Growth continues in some sectors of the HB LED market
Thanks to continued demand for high brightness LEDs for LCD backlights, smartphones and lighting, the total HB LED market will likely see only a 5% decline this year, according to Strategies Unlimited. And presuming the general economy picks up again in 2010, advanced LEDs should resume their 19% annual growth rate, to reach some $12.4 billion by 2013. “None of the market fundamentals or long term trends have changed,” reported Robert Steele, director of optoelectronics programs, at the recent Strategies in Light conference in Santa Clara.
End demand for HB LEDs remained strong through 2008, with unit growth up 25%, to 48 billion, despite the marked slowdown in 4Q. But sharp price declines held revenue growth to 11%, to $5.1 billion. Sales of the LEDs for handsets, outdoor signage, and automotive lights will slow with the economy this year.
But better LEDs, and better fixtures that use them, propelled 39% growth in the LED lighting market, as the low energy lights began to make economic sense in more outdoor and commercial applications. Steele expected the downturn to slow growth this year, though sales will still likely increase some 17%. Lighting remains about a $450 million small slice of the total HB LED market.
Demand for LED backlights to cut power usage in mobile products other than cell phones jumped 93% in 2008, to something over $500 million. LED backlights reached 12% penetration in laptops, aided by the popularity of netbooks, and unit demand is expected to double in 2009. All the major TV makers now have LED backlight programs, and even a tiny portion of that huge market would be big numbers, but just how well demand will hold up for sets with this more expensive technology in a tight environment remains unclear. Steele noted that his skepticsm about the TV backlight market makes his overall HB LCD forecast more conservative than some others, and excluding displays, he projects a 10% HB LED market decline for 2009.
Insight Media analyst Dale Maunu argued field sequential color technology would soon drive wide adoption of LED backlights in televisions for better picture quality at lower cost, by eliminating the color filter. Instead of the liquid crystals controlling where white light can pass through red, green, or blue filter, the crystals would control when flashing red, green, or blue LED light can pass through a clear film. “Field sequential color is the killer app for LEDs,” said Maunu. “You cut out the color filter and use the savings for the backlight.”
Light bulb and fixture suppliers are making notable improvements in their products and getting more widespread commercial adoption. The Department of Energy recognized 22 of 48 submitted light fixtures this year for their high quality in meeting its stringent performance and reliability criteria, big progress in a sector long plagued by lights that don’t perform or last as advertised.
Finelight reported that intelligent use of LEDs could already be a lower cost alternative for commercial office lighting. CEO Terry Clark said that using LED lights for task lighting, lighting vertical surfaces with wall washing, and reducing the number of overhead T8 fluorescent fixtures cut energy usage by more than 50% a year, without any additional initial cost.—and users much preferred it to standard overhead fluorescents. “We see overwhelming user acceptance,” he noted. “This can change things faster than any other energy technology.”
Densen Cao, president of the CAO Group, claimed hotels who use his candelabra LED replacement bulbs in their chandeliers will get payback within a year or two, despite a higher cost for the bulbs, due to the long hours the fixtures are on and the high costs for changing bulbs. The Marriott in Phoenix and the Broadmore in Palm Springs are both using the bulbs, which do have the color quality of incandescents. CAO mounts its LEDs around a unique cylindrical leadframe, which spreads the light in all directions, and also serves to effectively dissipate the heat. “The key is not the LED,” said Cao, “The key is the heat management.”
Energy savings programs jumpstart the market
Plenty of energy-savings initiatives are also driving demand for LEDs. The Clinton Climate Initiative is promoting adoption of LED lighting to reduce global energy usage in major cities around the world, helping cities with project analysis, negotiation of volume purchase discounts, or facilitation of access to financing, in replacing traffic signals from Lima to London, in replacing street lights from Anchorage to Los Angeles, in replacing indoor lighting from shopping centers in India to the U.S. Pentagon. Los Angeles recently announced that it will convert 140,000 streetlights to LEDS, backed by some statistical modeling on cost savings from the Initiative. The Pentagon plans to install some 4200 LED downlights. “We want you to think of this as a way to increase the size of the total market,” said Michael Cavallo, domain director for lighting for the Initiative. “We’re just helping to accelerate what would happen normally.”
California’s aggressive standards to reduce global warming will soon make the incandescent bulb a niche product, argued Gary Flamm, lighting program lead for the California Energy Commission. In two years, bulbs with the brightness of an incandescent 100W bulb can use no more than 72W, and wattage limits drop yearly from then on. Building permits applied for after August 1 this year must meet new energy efficiency standards. Indoor residential lighting will be reduced by 50% by 2018. Residential new construction must be zero net energy by 2020, and existing homes may have to upgrade when they are sold. “You ain’t seen nothing yet--we have some very aggressive goals [for energy savings] that have been given to us,” he stressed as he outlined the new rules to cut energy consumption. “I think LEDs are poised to enter the market strongly.”
Innovative financing is also speeding adoption of street lights, such as leasing programs paid for from the energy savings, which require no upfront costs—and may even give the city a big rebate check up front. These are big costs and potentially big savings for many cities, noted George Woodbury, director of energy services for the big street lighting service company ITS, citing the $83 million a year Dallas, TX, spends, and the $40 million a year they could probably save by replacing them with LED lamps. He reported on a $1.3 million project to replace the street lights in Newton, MA, that saved the city $750,000 a year, thanks to both energy use and government credits, and the client got some of that in a rebate check up front to start.
China invests in major programs
Another government with ambitious goals for saving energy with LED lighting technology is China, though that country also has big plans to grow a domestic HB-LED industry as well. This year the Chinese government plans new showcase city lighting programs, and significant investment from its economic stimulus program from both national and local governments, said Jun Ruan, vice secretary of the China Solid-State Lighting Alliance. Last year the CSA and others facilitated the $7 million Olympics LED showcase with the Water Cube, Bird’s Nest and opening ceremony displays. “SSL is a key to energy policy and industrial upgrade in China,” he said. “China will become the largest and fastest market in the world.”
Ruan reported the sector produced some $285M worth of LED chips in 2008, with 50 makers using a total of more than 100 MOCVD tools. As many as 1000 packaging companies did $2.8 billion worth of business 2008, up about 10% from 2007. But packaging revenues dropped as much as 30% in Q4 at some firms, leading to closures at some small, lower-end players. Another 2000 firms make some $6.8 billion worth of end products, primarily architectural lighting and displays. And the government seems to be one of the biggest users, with a roster of ambitious projects: installing 100,000 municipal street lights to reduce energy consumption by 30%; replacing 90% of the lights at Harbin Ice and Snow World with LEDs by 2009; building a 15 hectare showcase lit by LEDs for Expo Shanghai in 2010; spending $150 million for showcase outdoor LED lighting in ten cities, including gas stations, parking lots, and tunnels. Another project plans to light new metro lines being built in 20 cities. “This is a huge business opportunity for everyone,” noted Ruan.
Another $50 million from the Ministry of Science and Technology is going into R&D to support development of LED production technology, standards and key applications. Ruan reported the national R&D program has met the short term target of 80 lm/W at 350mA, patented a process for GaN epitaxy on silicon, and developed a MOCVD tool with 6-wafer capacity.
But real cost effectiveness still depends on improving manufacturing
Still, while brightness and efficiency and light quality and quality of fixtures have all made impressively big improvements recently, the LED lights still cost too much to be competitive in many applications, largely because of issues with chip yields, testing and thermal management.
The best possible standard-shape replacement light bulb that could be made with the best available component LED, package and driver electronics on the DOE roadmap three years out would still be only as bright as a 35W-50W incandescent, argued Mark McClear, director of business development at Cree. “We need breakthroughs in packaging, in phosphors, in optical, in thermal,” he said.
Other participants at the conference told SEMI their pain points were insufficient speed and accuracy of testing, or heat management, or control of the epi process across the wafer. The finished chips vary not just by speed like ICs, but by flux (watts) and forward voltage and by dozens of color variations, so finished products must be sorted into literally hundreds of bins for different applications and pricing. One wag noted that 100% yield in this sector meant that all the die could actually be sold for something, and none of them had to be thrown out.
The industry is making progress at better control of its processes, reported Erik Milz, strategic marketing manager, Philips Lumileds Lighting. Conformable coatings and phosphor tiles instead of globbing on the phosphors have made the color shifting by the phosphors much more predictable. Progress on controlling forward voltage means that measure may be reduced from 5-6 bins down to maybe half that number in the near future.