24 Mar 2009
Despite economic conditions, the company remains confident about growth prospects in several markets.
The current economic downturn is taking its toll in many manufacturing sectors, and it is easy for any company caught up in the turmoil to fall into the traps of negativity and introspection. Lumileds, however, is certainly not suffering from these afflictions. The San Jose chipmaker believes that its LEDs have a dominant, unshakeable position in automotive lighting and cell phone flash lights, and will capture a significant share of the emerging general lighting business.
It should be no surprise to anyone that it is the last market that excites Lumileds the most. "Two or three years ago I was saying 'If we can get a certain breakthrough, then general illumination will happen,' " said Lumileds' chief technology officer, George Craford. "I don't say that anymore. It is going to happen - it's only a question of when."
Craford and his colleague Steve Landau, director of marketing communication, both believe that LEDs have now passed the tipping point for initial adoption into mainstream lighting. "Companies around the world have been designing products over the last 12 months," said Landau, "and all that work isn't going to just sit on the shelves."
A new administration
The arrival of the Obama administration may also help to spur LED sales in this sector. "There's a new energy secretary and a new focus on energy efficiency as the only really effective way of addressing consumption," explained Landau. He expects that solid-state lighting will be touted as an option for reducing energy consumption. "How our government chooses to address that may be very different from the past."
Other countries, such as South Korea and China, have been looking more seriously at their ways to cut energy consumption for some time. Many people view switching to greater use of LEDs as part of the solution, and shipments to these countries have great potential for growth over the next few years. The financial rewards for even a tiny share of the lighting market are huge, but success will require a detailed understanding of the customer's needs.
"There are literally thousands of applications and hundreds of segments around the world," said Landau. The specific needs of the end user, such as the LED's color temperature and rendering index, vary with culture, geographical location and the particular application.
For example, reliable LEDs with a long lifetime are needed for street lighting, while a high light output is the key priority for torches and portable lighting. "They are very different needs, so we invest in technology innovation, research and development, and bringing the inputs back from the market to shape our products," said Landau.
Turning off displays
Lumileds' interest in displays has declined. "In the past you have heard us talk about displays," said Landau, "but it is not a primary focus of ours at this point. The market has clearly spoken about where they see the value for innovation and new products, and it really is in the lighting illumination segments."
Although white emitters are clearly Lumileds' focus for general lighting, the Californian company actually produces higher volumes of AlGaInP-based red and orange LEDs, which are predominantly deployed in the automobile sector. According to Landau, the SnapLED and SuperFlux mid-power products have positioned Lumileds as the world's dominant provider of LEDs for rear-combination lamps and center high-mount stop lamps.
White LEDs are also making an impact. "Over the last few years we have seen increased adoption of Luxeon - Luxeon Rebel, Luxeon K2, and even Luxeon I and Luxeon III - in functions such as back-up lamps, side-marker lamps, license-plate lighting and some interior lighting," said Landau.
Likely changes to European Union law, which will mandate daytime running lights on all motor vehicles built from 2011, should offer further opportunities for Lumileds to increase sales of white LEDs to car makers.
Another market where Lumileds enjoys success is the cell phone. "The flash function in handsets is a space that we have created with the Luxeon Flash LEDs," said Landau. "That continues to be a tremendously powerful sector. We are seeing greater implementation of our Luxeon Flash products at all value points - not just the premier digital imaging handsets - because what is seen in the market is an increasing desire for higher-quality images in low-light environments."
Will silicon muscle in?
The opportunities that exist in the LED industry have even led to speculation that silicon chip manufacturers might enter this market. "There has been some noise about that," said Craford. However, he thinks that silicon chipmakers would find it difficult to make this transition, because compound semiconductor manufacturing is a substantially different process.
"If you compare the square inches that silicon produces in the world with LEDs, it is a vastly different scale of production. Even if you did all of the lighting with LEDs, you would have to do a log plot to get it on the same piece of paper."
If silicon chipmakers agree with Craford and think that a move to LED manufacturing is a jump too big to justify, then Lumileds' competition will continue to come from other established LED makers. And with a dominance of some key markets, and a bright future for the LED industry in general, Lumileds looks set to remain in pole position.