Technical Insight
HB-LEDs: the market drive towards solid-state lighting
Growth in the high-brightness LED market will be fueled increasingly by illumination applications over the next five years as the price/performance characteristics of devices improve. Bob Steele of Strategies Unlimited analyzes the development of the solid-state lighting marketplace.
Rapid advances in high-brightness LED (HB-LED) technology have opened up the possibility of using LEDs as sources of general illumination in the not-too-distant future. Remarkable progress in LED efficiency, lifetime and total lumen output has enabled an early market in niche lighting applications, and has given encouragement to those who believe that LEDs could have a significant impact on the lighting market within the next 10 years.
Reflecting the enthusiasm surrounding this technological progress, national programs to promote and develop LEDs for lighting (generally known as solid-state lighting) are underway in the US, Japan, Taiwan, Korea and China. Because lighting accounts for approximately 20% of total electricity consumption, the main motivation for these programs is large-scale energy savings, along with the associated benefits of reduced oil imports, lower greenhouse gas emissions, and lower energy costs to consumers.
The development and commercialization of solid-state lighting is dependent on a robust HB-LED industry that can generate the revenues and profits to support the R&D required to improve LED performance and lower the costs. Despite a flattening in 2001 due to the worldwide economic slowdown, the history of the HB-LED market shows a CAGR of more than 47% from 1995 through 2002. It reached $1.8 billion in 2002, and is forecast to exceed $2.5 billion in 2003.
Current HB-LED applicationsThe current HB-LED market can be conveniently divided into six major application categories, and associated subcategories. These are given in Table 1 along with figures showing the size of each market in 2002.
As Table 1 shows, the use of HB-LEDs in illumination applications (solid-state lighting) accounted for just 5% of the market ($85 million) in 2002. However, it is one of the fastest-growing applications, and the one that is driving a great deal of the current interest in HB-LED technology.
The current and potential future market for LEDs in lighting applications exists only because LED technology offers real, often quantifiable, benefits in these applications. Whereas LEDs have several years of history in some lighting applications, such as machine vision and architectural/theme/retail applications, in many other areas lighting system designers are just beginning to understand their properties and experiment with LEDs as new lighting tools.
Designers are attracted by the design flexibility accorded by a directional light source that is capable of saturated color, and most applications in lighting to date have been for colored LEDs. The combination of red, green and blue LEDs provides a far greater selection of color and grayscale (16.7 million variants) than any other light source. Approximately 80-90% less energy is consumed than with conventional filtered white-light sources, and the light beam produces no heat.
Compact solutionThe solid-state compact nature of HB-LEDs is one of the primary drivers behind their use. Compact, digitally addressable LED arrays can be assembled so that a large variety of colors can be produced using programmable controls. Similarly, long linear strips of LEDs can be assembled for use in contour lighting and channel letter lighting.
The long lifetime of LEDs relative to conventional light sources has been a key attribute in their adoption, especially in applications where a high premium is placed upon reliability, or where maintenance costs are high. For example, in machine vision, the cost of downtime on a manufacturing line due to lamp failure is much higher than the cost difference between LEDs and conventional sources.
In white-light applications, LEDs are more than twice as efficient as low-wattage incandescent and halogen lamps, and the best white LED technology is significantly more efficient than standard 60-100 W incandescent lamps (17 lm/W). White LEDs demonstrated in the laboratory are now approaching the efficiency of fluorescent lamps (80 lm/W) (see Compound Semiconductor June 2003).
The main disadvantages of LEDs are their much higher cost than conventional light sources, and their low lumen output per device. Both of these problems are being vigorously addressed by the LED industry, and dramatic progress has been made in the past few years. For commercial white LEDs, using large-area chips and special packaging has increased the lumen output per package by a factor of 100. The cost per lumen has decreased by a factor of five. Even greater performance and cost improvements are imminent in products that have been announced, but are not yet fully commercial.
Much additional progress must be made before LEDs can effectively penetrate the large-scale general illumination market, but substantial penetration into lighting applications can still be expected in the next five years, based on the attributes described above.
Near-term illumination marketsThe key to the near-term adoption of HB-LEDs in lighting applications is not to use them in applications where traditional light sources (fluorescent, halogen and incandescent) are firmly entrenched, much lower in cost, and where maintenance and replacement costs are low. The greatest driving force in the illumination market for LEDs is their use in new applications where traditional lighting has significant disadvantages and where LEDs provide some true added value, or where a factor such as reliability is particularly important.
The major uses of LEDs in lighting applications currently are listed in the box above. These niche applications are being developed primarily by lighting systems companies that are manufacturing lighting fixtures (luminaries) or other products, including control electronics and optics, using the devices provided by the LED manufacturers to address a specific lighting task. By and large, these companies are not the mainstream lighting system manufacturers (although there is some participation by such companies), but smaller, specialized companies focused on the development of LED lighting. Such companies include pioneers in the field such as Color Kinetics, TIR Systems, Permlight Products, Boca Flasher, and many others.
However, mainstream lighting companies are beginning to evaluate the potential of LEDs and a number of them have even developed LED-based products. At lighting industry trade shows - such as LightFair, the largest in North America - a significant number of exhibit booths have displayed LED-based products in recent years.
These specialized lighting applications represent one of the fastest-growing markets for HB-LEDs. While they are relatively limited compared with the $12 billion general illumination market (for all types of lamps) that is envisioned as the "holy grail" of the HB-LED industry, they nevertheless constitute a transition stage that will provide a point of entry into this larger market. Moreover, these applications are being developed based on the current price and performance characteristics of LEDs, whereas the development of the general illumination market will require much lower prices and much higher performance than is available today. As the price/performance characteristics of HB-LEDs continue to improve, and as the lighting industry becomes more familiar with the attributes of LEDs, this market will continue to expand.
Future forecastFigure 1 shows Strategies Unlimited s forecast for the overall HB-LED market and that for HB-LEDs used in the illumination sector. The overall market is forecast to grow at an average annual rate of 21% to reach $4.7 billion in 2007. Meanwhile, the market for HB-LEDs in illumination is forecast to grow at 44% per year, double the overall rate, to reach $520 million in 2007. In that year, illumination applications are projected to account for 12% of the HB-LED market, compared with just 5% today. Beyond 2007, the market for HB-LEDs in illumination is expected to continue to grow, resulting in the capture of a significant fraction of the world lighting market after 2010.
Reflecting the enthusiasm surrounding this technological progress, national programs to promote and develop LEDs for lighting (generally known as solid-state lighting) are underway in the US, Japan, Taiwan, Korea and China. Because lighting accounts for approximately 20% of total electricity consumption, the main motivation for these programs is large-scale energy savings, along with the associated benefits of reduced oil imports, lower greenhouse gas emissions, and lower energy costs to consumers.
The development and commercialization of solid-state lighting is dependent on a robust HB-LED industry that can generate the revenues and profits to support the R&D required to improve LED performance and lower the costs. Despite a flattening in 2001 due to the worldwide economic slowdown, the history of the HB-LED market shows a CAGR of more than 47% from 1995 through 2002. It reached $1.8 billion in 2002, and is forecast to exceed $2.5 billion in 2003.
Current HB-LED applicationsThe current HB-LED market can be conveniently divided into six major application categories, and associated subcategories. These are given in Table 1 along with figures showing the size of each market in 2002.
As Table 1 shows, the use of HB-LEDs in illumination applications (solid-state lighting) accounted for just 5% of the market ($85 million) in 2002. However, it is one of the fastest-growing applications, and the one that is driving a great deal of the current interest in HB-LED technology.
The current and potential future market for LEDs in lighting applications exists only because LED technology offers real, often quantifiable, benefits in these applications. Whereas LEDs have several years of history in some lighting applications, such as machine vision and architectural/theme/retail applications, in many other areas lighting system designers are just beginning to understand their properties and experiment with LEDs as new lighting tools.
Designers are attracted by the design flexibility accorded by a directional light source that is capable of saturated color, and most applications in lighting to date have been for colored LEDs. The combination of red, green and blue LEDs provides a far greater selection of color and grayscale (16.7 million variants) than any other light source. Approximately 80-90% less energy is consumed than with conventional filtered white-light sources, and the light beam produces no heat.
Compact solutionThe solid-state compact nature of HB-LEDs is one of the primary drivers behind their use. Compact, digitally addressable LED arrays can be assembled so that a large variety of colors can be produced using programmable controls. Similarly, long linear strips of LEDs can be assembled for use in contour lighting and channel letter lighting.
The long lifetime of LEDs relative to conventional light sources has been a key attribute in their adoption, especially in applications where a high premium is placed upon reliability, or where maintenance costs are high. For example, in machine vision, the cost of downtime on a manufacturing line due to lamp failure is much higher than the cost difference between LEDs and conventional sources.
In white-light applications, LEDs are more than twice as efficient as low-wattage incandescent and halogen lamps, and the best white LED technology is significantly more efficient than standard 60-100 W incandescent lamps (17 lm/W). White LEDs demonstrated in the laboratory are now approaching the efficiency of fluorescent lamps (80 lm/W) (see Compound Semiconductor June 2003).
The main disadvantages of LEDs are their much higher cost than conventional light sources, and their low lumen output per device. Both of these problems are being vigorously addressed by the LED industry, and dramatic progress has been made in the past few years. For commercial white LEDs, using large-area chips and special packaging has increased the lumen output per package by a factor of 100. The cost per lumen has decreased by a factor of five. Even greater performance and cost improvements are imminent in products that have been announced, but are not yet fully commercial.
Much additional progress must be made before LEDs can effectively penetrate the large-scale general illumination market, but substantial penetration into lighting applications can still be expected in the next five years, based on the attributes described above.
Near-term illumination marketsThe key to the near-term adoption of HB-LEDs in lighting applications is not to use them in applications where traditional light sources (fluorescent, halogen and incandescent) are firmly entrenched, much lower in cost, and where maintenance and replacement costs are low. The greatest driving force in the illumination market for LEDs is their use in new applications where traditional lighting has significant disadvantages and where LEDs provide some true added value, or where a factor such as reliability is particularly important.
The major uses of LEDs in lighting applications currently are listed in the box above. These niche applications are being developed primarily by lighting systems companies that are manufacturing lighting fixtures (luminaries) or other products, including control electronics and optics, using the devices provided by the LED manufacturers to address a specific lighting task. By and large, these companies are not the mainstream lighting system manufacturers (although there is some participation by such companies), but smaller, specialized companies focused on the development of LED lighting. Such companies include pioneers in the field such as Color Kinetics, TIR Systems, Permlight Products, Boca Flasher, and many others.
However, mainstream lighting companies are beginning to evaluate the potential of LEDs and a number of them have even developed LED-based products. At lighting industry trade shows - such as LightFair, the largest in North America - a significant number of exhibit booths have displayed LED-based products in recent years.
These specialized lighting applications represent one of the fastest-growing markets for HB-LEDs. While they are relatively limited compared with the $12 billion general illumination market (for all types of lamps) that is envisioned as the "holy grail" of the HB-LED industry, they nevertheless constitute a transition stage that will provide a point of entry into this larger market. Moreover, these applications are being developed based on the current price and performance characteristics of LEDs, whereas the development of the general illumination market will require much lower prices and much higher performance than is available today. As the price/performance characteristics of HB-LEDs continue to improve, and as the lighting industry becomes more familiar with the attributes of LEDs, this market will continue to expand.
Future forecastFigure 1 shows Strategies Unlimited s forecast for the overall HB-LED market and that for HB-LEDs used in the illumination sector. The overall market is forecast to grow at an average annual rate of 21% to reach $4.7 billion in 2007. Meanwhile, the market for HB-LEDs in illumination is forecast to grow at 44% per year, double the overall rate, to reach $520 million in 2007. In that year, illumination applications are projected to account for 12% of the HB-LED market, compared with just 5% today. Beyond 2007, the market for HB-LEDs in illumination is expected to continue to grow, resulting in the capture of a significant fraction of the world lighting market after 2010.
