Penguin Solutions sells flat-growing Cree LED to Transom to double down on AI
What's the deal? Penguin Solutions has agreed to sell its Cree LED business to Transom Capital GroupDealroom has a profile for this one. Try Dealroom →, a Los Angeles-based private equity firm, in an all-cash deal. The price was not disclosed. The transaction is expected to close in the first calendar quarter of 2027, subject to customary conditions.
What each side does: Cree LED makes LED chips and components for lighting, displays, and specialty applications, selling to luminaire manufacturers. Penguin (Nasdaq: PENG), formerly SMART Global Holdings, now bills itself as an AI infrastructure and memory company.
Why now? The sale continues a clear portfolio shift. Penguin exited its remaining stake in a Brazilian memory-module business in March 2026, and is now shedding Cree LED to concentrate on data-centre AI infrastructure and memory.
The numbers: Penguin's fiscal 2026 sales rose 26% to $1.73 billion, driven by memory. Cree LED, by contrast, has been broadly flat for years — around $248.7 million in fiscal 2026, roughly where it sat in 2023. It accounts for about 10% of projected fiscal 2027 net sales, a share management expects the divestiture to trim.
What changes? Cree LED will operate as a standalone business under Transom, which specialises in corporate carve-outs and operational turnarounds. Its portfolio includes Bose Professional and SigmaTron InternationalDealroom has a profile for this one. Try Dealroom →, but no prior LED or semiconductor holdings.
"We see significant opportunity to build on this foundation... to position Cree LED for long-term success as a standalone company," said Conor Davenport, a managing director at Transom.
The signal: Penguin is cutting loose a stable but stagnant business to chase faster AI-driven growth; its fiscal 2027 outlook implies roughly 40% revenue growth. The move sharpens the strategic contrast between legacy components and surging demand for AI data-centre infrastructure.
Read more: marketscreener.com
Image credit: Generated with Gemini
