Thomas Jefferson fancied himself an inventor and innovator, and he wasn't bad with a quote.

Here's one: "I have sworn upon the altar of God eternal hostility against every form of tyranny over the mind of man."

Jefferson, who had to write by candlelight, might appreciate how the citation is displayed today carved in a band under the dome of his memorial in Washington and illuminated with energy-efficient light-emitting diodes manufactured in a high-tech clean room in Durham.

About 58% of Cree'ís revenue in the fiscal year ended June 2002 came from LEDs. But there's more to Cree than light, though describing some of its products is about as easy as catching beams from an LED.

For one thing, the mix is changing, testimony to the company's commitment to research and development. Cree expects 70% of this year's sales to come from products it developed or invented in 2002.

While the new products include LEDs, Cree also develops and makes devices from its patented process for fabricating semiconductor wafers from silicon carbide and gallium nitride.

And Cree is working on new LEDs that will be bright enough to compete with light bulbs.

What sets Cree apart from many research-oriented companies is its unflinching focus on the bottom line.

Its research engineers work beside production workers, doing double duty finding ways to squeeze costs and increase efficiency. "We are a company that understands how to take fairly immature technology and put it into high volume and make money at it," President and CEO Chuck Swoboda says.

"If you think about it, traditional manufacturing companies aren't considered very innovative. R&D companies aren't very good at making things and making money at it.

All of which are reasons why Cree is Business North Carolinaís High-Tech Company of the Year, presented by the magazine and KPMG LLP. At a time when slow sales, layoffs and cutbacks are the norm for high-tech companies, Cree got through the 2001-2002 slump without reducing employment and, though it lost money last fiscal year, it has surged back.

In its second quarter, which ended in December, it grossed .7 million, a 16% increase over the same period a year earlier, and netted nearly million.

For its first half, it grossed .5 million, up 25%, and netted .9 million ó compared with a million loss for the same period the previous year.

"They seem to have weathered the storm well," says Jim Nichols, one of four judges and until recently the N.C. Commerce Department's manager of electronics and information-technology development.

Jeff Reid, executive director of the Center for Entrepreneurship and Technology Venturing at UNC Chapel Hill, notes, "The percentage growth they had was phenomenal at a time when most high-tech is not doing well at all.

I believe their technological innovation has been a key to their success. They keep producing a product that companies want to buy."

"They're a technology leader and have shown a commitment to that by reinvesting a significant percentage of their revenue back into research and development," says Jim Davis, senior vice president and chief marketing officer of Cary-based SAS Institute, last year's winner.

"Their innovation, backed by a solid vision, has transitioned them from pioneer to industry leader." Adds David Kinney, the fourth judge and BNC editor-in-chief and publisher: "Not only that, but a world leader born in our own back yard."î

The judges selected Cree from the annual ranking of top tech companies that KPMG compiles. "This has been a difficult year for many businesses, technology companies included," says Brad Hurrell, the partner in charge of the the list, which Cree capped.

After all, the tale of how Neil Hunter, his brother Eric and a trio of scientists from N.C. State University turned a scientific breakthrough into a manufacturing company already is legendary in Tar Heel tech circles.

Neal Hunter was a 25-year-old engineering graduate working in his first real job as an equipment salesman when he teamed with his brother, Eric (also a State engineering grad), to put scientific research they had encountered at the school into production.

They recruited three scientists from N.C. State who had figured out a way to successfully fabricate silicon carbide wafers, which must be produced at temperatures above 3,500 degrees ó heat so searing that controlling impurities and defects is nearly impossible.

Even microscopic defects or impurities ruin semiconductor wafers. In many ways, silicon carbide is considered a superior material for semiconductor uses than plain silicon because it can withstand higher temperatures and operate at higher power.

In 1987, with patent licenses from State for the new silicon carbide techniques, Hunter and his brother maxed out their credit cards and took out second mortgages to raise about 10,000 for the startup.

"It just seemed like the thing to do," Hunter says. Yet, "there was always at least one person on the team saying, 'We can't do this. This is nuts.'

Fifteen years later, the company has about 1,000 employees and its stock, even after the economic slowdown, has a market value of more than billion.

Cree has managed to grow without taking on debt, financing its expansion with a combination of stock offerings and reinvestment of earnings.

"Cree has always been cash-flow positive," says Jim Reed Jr., an analyst with Reed Global Advisors in Bellevue, Wash. "They have been smart with their money."

Lately, Cree has been cashing in on the wave of new hand-held wireless devices that use LEDs for their miniature monitors. While most of the telecommunications industry is struggling, the one thing that is selling briskly is the mobile telephone with a tiny color monitor ó a device that uses LEDs.

Ram Kasargod, analyst with Morgan Keegan & Co. Inc. in Memphis, says one of Creeís greatest achievements has been to prove that it can go toe-to-toe with Asian manufacturers and come out the winner in a commodity market. Cree's fiercest competitor for LED sales is Japan's Nichia Corp.

And there are more coming. ìOne of the concerns is, can competition from Southeast Asia impact Cree?î

Just how competitive and tough are Cree and its boyish-looking, 36-year-old CEO?

One of the companies it battles is San Jose, Calif.-based Lumeleds Lighting, which has as its director of sales and marketing one Mark Swoboda, who helped his younger brother land his first high-tech job at Hewlett-Packard, which later spawned Lumeleds.

Chuck Swoboda is repaying the favor by trying to snatch away Lumeledsí business. ìItís a good, healthy sibling rivalry,î he says. ìOf course, I want to be winning.î

Mark Swoboda, the only other boy among six siblings, is a decade older and recalls his younger brother constantly hanging around and wanting to emulate him.

Their demanding father, the sales manager of a plumbing-and heating-supply company, stressed the importance of education and achievement and let the younger kids know each was supposed to try to surpass the one who came before.

"Our dad was always about taking responsibility,î Mark Swoboda says. ìBut he did it in a subtle way, always wanting us to take on more responsibility and be goal-driven. Thatís what started it all.î

Their house in the Chicago suburb of Waukegan sat on an acre lot, and when mowing the lawn fell to Chuck, he quickly came to understand that he had to cut the grass precisely the way his old man wanted.

His brother recalls Chuck finishing the job, deciding it wasnít quite right and running the mower over the whole thing again.

The real push for achievement came in local schools, where Chuck was the fifth Swoboda to pass through. ìJust about every teacher I ever had had always had one of my brothers or sisters before me, and they always told me how good they were.

It was always a goal to do better. There was that natural inborn rivalry of a family unit.î

Mark Swoboda was the first in the family to get a college degree. When it came his turn, Chuck followed Markís path to the engineering program at Marquette University in Milwaukee.

He was still working on his bachelor's in electrical engineering when the Hunters founded Cree. After graduating in 1989, he again trailed Mark, this time to Hewlett-Packard in San Jose, Calif., where he was hired to do marketing with an emphasis on engineering.

His little brother, Mark recalls, quickly established himself as not just bright and driven but someone who delighted in taking risks and doggedly pushed new concepts and products. One that he stumbled upon was a new way to use LEDs in mobile telephones.

He managed to get Motorola interested, which led to the first generation of its flip phones with an alphanumeric display. ìIt was a custom product and it was high-risk,î Mark recalls, ìbut the return was very good for H-P.î

In 1993, Cree went shopping for a product manager to run its blue LED production. When it hired Swoboda, the company had about 30 employees. His workaholic ways and detail-oriented management style complemented Hunter, the self-styled company visionary.

Swoboda was promoted to president and chief operating officer in 1999, taking on much of the day-to-day operations. When the high-tech slump hit in 2001, Hunter stepped aside as CEO in favor of Swoboda.

In high-tech terms, it was a move toward youth and vitality. Swoboda was 33; Hunter, who still serves as executive chairman, was 38.

Under Swoboda, Cree opted to ratchet up R&D spending, from million in 2000 to .2 million in 2002, shifting jobs out of manufacturing and into research instead of cutting the employee head count.

It was an expensive move at a time when Creeís sales slipped along with the rest of the high-tech industry.

In the companyís fiscal 2002, it recorded a net loss of .7 million, following a profitable fiscal 2001, when net earnings totaled .8 million.

But when sales and earnings rebounded in the first half of fiscal 2003, in part due to some of the new products that Creeís researchers had developed, Swoboda got instant vindication.

The companyís performance even converted skeptics such as Reid, the analyst. ìI had a sell rating on the company for a long time.

I thought they were way overvalued. Then, in these last two quarters, they really hit their stride. I am becoming more of a believer.î

Still, Cree continues to operate in a very narrow market, which makes it vulnerable if something happens to one of its customers.

In 2002, 64% of revenue (excluding government contracts) came from five customers who primarily buy its LEDs. That percentage is likely to increase.

On April 1, Cree announced that one of its big five, Japanís Sumitomo Corp., had agreed to buy million of Cree LEDs through June 2004. It is Creeís largest deal ever ómore than four times what Sumitomo purchased in the 2002 fiscal year.

Swoboda understands that the companyís long-term health depends on broadening its customer and product base, which means finding another high-tech hit in its group of newer products.

He likes each of the emerging products ó the DVD laser, the amplifiers and the rest ó and ticks off, like some sort of marketing mantra, the advantages each can offer customers: more efficiency, higher capacity, lower costs.

But the key to the companyís growth might well lie in that subdued lighting found in the Jefferson Memorial, which only hints at the potential for LEDs in general-purpose lighting ó a -billion-a-year market.

Much of todayís lighting still uses the incandescent bulbs that Thomas Edison invented more than a century ago. LEDs use far less energy, put out less heat and last longer. The trick is to find ways to make them bright and cheap enough for general use and to sell homeowners and businesses on installing LED fixtures.

Analysts agree that a major shift may be coming and that Cree is one of the companies that will be battling to be a leader in that change.

Thereís no guarantee, of course, that LEDs will be the technology that takes over. But if Creeís gambit succeeds anything like that of the original blue and green LEDs that launched the company, the potential payoff is vast.

Millions, even billions, of dollars of new business is what Swoboda is hoping for. After all, making money out of research is what Cree has always been about. "I think what the founders of this company understood was that the only reason to work this hard at something is if you turn it into a real business."

Those words might have sounded strange coming from Jefferson, who delighted in dabbling and died deep in debt, but they serve as a guiding light for Cree.