The 2009 holiday season has turned into the coming-out party for the use of LEDs for general illumination, paving the way for double-digit sales growth in 2009 and a near doubling in market revenue by 2013, according to iSuppli Corp.
Multiple retailers around the world are actively promoting LED lights for indoor and outdoor decorative illumination applications. Meanwhile, LED lights with the Edison sockets used for replacing conventional light bulbs are starting to appear on the shelves of many of these same stores.
The LED industry is on the threshold of a new expansion phase—a phase that will be characterized by growth rates in the high double digits during the next three years. This growth will be driven by the increased adoption of High Brightness (HB) and high flux—also referred to as high power or Ultra High brightness (UHB)—LEDs into a new range of next-generation lighting applications.
Global LED revenue will expand by 10.9 percent in 2009 to reach $7.4 billion, up from $6.7 billion in 2009. This comes in stark contrast to the overall semiconductor market, which is expected to contract by 12.4 percent in 2009 because of the slowdown in the global economy.
By 2013, the global LED market will reach $14.3 billion, nearly double from 2009.
Beyond general illumination, this growth is being driven by the rising penetration of LEDs as the lighting source of choice for myriads of existing lighting applications, including automotive, traffic and street lighting, the backlighting of small LCD displays and keypads in mobile handsets, personal navigation devices, digital picture frames and cameras. The market also is being aided by the emergence of new applications, such as backlighting of large-sized LCDs in televisions, notebooks and computer monitors and personal illumination.
LEDs Targeting Larger-Sized LCD Backlighting
A key application growth market for HB and high-flux LEDs will be the backlighting of large-sized LCDs in flat-screen LCD-TVs, notebook laptops and computer monitors. The rapid adoption of LEDs for the backlighting of LCD displays in notebooks and the increasing use of LEDs for backlighting of LCD displays in televisions have taken the industry by surprise this year.
These emerging applications have resulted in a surge in demand for LEDs, constraints in manufacturing capacity and a slowdown in the Average Selling Price (ASP) erosion for white HB LEDs. This is because although the market is still in its early stages of development, LCDs in notebooks and large-sized televisions consume significantly more LEDs than displays in handsets and cameras. Televisions and notebooks also demand higher-quality devices in terms of luminous intensity and spectral uniformity.
Several major television OEMs, including Sony, Sharp, Panasonic and Vizio, have introduced or are poised to unveil LCD TVs with LED backlights in the second half of 2009. This follows the immensely successful launch by Samsung Electronics of its new Luxia series of ultra-slim LED-TVs in the United States, South Korea, China, Europe and India. Furthermore, all of the major PC manufacturers are transitioning their netbook and notebook products from Cold Cathode Fluorescent Lamps (CCFLs) to LED backlights.
Solid State General Illumination is Here
In addition, as predicted by iSuppli in 2007, LEDs now have started to penetrate the general illumination market for residential dwellings and enterprise offices. And while the retail prices for LED light bulbs are still about an order of magnitude higher than those traditional incandescent lamps, customers increasingly are becoming aware of the power savings and long life benefits of solid-state LED lights.
As expected, the solid-state lighting market for HB and high-flux device will outpace the overall LED market growth through the year 2013. Through 2013, revenue generated by the traditional market for standard-brightness
LEDs will decline by about 2.5 percent, while the market for HB LEDs will grow by 6.7 percent to approximately $5.4 billion. The market for high-flux LEDs grew by almost 53 percent to reach $7.8 billion.
Key Characteristics of Today’s LED Market
In 2009, the solid-state lighting industry is now characterized by several trends. First, there has been a slowdown in the erosion in pricing of blue and white HB LEDs. In the first half of 2009, there were periodic capacity constraints in the LED supply base, driven by the faster-than-expected increase in unit demand for LEDs used for the backlighting for LCDs in notebooks and televisions. In some instances, spot pricing for white HB LEDs actually increased. iSuppli believes that ASP erosion for LEDs used in handsets and other small LCD displays will slow down during the next two years as LED suppliers target higher-margin applications in LCD-TVs and notebooks.
Second, there’s a growing need for increased capacity to ease the developing capacity constraints. iSuppli estimates that in 2009 the total consumption of LEDs will amount to approximately 68.7 billion units, rising to 124.4 billion units in 2013.
Current annual capacity of the LED industry is approximately 75 billion units, which implies that many LED manufacturers now are operating at close to 100 percent utilization rates. This also implies that while current capacity can meet near-term demand, the forecasted growth in the LED market will lead to a drastic undersupply situation in 2010 unless additional capacity is brought on line during each of the next four years.
Third, patent issues with regard to LED manufacturing technologies remain important; but concerns of Intellectual Property (IP) infringement are being alleviated by increased cross licensing. Many of the LED industry IP leaders such as Nichia, Cree and Osram have entered into cross-licensing agreements with on another and also have licensed phosphor technology to Taiwanese LED makers. This has resulted in a very complicated global network of IP agreements.
Fourth, Taiwan is continuing to emerge as an important player in the global LED industry. With a well-established LED supply chain and a dominant manufacturing industry for many emerging end-market applications for LEDs, such as notebook and LCD TV panels, Taiwan now has become the second largest manufacturer of LEDs after Japan. Fifth, tremendous advances continue to be made in improving the output efficiency of LEDs. With improved packaging and material processing technologies, LED manufacturers continue to push the capabilities of packaged LED light sources.
LEDs: The Future of General Illumination
The development of high-flux LED light bulbs with luminous efficacy exceeding 100 lumens per watt, and innovative designs that allow LEDs to run on AC current without the need for an inverter, are pushing LEDs closer to being adopted in the mainstream general illumination market.
LEDs already are being used in various indoor and outdoor decorative illumination applications and are just starting to target the market for general lighting in homes and enterprises. In addition to the performance advantages offered by solid-state lighting, legislation around the world increasingly seeking to ban the use of incandescent light in favor of more energy-efficient light sources will push LEDs rapidly into the mainstream of general illumination.
Even in the near term, the advantages of solid-state lighting are beginning to outweigh the cost differential between LEDs and Compact Fluorescent Light Bulbs (CFLs). And as progress is made in LED performance, the cost differential will continue to narrow.
iSuppli projects that LED light bulbs will address the residential and enterprise general illumination market in earnest in 2010. Without a doubt the long-term future of general illumination is LEDs. The market is expanding and investments in innovative designs and creative solutions are worthwhile.
Read More, Solid State Lighting: Backlit-LCD TVs and General Illumination Brighten LED Market >