Demand For LED Technology Gains Steam

With the market for LED backlighting stabilizing, sellers of LED technology are looking to new lighting markets for growth over the next few years. LED lighting in general is a bright spot on the economic horizon, but industry researchers point to the market for packaged LEDs in residential lighting as a particularly hot area over the next three years.

“Amid falling prices and rising consumer acceptance, light-emitting diode (LED) technology is taking over the lighting business, spurring a 96% increase in packaged LED revenue in the market from 2013 through 2016,” according to a late 2013 report from market researcher IHS Inc. A packaged LED is an LED die that has a protective covering with contacts that allow it to be directly soldered to an electrical circuit.

IHS predicts global revenue for packaged LEDs used in lighting applications to reach $7 billion in 2016, up from approximately $3 billion last year.

In recent years, growth in packaged LEDs was centered on the market for LCD backlighting, in applications such as mobile phones, notebook computers, and televisions. Those applications have completed their transition to LED technology for the most part, stabilizing demand and limiting growth to single-digit percentages, IHS says. In a separate 2013 report, the researcher said LED backlighting was set to reach 90% penetration in LCD TVs in 2013, for example (see the figure).

Such changes open the market to more general lighting applications, which IHS predicts will “provide the next wave of explosive growth for packaged LEDs.” 

“In 2012, the lighting sector became the largest end application for the packaged LED market, having finally overtaken the TV backlighting market,” the researcher reports. “Market saturation for LED backlighting has resulted in a number of leading suppliers shifting their focus and development resources toward the lighting industry.”

Competition Heats Up

Many companies focused on LCD backlighting have already begun their shift to lighting.

“LED suppliers that are focused on lighting are predicted to gain market share,” says Jamie Fox, principal analyst for LEDs at IHS. “Some of the companies that have a large market share in LED backlighting, such as Seoul Semiconductor and Samsung, have already managed to shift much of their business to lighting and have done very well in this area, winning market share in recent years.”

Increased competition will result, which researchers say will drive down prices in the LED market over the next four years. IHS forecasts average selling prices for packaged LEDs in lighting to fall to $0.19 in 2018, down from $0.25 in 2016 and $0.41 in 2013, for instance.

Residential lighting applications represent the greatest growth opportunity ahead, IHS says, predicting packaged LED revenue in that sector to grow to nearly $2.7 billion in 2016, up from roughly $850 million last year. Retail and hospitality markets have led LED lighting adoption in recent years, at approximately 6% penetration. Comparatively, the residential market is at about 1% penetration—but primed for growth. Geographically, IHS says Japan saw the largest adoption of LED lamps in 2013.

Future Japanese LED Lighting Market Trends Showcased at Lighting Japan 2014

The earthquake that shook Japan in 2011 drove up LED bulb market demand. Unlike other countries, Japan first developed LED lighting in the residential market which substantially increased market demand as a whole. The lighting market continued expanding LED products in 2013, targeting indoor lighting including residential and commercial lighting, and launching tube lighting, panel lighting and ceiling lamps. LEDinside continues to observe commercial lighting market developments in 2014. As commercial lighting continues to expand, tube, panel, and niche market candle lighting are gradually maturing.

Commercial Lighting
LED tubes and panels continue to develop. Toshiba improved the dimensions of their florescent lamp fixtures, launching 160mm tubes with 5200lm, emphasizing that they are smaller in size than traditional florescent fixtures, have an increased brightness, and reduced electricity consumption. Cost can be recovered in about 3.5 years. Ceiling lamps used in dining rooms or kitchens have higher color rendering demands. Toshiba products color rendering can currently reach Ra90. Optical design uses reflector plates to reach overall luminosity efficiency.

Originally a consumer plastic manufacturer, Iris Ohyama is actively strategizing the lighting market, snatching up large amounts of market share. Luminosity efficency of their new shaped integrated style lamps can reach 160lm/W, an increase of 33 percent compared to older models. In order for the company’s slender florescent tube to win the Good Design Award, it must follow these three steps: install a base, power circuit, and assemble lighting fixture, as well as for multiple sets of lamps to be able to use the same electrical source. 

Overseas manufacturers also used Lighting Japan 2014 to display their new products, seizing Japanese lighting market shares. For example, Korean package, module, and lighting manufacturer Lumens plans to develop and 併重 these three areas in 2014.

You'll see more LED headlights

LED headlights, currently a technology for pricey luxury cars, are starting to enter the mass market.

By 2020, LED headlights will account for 20 percent of headlights produced worldwide -- up from roughly 2 percent this year, according to a market projection by Osram, a leading supplier of automotive lighting components.

LED taillights and daytime running lights have proved popular with automotive designers, who like to use LEDs to create intricate jewel-like looks for their vehicles.

Automakers favor LEDs because they are durable, compact and energy-efficient, but they are still relatively expensive. A no-frills halogen headlight might cost automakers $20 or so, while a xenon headlight generally ranges from $60 to $80. LED headlights cost roughly twice as much as xenon headlights, although the cost is declining fast.

LEDs, or light-emitting diodes, generate light when electricity is passed through a diode made from a silicon chip. Halogen and xenon lamps are different types of incandescent lights.

Claus Allgeier, Osram's vice president of solid-state lighting, predicts that over the next three years or so, LEDs will achieve price parity with xenon lights.

"This is a huge transition," Allgeier said in a Sept. 4 interview. Prices "have been changing quite rapidly. Over the last two or three years, there has been a substantial improvement of price and performance."

Because they do not generate light from heat, LEDs are more energy efficient than halogen bulbs. A halogen headlight might require 65 watts, while an LED headlight might need only 15 watts or so.

Toyota has shown some willingness to equip mass-market models -- such as the Prius -- with LEDs. Others seem likely to follow, given recent efforts by suppliers to design low-cost generic LEDs.

Three years ago, Osram introduced a generic LED unit, a component that looks like a small hockey puck.

Automakers can use it as a relatively inexpensive light source for taillights, headlights, brake lights or other uses.

General Motors has used it for daytime running lights on the Cadillac XTS and ATS. Ford and Mitsubishi have used it for fog lights, and BMW has used it for fog lights and headlamps.

But Osram's puck is not a one-size-fits-all solution, acknowledges David Hulick, Osram's marketing director.

"We believe there will be more opportunities" for a standardized LED headlight as automakers use that technology for mass-market cars, Hulick said. But many automotive designers are reluctant to adopt the LED "puck" because it sets some limitations on the look of the headlight or taillight.

"Lighting is used as the car's jewelry," Hulick noted. "It's used to create a brand identity at night. The challenge for the lighting industry is to serve that purpose and look for other solutions."

In the near future, the luxury segment is the strongest candidate for LED headlamps, fueled by some recent innovations.

At the Frankfurt auto show last week, Audi introduced the latest twist for LEDs: an A8 sedan equipped with an LED high beam that can dim itself without using mechanical shutters. Hella KGaA Hueck & Co. will supply the headlight, using LEDs produced by Osram.

The A8's high beam features five light bars with five LEDs per bar.

That high beam can be left on. When a camera mounted on the windshield spots an oncoming vehicle, some of the LEDs are turned off automatically, creating a gap in the high beam to avoid blinding the oncoming motorist.

And if there are two vehicles -- say, an oncoming truck plus a car that your vehicle is overtaking -- the controls can create two or three gaps in the headlamp's beam to reduce glare, says Steffen Pietzonka, marketing vice president of Hella's lighting division.

"We really think that it will be the future for high-beam headlamps, especially in the premium car segment," he said.

Eliminating glare

Osram also has teamed with Audi to develop an experimental LED headlamp that generates a high beam with the help of a matrix of 78 LEDs arrayed in three rows.

The matrix LED headlight appears practical enough for production. Osram executives recently demonstrated the headlight's effectiveness during a recent night cruise on some country roads near the company's technical center in Herbrechtingen, Germany.

To be sure, automakers already have introduced headlights that dim automatically, but those require mechanical shutters to dim the high beams. Osram and Hella have dispensed with shutters, and their LED high beams are tailored to eliminate glare more precisely to accommodate oncoming traffic.

For the moment, matrix LED headlamps are too costly for the mass market, but LED prices are declining, as Allgeier noted.

"Regardless of technology, we have been limited to 70 meters of vision for the low beam for many years," Allgeier said. "Now, that's a barrier that we can overcome."