iSuppli: LED solid state lighting will enter a new expansion period

iSuppli believes that the 2009 holiday season has become an LED debut event for general lighting, which will pave the way for double-digit growth in sales in 2009 and doubling in 2013.

Many retailers around the world are actively promoting Led Lights for indoor and outdoor Decorative Lighting. At the same time, screw-head LED lights used to replace traditional light bulbs are also beginning to appear on the shelves of these businesses.

The LED industry is about to enter a new expansion period, and will grow at a double-digit rate of more than 15% in the next three years. This growth will result from more high-brightness (HB) and high-throughput LEDs entering a new generation of next-generation lighting applications. High-throughput LEDs are also known as high-power or ultra-high-brightness (UHB) LEDs.

In 2009, global LED operating revenue will increase by 10.9%, from $6.7 billion in 2009 to $7.4 billion. This is in stark contrast to the overall semiconductor market, which is expected to shrink by 12.4% in 2009 due to the global economic slowdown. By 2013, the global LED market will reach $14.3 billion, nearly double the growth in 2009.

LED Lighting

In addition to general lighting, LEDs are increasingly the preferred source of light for a variety of existing lighting applications and are an important factor driving the rapid growth of the market. These lighting applications include automotive, transportation and street lighting, as well as small LCD displays and keyboard backlights in products such as cell phones, personal navigation devices, digital photo frames and cameras. The market has also benefited from the emergence of new applications such as large-size LCD backlights for televisions, laptops and PC monitors, as well as personal lighting.

LED aiming at large size LCD backlight

A key application growth market for high-brightness and high-throughput LEDs will be the backlighting of large-size LCDs in flat-panel LCD TVs, notebook computers and notebook computers. LEDs quickly became the backlight for notebook LCDs, and TV LCDs are increasingly using LED backlights, which surprised the industry this year.

These emerging applications have led to a surge in demand for LEDs, insufficient manufacturing capacity, and a slowdown in the average selling price of white high-brightness LEDs. This is because, although the market is still in the early stages of development, LCDs in notebook computers and large TVs consume significantly more LEDs than mobile phones and camera monitors. Televisions and laptops also require LEDs to have higher quality in terms of luminous intensity and spectral uniformity.

Several major TV OEMs, including Sony, Sharp, Panasonic and Vizio, have already or are preparing to launch LCD TVs with LED backlights in the second half of 2009. Prior to this, Samsung Electronics' Luxia series of ultra-thin LED TVs were successful in the United States, South Korea, China, Europe and India. In addition, netbooks and notebooks from all major PC manufacturers began to transition from cold cathode fluorescent lamps (CCFLs) to LED backlights.

Solid state general lighting debut

In addition, LEDs are now beginning to penetrate the general lighting market for residential and office buildings. This is in line with the forecast made by iSuppli in 2007. Although the retail price of LED bulbs is still an order of magnitude more expensive than traditional incandescent lamps, customers are increasingly recognizing the energy savings and long life benefits of solid-state LED lamps.

According to forecasts, the solid-state lighting market for high-brightness and high-throughput LEDs will grow faster than the overall LED market by 2013. By 2013, the operating revenue of the standard brightness LED traditional market will drop by about 2.5%, while the high-brightness LED market will grow by 6.7% to about $5.4 billion. The high-throughput LED market will grow by nearly 53% to approximately $7.8 billion.

The illustration shows iSuppli's forecast for the global market for standard brightness, high brightness and high power through-hole mounting, placement and display LED lights.

The main features of today's LED market

In 2009, there were several prominent trends in the solid-state lighting industry.

First, the price erosion of blue and white high-brightness LEDs has slowed down. In the first half of 2009, due to the faster-than-expected increase in the demand for LEDs for notebook computers and TV LCD backlights, LED supply faced the dilemma of insufficient capacity from time to time. In some cases, the spot price of white high-brightness LEDs has actually increased. iSuppli believes that the average selling price of LEDs used in mobile phones and other small LCD displays will slow down in the next two years as LED suppliers focus on higher-margin applications such as TVs and notebooks.

Second, the need to expand production to ease capacity constraints is growing. iSuppli estimates that total LED consumption will reach approximately 68.7 billion in 2009 and will rise to 124.4 billion in 2013.

The current annual production capacity of the LED industry is about 7.5 billion, which means that the capacity utilization rate of many LED manufacturers is now close to 100%. This also means that although the current capacity can meet short-term demand, the expected growth of the LED market will lead to severe supply shortages in 2010, unless new capacity is put into production every year for the next four years.

Third, patent issues related to LED manufacturing technology are still important, but the increased cross-licensing phenomenon has alleviated concerns that manufacturers fear intellectual property (IP) infringement. Major IP holders in many LED industries, such as Nichia, Cree and OSRAM, have signed cross-licensing agreements with each other and have licensed phosphor technology to Taiwan LED manufacturers. This creates a very complex network of global intellectual property agreements.

Fourth, Taiwan continues to be an important player in the global LED industry. With a well-established LED supply chain and strong manufacturing positions in many emerging LED end market applications, such as notebook computers and LCD TV panels, Taiwan is now the second largest LED manufacturing destination, second only to Japan.

Fifth, there has been tremendous progress in improving LED output efficiency. By improving packaging and material handling technologies, LED manufacturers continue to improve the performance of packaged LED sources.

LED: the future of general lighting

The development of high-throughput LED bulbs with luminous efficiencies exceeding 100 lumens per watt, as well as innovative designs that allow LEDs to use alternating current without the need for inverters, are driving LEDs closer to being used by the mainstream general lighting market.

LEDs have been used in a variety of indoor and outdoor decorative lighting applications, and have just begun to focus on the general lighting market for homes and businesses. In addition to the performance advantages of solid-state lighting, legislation around the world to ban the use of incandescent lamps and promote energy-saving, will promote LED quickly become the mainstream general lighting products.

Even in the near term, the advantages of solid-state lighting have begun to cover the cost difference between LEDs and compact fluorescent bulbs (CFLs). As LED performance continues to improve, the cost gap will continue to shrink.

iSuppli predicts that LED bulbs will really enter the residential and corporate general lighting market in 2010. There is no doubt that the long-term future of general lighting lies in LEDs. The market is expanding and it is worth investing in innovative design and creative solutions. (Source: EDN CHINA)

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