Presentation and panel discussion from 2010 LED Forum, Guangzhou, China, June 2010

1. LED Lighting Market Strategies Under New U.S. Energy Policies Mark McClear mark_mcclear@cree.com June 11, 2010

2. Disclosure: Forward-Looking Statements This presentation includes forward-looking statements about Cree’s business outlook, future financial results, product markets, plans and objectives for future operations, and product development programs and goals. These statements are subject to risks and uncertainties, both known and unknown, that may cause actual results to differ materially, as discussed in our most recent annual and quarterly reports filed with the SEC. Important factors that could cause actual results to differ materially include current uncertainty in global market conditions that could negatively affect product demand, collectability of receivables and other related matters; our ability to successfully develop new products; our ability to lower costs; increasing price competition; the complexity of our manufacturing processes and the risk of production delays and higher than expected costs; risks associated with the ramp-up of production for new and existing products; the rapid pace of technology development that could affect demand; and the difficulty of estimating future market demand for our products. The forward-looking statements in this presentation were based on management’s analysis of information available at the time the presentation was prepared and on assumptions deemed reasonable by management. Our industry and business are constantly evolving, and Cree assumes no duty to update such forward-looking statements to reflect subsequent developments.

3. Outline Introduction U.S. Energy policies/organizations EISA 2007 U.S. Department of Energy Programs U.S. EPA Energy Star NGO Programs Government & NGO Rebates Impact & Strategies Summary

4. Lighting Used To Be A Lot Easier… Used a lot of energy, but… Color was perfect, never changed CRI was perfect, nobody ever questioned it Price was very low When it burned out, you threw it away…

5. Then Things Began To Get Complicated… Saved some energy, but… First CFLs (1990’s) had poor color… …buzzed …flickered …did not start instantly …would not dim Cost >10x standard Contained >5mg of mercury

6. LEDs to the Rescue? Poor Application Poor Implementation Poor Optical Control Poor Thermal Design What WhereThey Thinking…? Poor Quality LEDs

7. LED Marketing… 150 lm 240 lm Cree does not even make MR16 lamps!!! Cree MR16 volume in 2009: 0

9. Easy Installation Using Existing Socket

10. LED Operating Life: 50,000+ hrs (5.7+ years)

11. Solid-State, Fast Turn On, No Power Surge

12. High Shock / Vibration Resistant

13. Major Power Savings

14. Reduces Light Pollution

15. Voltages Available 12/14V, 24/28V, 120VAC, 240VAC

16. Major Reduction in Heat Generation

17. Wide choice of colors & infrared

18. Moisture resistant LEDs Cure Wrinkles!! LM-80 is undefined for 5mm LED lamps!!

19. The Consumer is Confused… “…I know this one saves energy, but… Will I like the color? Will my face, food, fabric look natural? Will it buzz or flicker like the old ones? Is it worth the extra cost? Will it hurt my family? Are LEDs any better? How can I know?”

20. Au n-con n-GaN InGaN MQW p-GaN Bond metal Mirror Si Au-Sn p-con …And the Consumer is Never Going to Understand the Technology…

21. The U.S. Government is Here to Help: EISA 2007 Energy Independence and Security Act of 2007 Eliminates the manufacture of >150W to <500W probe-start metal halide magnetic ballasted fixtures starting in 2009 Severely restricts the manufactureor import of most common general-service incandescent lamps beginning 2012 (exemptions apply), and Establishes incentivesto develop an LED product that can replace the 60W incandescent These Power Utilities Will Support L-Prize

22. U.S. Department of Energy Programs

23. Original U.S. EPA Energy Star Program Household appliances Computer systems, servers Exclusively focused on energy savings

24. Energy Star for Integral Lamps Minimum efficacy: 50/55 LPW (<10W/≥10W) Minimum lumens: Varies by thermallystabilized “wattage equivalent” Minimum CRI: 75, R9 > 0 Lumen Maintenance (L70): 25,000 hours CCT: 2700 K, 3000 K, 3500 K, or 4000 K Duv tolerances: per ANSI C78.377-2008 Power Factor: >0.7 for lamps ≥5W Intensity distribution: Less than 80% of total flux in the 0° to 60° zone and at least 20% of total flux above 90° Dimming NOT required (very desired) Must provide: IES LM-79-2008, sec 10 goniophotometer report IES LM-80-2008 report on LEDs used Restrictions on “product equivalency” marketing claims, must use “Lighting Facts” label Warranty: 3-years Wattage Equivalent Lumens

25. NGOs Helping Also… Education Product screening/recommendation Market development

26. Government & Power Company Rebates Utilities, Power Agencies and State Wide Programs Rebates can range from $15 per fixture to $50 per fixture Requirements by the state utility commissions to reduce peak demand and consumption in the residential, commercial and industrial sectors PGE, PECO, First Energy, Efficiency Vermont, Clean Energy NJ, NYSERDA , etc.

27. Impact of Energy Programs on LED Business – #1 Drive Performance and Cost Roadmaps US Department of Energy 2010 Multi-Year Plan for SSL

28. Cree Performance Roadmap 186 LPW 208 LPW Theoretical maximum for LED 161 LPW R&D Capability 131 LPW 3 yrs XP-G CW Lumens/watt XP-E HID High Volume Production XR-E Fluorescent XR-E CFL LED Incandescent

29. XLamp® XM-L LED 5.0 mm XM-L 5.0 mm XP-G XP-E XLamp XM-L XLamp XP-E Revolutionary flux & efficacy: Up to 160 lm, 160 LPW @ 350 mA Up to 750 lm, 110 LPW @ 2A Typical Targets : 145 lm @350mA ; 675 lm @2A Proven design similar to XP: Lighting-Class, small optical source size ~2ºC/W RTH, isolated thermal pad Vf= ~2.9 @ 350mA Timeline: June 2010: Engineering samples, Preliminary Datasheet, Optical Model Late 3Q 2010: Commercial availability XM-L XP-G XP-E

31. 100’s of Millions of XLamp power die

33. Minimum lumens: Varies by thermallystabilized “wattage equivalent”

34. Minimum CRI: 75, R9 > 0

35. Lumen Maintenance (L70): 25,000 hours

36. CCT: 2700 K, 3000 K, 3500 K, or 4000 K

37. Duv tolerances: per ANSI C78.377-2008

38. Power Factor: >0.7 for lamps ≥5W

39. Intensity distribution:

40. Less than 80% of total flux in the 0° to 60° zone and at least 20% of total flux above 90°

41. Dimming NOT required (very desired)

42. Must provide:

43. IES LM-79-2008, sec 10 goniophotometer report

44. IES LM-80-2008 report on LEDs used

45. Restrictions on “product equivalency” marketing claims, must use “Lighting Facts” label

46. Warranty: 3-yearsWattage Equivalent Lumens

47. Impact of Energy Programs on LED Business – #3 Drive Standards IES-LM-80-08 IES-LM-79-08 ANSI C78.377-2008

48. Impact on Binning… ANSI C78.377-2008 3000K Quadrangle 2007 2006 2010 2009 Prediction

50. EZBright chips used in the XLamp component family

52. Impact of Energy Programs on LED Business – #6 Market Acceleration Global High Brightness LED for General Illumination Market $4.5 $4.0 2007 Lighting Forecast* 2008 Lighting Forecast* $3.5 2009 Lighting Forecast* $3.0 2010 Lighting Forecast* $USD, Billions $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 * Strategies Unlimited

53. Summary U.S. Government and non-government energy programs have had a very positive impact on the Solid State Lighting market Specifically, these programs have helped drive: …Performance and cost roadmaps …Awareness and necessity for quality in SSL …Standards creation and implementation …Break-through product developments …Education and shaping of purchase behaviors The result has been measureable market acceleration, and Real Energy avings