Are LEDs Cool?

The LED market is complex. So where are we in the LED market today?

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The high-brightness LED market is moving in several directions at once. On one front, LEDs are moving into automotive and solid-state lighting. Within solid-state lighting, there are different markets, such as industrial and residential. And in the supply chain, there are LED chips, equipment and fabs.

And then, there is intelligent lighting, where the smartphone or tablet controls the lighting and other functions in the home. In this case, LED vendors are trying to transform home lighting from a rather mundane topic into something cool. Are lighting–and LEDs–cool or not?

To be sure, LEDs are a complex market. So where are we in the LED market today? In total, the LED component market, which represents packaged LEDs, is expected to grow from $14 billion in 2013 to over $15 billion in 2014, according to Strategies Unlimited, a research firm.

“In terms of all applications, there is a saturation in the display market like TVs, cell phones, notebooks, monitors and tablets,” said Stephanie Pruitt, LED analyst at Strategies Unlimited. “Most of these products are now 100% LED lit, or will be in the next year or two. Automotive is definitely on the upswing. More cars will have interior and exterior LED lighting. And LEDs have only started to chip away at the massive market, which is general lighting.”

Indeed, solid-state lighting appears to be the next big thing in the LED market, but the technology is still in its infancy, added Philip Smallwood, director of research for LEDs and lighting at Strategies Unlimited. “In the residential sector alone, there is an average of 52 sockets per household. There are 133 million homes in the U.S. That’s adds up to billions of sockets out there. LED lamps have not penetrated more than 1% or 2% of the sockets for residential applications,” Smallwood said.

Today, there are two basic metrics for LEDs–lumens per dollar and lumens per watt. Light bulb efficiency is measured in terms of lumens per watt. The cost factor is lumens per dollar.

So what’s the big issue with LEDs? Clearly, it’s cost. “The lumens-per-watt was a big deal before. If you look at the light bulbs, they are about a maximum of 100 lumens per watt for the lamps out there. Cree has reached 240 lumens per watt in the lab. We already see 200 lumens per watt for some LEDs in the market,” Smallwood said. “Now, lumens per dollar is the big push. These LEDs are bright enough. What we really need to do is to reduce the cost of the final product and the final LED.”

On average, LED bulb prices have fallen to $8 or so today, from $40 to $50 two to three years ago. Some say the prices are still too high for consumers. Is there a magic price point that consumers are looking for in LED bulbs? “A couple of years ago, everyone was saying it has to get below $10,” Pruitt said. “Now, everyone says it has to get below $5 before everyone starts to adopt it.”

The outdoor market for LEDs is also picking up, but cost is still an issue. For example, in the United States, the largest installation for LED-based street lights is located in Los Angeles. The city has installed more than 140,000 LED-based street lights within the last four years. For that installation, the price of an LED-based street light has fallen from more than $400 to around $200 today, according to Shonika Vijay, luminaire analyst at Strategies Unlimited.

What’s next in LEDs? There is a lot of buzz about home automation and intelligent lighting. The smartphone or tablet can control the lighting and other functions in the home. Philips, Samsung and others are making a big push in the so-called intelligent lighting arena. “That’s what companies are trying to do. They are trying to make lighting cool. It’s unclear if it will work or not right now. It depends on the cost, ease of use and the actual integration process,” Smallwood added.