ACEEE 2006 Summit on Emerging Technologies for Energy EfficiencyOctober 26, 2006

Robert V. SteeleStrategies Unlimitedrsteele@strategies-u.com

High-Brightness LED Applications and Market Trends

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Outline

IntroductionHigh-Brightness LED MarketsSolid-State LightingOutlook and Forecast

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Technology Scope

Will focus discussion on semiconductor-based inorganic LEDsOrganic LEDs (OLEDs) have potential in the long term to be used for lighting, but they are still in the R&D stage for this purposeHigh-brightness inorganic LEDs have been in the commercial market for 10 years and already have a foothold in the lighting market

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LED History

LEDs have been in commercial production for over 35 years (billions and billions sold)For 25 years mainly used as small indicator lamps and alphanumeric displaysBecause of limitations of materials technology (GaP and GaAsP):

Did not have full color spectrum (e.g. blue and green)Could not use in full sunlight outdoor conditions

High-brightness AlGaAs introduced in mid-1980s by HP and Stanley Electric

High brightness, but limited to 660 nm (deep red)

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LED History (cont.)

LED materials “revolution” occurred in the early-mid 1990sInGaAlP developed by HP and Toshiba produced high-brightness red, orange and yellow (ROY)InGaN developed by Nichia, Toyoda Gosei and Cree produced high-brightness blue and green (and white, using blue + phosphor)Devices fabricated with sophisticated production tools –metalorganic chemical vapor deposition (MOCVD) - rather than LPE and VPE used in conventional LEDsIn the past 10 years, performance of HB LEDs has improved dramatically, and prices have fallen steadily

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LED Performance History (Red)

0.001

0.010

0.100

1.000

10.000

100.000

1965 1970 1975 1980 1985 1990 1995 2000 2005

+20x/Decade

Flux/Package

-10x/Decade

Cost/Lumen

Lumens or $/lumen

“Haitz’s Law”

Source: Roland Haitz

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HB LED Market Drivers

Full color spectrum, including whiteHigh visibility, including full sunlight conditionsLong lifetimes (10s of thousands of hours)Energy efficientCompactAutomated assemblyDigital addressing for displays and lighting

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Outline

IntroductionHigh-Brightness LED MarketsSolid-State LightingOutlook and Forecast

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HB LED Application Space

HB LEDMarket

Mobile Appliances

Signs and Displays

Automotive

Signals

Illumination

OtherIndicators, small displaysamusement, misc. other

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HB LED Market History

0500

1,0001,5002,0002,5003,0003,5004,0004,500

Revenue ($ Million)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

CAGR = 42% (1995-2005)

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2005 Market

Market grew by 6% to $3.9 billionUnits grew by 24% to 23.6 billion

Dramatic slowdown from 37% growth in 2004, and 2001-2004 average of 46% per yearMost applications showed reasonable growth, but Mobile Appliance market stagnatedSevere pricing pressure for low-end products due to excess capacity: e.g. keypad backlights

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Recent Market History

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2001 2002 2003 2004 2005

Revenue ($ Million)

Other

Illumination

Signals

Automotive

Signs/Displays

Mobile Appliances

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2005 Applications Breakout

Mobile Appliances

52%

Other12%

Signals2%

Illumi-nation

6%

Signs/Displays

14%

Auto-motive

14%

Total: $3.9 Billion

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Outline

IntroductionHigh-Brightness LED MarketsApplication TrendsSolid-State LightingOutlook and Forecast

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LED Illumination or “Solid-State Lighting”

Illumination includes applications in which LEDsare used to illuminate an object or surface

Not viewed directly (e.g. signs, signals)

Market is in early growth phaseHighly fragmentedMany companies making lighting productsNiche applications

Many non-standard, off-the-shelf productsApplications range from very small (e.g. flashlights, reading lamps) to multimillion dollar projects

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Illumination or “Solid-State Lighting” (cont.)

LEDs are much more expensive than conventional light sources, but ..

They can provide features not achievable with conventional light sources

Many applications driven by higher efficiency and longer lifetimes of LEDsMost applications are for colored lightingWhite light applications are growingThe goal of LED lighting is not just to replace light bulbs, but to provide additional value

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LED Lighting Applications (partial list)

ArchitecturalRetail displayHospitality (hotels, restaurants)EntertainmentAccent and decorativeSafety/securityMachine visionPool and spa

Consumer portable (flashlights, headlamps)Signage (channel letters)LandscapeOutdoor area lightingSolar-powered, off-gridResidentialMuseums

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LED Lighting Products

Philips Lighting

Permlight

Color Kinetics

Optiled

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LED Lighting - Hospitality

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LED Lighting – Contour Lighting and Channel Letters

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LED Lighting - Architectural

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LED Specialty Lighting

Machine VisionLandscape Lighting

Pool and SpaEntertainment

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LED Residential Lighting

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LED Lighting Market Development

Market is being developed by lighting systems companies targeting specific applications

Both large (e.g. Philips, Osram, GE) and small companies

Each application requires a unique approachSelling points for LEDs include:

High reliability/low maintenanceLong lifetimeCost competitive on life cycle basisEsthetics, quality of lightUnique solution to a lighting problemSatisfies regulatory requirements (e.g. Calif. Title 24)

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White LEDs for Lighting

Vast majority of white LEDs sold today use a blue LED chip + a “yellowish” phosphor to achieve white appearance Addition of red phosphor can improve white color spectrum (i.e. “warm” white)Newer, more sophisticated white lighting products are using RGB color mixing plus feedback and control to maintain, or change, white balance

Most efficient way to produce white

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RGB Color Mixing for White Light

TIR Systems LEXELTM

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Outlook for White LED Performance*

0

20

40

60

80

100

120

2000 2002 2004 2006 2008 2010

Luminous Efficacy

(lumen/watt)

Cool W hiteW arm W hite

Incandes-cent

CFL

Fluorescent

*Commercially available LEDs

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Hurdles to be Overcome for Penetration of General Illumination

Lower cost, higher efficiency white LEDsStandards (e.g. definition of lifetime)Binning and color consistency issuesLighting industry understanding of unique properties of LEDs; customer acceptanceEstablish sales channels into traditional lighting applicationsIntegration of drivers, thermal management, optics, controls for “plug-and-play” solutions

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LED Lighting Market Evolution

0.01

0.1

1

10

100

2000 2005 2010 2015 2020

Market Size($ Billion)

Total "Lamp"MarketLED Lighting

Specialty Niches

BroaderAdoption

GeneralIllumination

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National Solid-State Lighting ProgramsUS Next Generation Lighting Initiative (NGLI) passed by Congress in 2005; funded at $20 M/yrJapan national program since 1998, continuingNational SSL initiatives underway in:

TaiwanSouth KoreaChina

Combination of government plus private efforts could make China the largest market for solid state lighting

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National Drivers for Solid-State LightingHuge potential for energy savings

Typically 20-25% of electricity is used for lighting

Potential annual energy cost savings is $10s-100s billion per countryReduced oil importsReduced CO2 emissionsTechnological leadership in a new industry

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Outline

IntroductionHigh-Brightness LED MarketsSolid-State LightingOutlook and Forecast

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Outlook for HB LEDs

Overall outlook for HB LEDs continues to be highly positive, in spite of recent slowdown due to Mobile Appliance saturationMarket will advance across a wide range of applications, including newer ones such as backlighting for LCD monitors and TVs, and automobile headlampsIllumination will be a major market driver

Projecting ~$1 billion in 2010

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HB LED Market Forecast

01,0002,0003,0004,000

5,0006,0007,0008,0009,000

2005 2006 2007 2008 2009 2010

Revenue($ Million)

OtherIlluminationSignalsAutomotiveSigns/DisplaysMobile Appliances

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Thanks for your attention.