SMART after the sale is finalized. However, these employees are expected to remain in the city, as its new owner intends to establish an office in Durham.

In the meantime, SMART, which primarily focuses on memory products for computers and servers, is leasing space on Cree’s Durham campus.

To most people, Cree is known for creating LED light bulbs.

But under CEO Gregg Lowe, who joined the company in 2017, the company has been placing a larger emphasis on semiconductor manufacturing. Cree views semiconductors as having a much higher potential for growth than lighting.

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The company is currently investing a billion dollars into expanding its silicon carbide manufacturing capabilities. A lot of that investment is going toward a new facility in New York after that state offered a large incentive package to Cree last year. However, it is also expanding its facilities in Durham.

Silicon carbide is used as a semiconductor for important technologies like 5G wireless and electric vehicles, two areas that will be the focus of increased demand in coming years. Cree is already a partner with German car maker Volkswagen, which plans to roll out 70 new electric vehicles over the next decade, Lowe told The N&O last year.

The deal “represents another key milestone in our transformational journey to create a pure-play global semiconductor powerhouse,” Lowe said in a statement. “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 (electric vehicles), 5G and industrial applications.”

In its most recent fiscal year, which ended in June, Cree’s semiconductor business made more than $470 million, or 52% of the company’s revenue. LED products made up 48% of the company’s revenue, or around $433 million.

The sale sent shares of of Cree higher, ending the day up 3.8% to $73.93 per share.

Before Lowe joined Cree, the company had tried to sell its semiconductor business. But the deal for the German firm Infineon to buy Cree’s Wolfspeed subsidiary was quashed because it was unlikely to be approved by the Committee on Foreign Investment in the United States.

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Longtime company leader Chuck Swoboda left the company not long after that deal fell through.

Since then, however, the company has doubled down on semiconductors, including buying a key part of Infineon’s chip business for about $430 million.

“We are fully focused on semiconductors right now,” Lowe said last year.

The deal to sell its LED business will need regulatory approvals. But Cree said it expects to close the sale next year.

Mark Adams, the CEO of SMART, said the purchase of Cree’s LED business will bring much needed diversity to his firm.

“We see a meaningful opportunity to expand our business into specialty lighting,” he said in a statement.

©2020 The News & Observer (Raleigh, N.C.)