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LED lighting industry at "crossroads" says report

A report from analyst company iSuppli suggests that major investment in research is needed before LEDs can compete effectively in general illumination.

Growth in the market for LED lamps and chip LEDs is set to slow to 11% this year, claims a report published by analyst company iSuppli.

Jagdish Rebello, who authored the report, says that the solid-state lighting industry now stands at a crossroads, with the saturating mobile handset market growing more slowly than in recent years.

Rebello measured the 2004 market for all LED lamps and chips to be worth $4.7 billion. Over 57% of that figure resulted from sales of HB-LEDs, which Rebello defines at devices emitting over 100 mcd.

Although there are plenty of new applications for HB-LEDs waiting in the wings, the big question is when these will take off.

And while solid-state lighting will penetrate applications such as car headlamps, large-screen backlighting and, eventually, general illumination, the industry may have to be more patient than it expects.

"Except for camera flash-lighting applications, most new markets in the automotive and general illumination industries are not yet close to commercialization," he cautioned. "LED suppliers to the backlighting industry must plan for aggressive price erosions, while simultaneously searching for new markets to target."

As a result, Rebello is only expecting 10% growth in the HB-LED sector this year, compared with a recent average of around 50%. That's a trend set to continue, with only single-digit annual growth expected between 2006 and 2010. "Several high-profile applications, such as the backlighting of large-screen LCD displays, will likely not live up to the early hype," added the analyst.

And it will be at least 2010 before LED lights really penetrate the general illumination market and become a commodity item like today's light bulbs.

Rebello also believes that "a large amount of costly research" is required to improve luminous efficiency before this huge market opens up. Currently, LED lamps are at least two orders of magnitude more expensive than traditional light sources.

In terms of rapid market growth, the action is now switching to what Rebello describes as ultra-high-brightness (UHB)-LEDs, defined by him as devices with a luminous flux of at least 20 lumens.

Worth around only $100 million in 2004, UHB-LEDs will command a market of $2.3 bn by the end of the decade, he predicts.

If Rebello's predictions are correct, that figure would represent around 32% of a total LED market worth $7.4 billion in 2010.

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