By now, most of us have seen or heard about the “Lighting Revolution” underway. You’ve likely seen the ubiquitous commercials on TV or the newspaper ads or you’ve walked past the aisles of LED lamps at your local Home Depot/IKEA/Wal-Mart.
This is all part of the shift from the 100-year old incandescent light bulb (technically, 134 years old) as one of the main sources of light across the world to a more efficient technology. This shift presents a significant new opportunity to the semiconductor industry. The advent of Solid State Lighting devices using LEDs as the light source started to gain broad acceptance around 2009 with the introduction of LED based bulbs that used much lower energy and lasted significantly longer than incandescent bulbs. However, since they also cost a lot more, it was not until 2013 that LED bulbs started to gain market share. This also happened to coincide with the ban on incandescent lamps that many countries across the globe began to implement. This top-down boost that LED bulbs received from governments was primarily due to the energy savings possible by switching to the new technology. Since lighting accounts for approximately one fifth of the total electricity consumption in the world, many countries saw this as an opportunity to significantly reduce dependence on fossil fuels.
Today, an LED bulb from a major manufacturer that is equivalent to the widely used 60W incandescent can be purchased for ~$9. This bulb only consumes a sixth of the power and lasts around 23 years, compared to only one year for a traditional incandescent bulb (It’s really about the total number of hours – translated into a period assuming a certain usage per day) while emitting the same amount of light output. This is a major achievement for lighting technology and has led to forecasts of a billion lamps shipping world-wide in 2014.
While this early growth is all about the energy savings that are possible – which are quite significant – it is our view that there will be newer and more uses of this technology that will contribute to even more penetration across the world. One such new usage of this technology is the Philips Hue System. Until its introduction, lights were really turned on and off. With the new system, one can now control – via a smart phone – lamps to emit one of 16 million shades of color. And they can be programmed to reflect the time of day, the weather outside, or pulsate to your favorite music to mimic disco lights from the dance floor! Check it out here:
All this is just the beginning. Yes, this is still likely a novelty item at $200 for three bulbs. But also keep in mind that in 2012, the same LED bulb that is now selling for $9 would have cost north of $40. This dramatic reduction in the price point was achieved both from improvements in the technology – i.e., Lumens per watt of LEDs – as well as manufacturing advances and efficiencies that are possible with semiconductor based technology.
The adoption of LEDs opens up a large opportunity for all Semiconductor companies. ON Semiconductor has invested in this area quite extensively and offers a broad array of solutions for power management, sensors, wired and wireless connectivity along with discrete semiconductors. Now, if only we can get more of you to go out and replace all your inefficient light sources with LED bulbs!
We would love to hear your view of this. Why and at what price point would YOU consider buying LED Lamps?