leds magazine special report

SPECIAL REPORTPackaged LED and SSL projections are powered by technology shifts and trendsEach year at Strategies in Light, analysts from our

colleagues at Strategies Unlimited present the

latest LED and solid-state lighting (SSL) market

forecast to an audience of LED and lighting

professionals who all want to know, “What has

happened in the market during the past year,

and where do my business opportunities lie?”

This pre-eminent presentation is reported on

annually by LEDs Magazine chief editor Maury

Wright, who focuses on the data-driven details

that help decision makers move forward and

make big plays in the industry. This special report

combines the past three years of Strategies

Unlimited forecasts, noting the technology shifts

that sparked trends as well as growth and dip

patterns, and delivers a comparison of regional

markets as well as LED and SSL segments.

REPRINTED WITH REVISIONS TO FORMAT FROM LEDS MAGAZINE. COPYRIGHT 2015 BY PENNWELL CORPORATION.

TECHNOLOGY AND APPLICATIONS OF LIGHT EMITTING DIODES

Packaged LED market resumes moderate growth while the SSL market will enjoy 12% CAGR through 2017

PAGE 28

Research projects five years of growth for packaged LEDs and SSL

PAGE 16

Strategies Unlimited tempers LED and SSL projections but remains bullish on sectors

PAGE 2

2 LEDS Magazine SPECIAL REPORT

ORIGINALLY PUBLISHED APRIL 23, 2015


Analysts led off the Plenary Session on each day of Strategies in Light,

reports MAURY WRIGHT, with growth projections for both packaged LEDs

and lighting products slightly lowered relative to the 2014 presentations.

THE STRATEGIES IN Light (SIL) 2015 conference, held Feb. 24-26 in Las Vegas, NV, featured Plenary Sessions anchored by Strategies Unlimited market-research presentations on each of the two main-conference days. Senior analyst Stephanie Pruitt reported that packaged LED revenue hit $15.4B (billion) in 2014 and projected growth to $22.1B in 2019. Philip Smallwood, co-chair of SIL and director of research at Strategies Unlimited, reported that LEDs penetrated 5% of the lamps market in 2014 and projected 52% penetration by 2022 based on units shipped. Smallwood reported LED penetration in luminaires at 33% in 2014 and projected 69% penetration by 2022.

Generally, the market projections were positive, but growth rates in terms of revenue were slightly down from the 2014 data. We will discuss the new data in detail including reasons for changes that range from packaged LED prices dropping faster than expected to new methods of modeling the lighting market that have been instigated by Smallwood in the research program.

Packaged LEDs

The packaged LED presentation is directly comparable to the data presented last year as the methodology remained consistent in the component area. Still, there is one caveat. Pruitt presented preliminary data. The actual data will not be finalized


3 LEDs Magazine SPECIAL REPORT

until April when the report is due for sale (after this article was written). So beware of some changes, although we’d expect them to be minor.

Pruitt took the stage on day two of SIL (Fig. 1) and compared data in the most recent years. In 2014, Strategies Unlimited projected a 13% compound annual growth rate (CAGR) for LED revenue through 2018. Pruitt said the new data suggests an 8% CAGR through 2019. The lower growth, however, is not in any way indicative of the research team expecting fewer LEDs to be sold. But LED component prices are eroding faster than expected. Moreover, parts of the LED forecast are driven by research on the lighting market, and Pruitt said the new forecast is “more conservative than last year due to lighting research”–in part the new models mentioned earlier.

Indeed, we can already see slower growth in revenue numbers reported for 2014. Pruitt said LED revenue grew from $14.5B in 2013 to $15.4B in 2014. That’s far lower than the 13% projection from last year. In fact, the 6% growth from 2013 even lags behind the new projection going out to 2019.

But before we delve into more details, let’s discuss the methodology of the packaged LED research. As with previous years, the scope includes all packaged LEDs but not bare LED die or chips. It certainly does include package-light LEDs such as products based on chip-scale packages (CSPs). We covered the CSP trend in our report from the Light+Building event in Frankfurt last year, and there is much more in our conference keynote coverage in this issue.

FIG. 1. Senior Strategies Unlimited analyst Stephanie Pruitt presented the research firm’s latest data on the packaged LED market.



The research is focused on revenue and not number of LEDs shipped or sold. The report covers products ranging from very-low-cost, low- and mid-power LEDs to the high-power LEDs that have been most prominently used in lighting until recently when mid-power LEDs entered that space. The scope also includes super-high-power LEDs, primarily chip-on-board (COB) products. Strategies Unlimited now also publishes dedicated COB LED research.

The segmentation of the packaged LED market also remains largely consistent with prior years. The 0.5W dividing line between the mid- and high-power segments remains. But that line may create ambiguity in some of the data where applications are dissected relative to the types of LEDs used. Many LEDs that look like traditional mid-power devices in plastic packages with no secondary optics can be driven at levels of 1W and higher today.

Application segments

The projected 8% CAGR through 2019 will lead to a packaged LED segment that totals $22.1B. Let’s look at the applications that will drive such growth and the near- and long-term prospects and trends for each. The primary application segments include:• Displays/backlights• Mobile• Signs• Automotive• Lighting

Fig. 2 depicts the segments and the recent growth or decline in each segment from 2013 to 2014. As you might expect, lighting will remain the largest growth segment for the foreseeable future. Two years ago, Strategies Unlimited reported that general lighting had become the largest consumer of LEDs by revenue. Previously, the display-backlight sector had consumed more LEDs by revenue. Still, all of the applications listed above consume copious amounts of packaged LEDs.



Display backlights

Indeed, the display-backlight market for TVs and computer monitors remains robust and likely consumes more individual LED components that any other application. But the LEDs utilized are generally low- or mid-power LEDs and are among the most-commoditized products in the packaged LED space.

In terms of revenue, the display sector is already in decline from $2.6B in 2014, as detailed in Fig. 3, with a -5% CAGR projected through 2019. The display sector will not suffer from the same type of saturation as the lighting sector that we will discuss later. Now the backlight segment is fully saturated, but consumers continue to buy new and better TVs or monitors. Still, LEDs used in displays will continue to fall in price. At the same time LEDs get brighter, resulting in fewer LEDs being required per display in some cases.

Packaged LED revenues ($B)

LED industry grew 6% from 2013 to 2014

0 1 2 3 4 5 6

Lighting

Automotivelighting

Signage

Mobiledevices

Backlightin displays

& monitors

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2013$14.6B

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Revenues for LEDs in mobile devices($B)

FIG. 4. LED revenue related to mobile devices is declining with falling LED prices.

FIG. 3. The display-backlight market for LEDs is in decline but is still significant.

FIG. 2. The packaged LED market grew by $800M from 2013 to 2014 with lighting applications leading the charge.



Pruitt noted, however, that technology innovation in the TV space could significantly impact the projection. Specifically, a larger-than-expected transition to 4k-pixel TVs, sometimes called ultrahigh-definition TVs (UHDTV), could result in more LEDs being sold into the application. Such higher-end TVs would almost assuredly rely on local-dimming implementations where individual LEDs light a smaller area of the overall screen to provide optimum contrast ratio. Conversely, were an OLED manufacturer to solve the manufacturing issues with large screens, allowing that technology to drop in price, fewer LEDs might be sold into backlighting.

Mobile devices

Moving to LED revenue in mobile devices, we find yet another application in decline. Fig. 4 depicts the details of the -5% CAGR projected by Pruitt through 2019. Still, the raw numbers are impressive. Mobile devices consumed $2.8B worth of LEDs in 2014 and the projection calls for around $2.1B in 2019.

The reasons for the decline in mobile are in part similar to the decline in displays, but OLED technology plays a larger role. The mobile market is nearly saturated, but the upgrade cycle continues to drive the sale of new devices. However, price erosion is heavy in the LEDs used in mobile devices for backlighting or lighting the keypad.

Moreover, OLED technology is already being used broadly by vendors such as Samsung in smartphones. LED revenue specifically for the phone market will go from $1.3B in 2014 to less than $1B in 2019. Declines in tablets and other mobile computing devices will be shallower.

Last year, we reported that expanded camera functionality in mobile devices was driving the need for more and higher-quality LEDs for both forward- and rear-facing camera-flash functionality. Indeed, we covered that technology trend in our report on the conference sessions at SIL 2014. Pruitt did not address the flash sub-



segment in her SIL presentation, but that data will likely be included in the final LED market report due in April.

Pruitt also suggested that as with the display market, a transition to higher-resolution screens in mobile devices could positively impact the revenue for LEDs in the mobile segment. There will be some level of penetration of UHDTV technology even in the smaller devices as screen technology continues to improve.

Automotive and signage

Moving to areas of growth, automotive is probably the packaged-LED application with the greatest growth potential outside of general lighting. As Fig. 2 indicates, the sector experienced 10% growth between 2013 and 2014. Moreover, Pruitt projects 10% CAGR through 2019 as depicted in Fig. 5, with revenue going from $1.8B in 2014 to $2.9B in 2019.

0.0

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Interiorlighting

2019201820172016201520142013

Revenues for LEDs in automotive lighting($B)

15% CAGR

Others24%

Others37% Front turn

4%

Front turn5%

Stop/tail13%

Stop/tail10%

Headlamps42%

Headlamps22%

DRL17%

DRL26%

Automotive exterior revenues

20192014

2014 Revenues forLEDs in lighting$5.3B

Other

Residential

Outdoor

Industrial

Commercial

Replacementlamps

FIG. 7. Lighting, and specifically general illumination, holds the greatest revenue potential for packaged LEDs. In 2014, general illumination accounted for 75% of the lighting market.

FIG. 6. Exterior applications, especially in headlamps, will drive the growth of LED revenue in automotive.

FIG. 5. The interior sub-segment of LED usage in automotive is saturated, but great growth potential awaits on the exterior.



The automotive application includes both exterior and interior lighting. The dashboard sub-segment of interior automotive lighting is fully saturated. We will see more in-cabin use of LEDs for ambience including color-tunable lighting products. We covered an Osram Opto Semiconductors product designed for just such applications more than a year ago. But the LEDs used in automotive interiors will mostly be commodity products and falling component prices will keep interior revenue relatively flat.

The exterior automotive application, however, still has a lot of room to grow with penetration remaining relatively low in headlamps. Moreover, the value proposition is twofold. Automakers will adopt LEDs for headlamps in mainstream cars to leverage the low power and long life inherent in LEDs. High-end vehicles will carry LED headlamps with functionality such as steered beams that can’t be realized with legacy sources.

Fig. 6 shows that LED revenue is projected to grow by 15% through 2019 in the exterior sub-segment with LED revenue in just that sub-segment exceeding $2B by 2019. The biggest growth will come in headlamps with that specific application consuming nearly $1B by 2019. Stop- and tail-light revenue will be the other high-growth area as automobile manufacturers add functionality in that application.

Signage is yet another LED application that is projected to grow. Pruitt reported that LED revenue in the application totaled $1.7B in 2014. Projection of an 11% CAGR will take the market to $2.9B in 2019.

General illumination

Lighting–specifically general illumination–however, will provide the real lift in LED revenue for the next five years. LED revenue in the lighting application totaled $5.3B in 2014 with 75% of that total dedicated to general illumination (Fig. 7). Retrofit lamps account for nearly half of the 2014 LED revenue in lighting. Pruitt projects a 14% CAGR through 2019, consuming more than $10B in LEDs for lighting.



Fig. 8 provides more details on the projection with general illumination accounting for 86% of the LED revenue by 2019. At the end of the projection, LED revenue for replacement lamps will grow to $6.6B with that application remaining well over half of the lighting consumption base. The other or non-general-illumination segment is the next largest in aggregate at $1.5B in 2019. That category, however, comprises a wide variety of small sub-segments including entertainment, architectural, retail display, consumer portable, safety and security, off-grid, and strip and string lighting. Outdoor is the second largest general-illumination sub-segment today and in 2019 growing to consume $815M (million) in LEDs.

LED types in lighting

Pruitt dug deeper into the LED market data relative to lighting applications. For example, Fig. 9 breaks down the total lighting application by types of LEDs used

FIG. 10. All classes of power LEDs will see growth in replacement lamps.

FIG. 9. The high-power LED segment will decline as a percentage of the total revenues of all LED classes.

FIG. 8. The Strategies Unlimited forecast states that 86% of the lighting market will be general illumination in 2019, and replacement lamps are expected to be the top consumer of LEDs by a wide margin.

Revenues for LEDs in lighting($B)

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12Replacement lamps

Commercial

Industrial

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’19’18’17’16’15’14’13

14% CAGR

$5.3B

$10.2B

Low power(<0.1W)

Mid power(0.1W – 0.5W)

High power(>0.5W – <5W)

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RGB

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20% CAGR



through the five-year forecast. The details rely on the aforementioned categorization of LEDs by power rating.

At first glance, the data is surprising. We’ve been hearing for several years about the rise of mid-power LEDs in a greater number of lighting applications. But the forecast projects that the mid-power share remains near-constant as a percentage of the total market. Still, the escalating overall market will take mid-power revenue from $1B in 2014 to $1.8B in 2019. But why doesn’t mid-power represent a bigger share percentage-wise? The answer is that many LEDs that are based on typical mid-power technology platforms operate well in excess of 0.5W today and are actually captured in the high-power segment.

Despite the inclusion of some super-charged mid-power LEDs in the high-power category, that high-power segment will decline as a percentage of the total, as you can see in the chart. The super-high-power category composed primarily of COB LEDs will enjoy the biggest gains percentage-wise. That gain is due to a couple of primary factors. Price erosion is much lower in both high- and super-high-power LEDs relative to low- and mid-power LEDs. And COBs are much simpler for many lighting manufacturers to work with given that the LEDs have a single electrical interface and can be more simply mounted in a design. Moreover, optics manufacturers have made great progress in lenses for the relatively-larger COB LEDs, as was evident in a recent feature article on optics.

FIG. 12. LED revenue will continue to ramp in outdoor applications with the most growth coming in chip-on-board (COB) LEDs.

FIG. 11. Mid-power LEDs will do especially well in commercial luminaires and specifically the troffer application.

Revenues for LEDs in commercial luminaires($M)

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In her SIL presentation, Pruitt also characterized types of LEDs used in specific applications, and a couple are of particular interest. Fig. 10 depicts the LED segments relative to replacement lamps, including A-lamps, directional lamps, and tubes. Arguably, replacement lamps are the most cost-sensitive portion of the general illumination market. Yet in terms of percentage of the LED market, high-power LEDs will remain predominant in the application. Moreover, COB revenue will grow at a higher rate than either the commodity mid- or low-power LEDs.

Mid-power LEDs will make the greatest gains in the commercial sector, as documented by Fig. 11. Ceiling troffers are widely used in the commercial sector. And LED-based luminaires that are focused on the traditional rectilinear troffer form factors are a good match to mid-power LEDs. The LEDs are applied in a linear fashion with the components closely spaced for even illumination.

The outdoor segment is one where COBs will really shine, according to Pruitt’s forecast. Fig. 12 shows high-power LED usage remaining relatively flat in outdoor applications while COBs ramp considerably. We’d speculate that the improved COB optics mentioned earlier will be a driver for the success of COBs in outdoor applications. In the past, luminaires that used COB LEDs relied on reflector-based designs for beam control. The new lenses can enable far superior beam control that had been only achievable with smaller sources.

Lighting market data

Now let’s transition to an examination of market data centered on lighting products presented in the Plenary by Smallwood on day one of SIL (Fig. 13). The presentation was entitled “How big can the LED lighting market get?” Smallwood addressed both the lamps and luminaires markets.

Smallwood moved into a leadership position in the Strategies Unlimited lighting practice in late 2013. He has since revamped the approach that the firm takes to characterize the lighting market. The research has been expanded to cover lighting



products based on all types of light sources–not just LED-based products. The data is segmented for form factors and applications. And Smallwood has led development of a market model that can yield regional geographical segmentation of the market. Smallwood also said the new approach will enable more accurate prediction of saturation by long-life, LED-based products and the coincident shrinking of market potential.

Starting with the lamps market, Smallwood said there are around 45B installed lamp sockets in the world with that number only growing incrementally in the coming years (Fig. 14). Today, 9B incandescent products are installed in those sockets with that number projected to fall to less than 2B by 2022. Smallwood’s projection shows that linear fluorescent and compact fluorescent (CFL) technologies will remain prevalent through 2022. Primarily, LED-based replacement lamps will replace the incandescent incumbent with some displacement of fluorescent and halogen technologies.

Recognize, however, that there is a vast difference between the installed base and shipments of lamps throughout the forecast period; Strategies Unlimited’s new model allows the analysts to report both, and by region or globally. For example, Fig. 15 depicts the difference in the North America region specific to A-lamps. The installed base chart on the left of Fig. 15 shows a strong presence of incandescent products, whereas shipments of such products will drop precipitously as LED lamp shipments continue to rise.

FIG. 13. Philip Smallwood of Strategies Unlimited presented lamp and luminaire market research at Strategies in Light.



Smallwood reported that LED lamps represented 5% of the overall 2014 market globally. He projects that penetration to rise to 28% in 2018 and to 52% in 2022. Those numbers may sound low, but remember the total lamp market includes tubes, and fluorescent technology will remain a major player. Indeed, Smallwood projects

that fluorescent tubes will still account for more than 20% of lamp shipments in 2022.

Ironically, Smallwood also reported a very bullish outlook for LED-based replacement tubes as he broke the data down by type of

lamp. Smallwood admitted that he never believed the concept of an LED-based replacement tube to be a very good idea relative to products such as integral, LED-based luminaires. But the research indicates that the market will heavily rely on such tube products primarily because of the ease of retrofit. Smallwood projects a 29% CAGR for tube shipments through 2022, although the growth will flatten at the end of that period as sockets are saturated.

FIG. 14. The global installed base of lamps will remain a mix in terms of light-source technology through 2022.

FIG. 15. The installed base of incandescent A-lamps in North America will decline slowly, whereas new shipments of such products have already plummeted as LED-lamp shipments rise.

Incandescent

LEDreplacement

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Overall saturation will be felt far more acutely. Total lamp shipments will decline by 44% through 2022. Other than the tube market, all of the other lamp types will be in decline in terms of units shipped by the end of this decade.

Still, the lamp market will remain sizeable in terms of revenue. Fig. 16 shows the lamp market charted by revenue and segmented by light-source technology. Revenue will peak at $21B in 2018 but still reach a hefty $16B value in 2022.

Smallwood also covered the luminaires space. And the Strategies Unlimited team has developed a far more granular model for the broad luminaires segment. The team is now segmenting the market by different types of fixtures including:• Downlights• Troffers• High bays• Suspended pendants• Tracklights• Street lights

Moreover, the new model includes the ability to sort the data by application including retail, office, hospitality, and more. The two types of segmentation can be applied individually or together. And in terms of LED-based fixtures, Strategies Unlimited is separately tracking fixtures that use LED-based replacement lamps and fixtures based on integral, LED-based designs.

In 2014, the combination of both types of LED fixtures represented less than 4% of the total luminaire market in terms of the installed base. But again installed base and shipments differ. Fig. 17 provides an excellent picture of both market size and the light-source technologies that will ship in luminaires. Luminaire revenue will only ramp from $59B in 2014 to $66B in 2022. But as mentioned at the beginning of the article, 69% of the luminaires will be LED-based in 2022.



Smallwood closed his presentation with some interesting thoughts. He said, “The lighting world has accepted that LEDs are the future.” Still, he characterized the transition as an evolution from the filament to LED sources. He added, however, that there is a revolution afoot in addition to the changing light sources.

Smallwood said, “The revolution is the ancillary products and technologies such as networks and controls that are coming along with LED lighting.” Smart lighting based on sensor-driven autonomous or programmatic controls is a good example. Smallwood also suggested that the revolution will deliver “lighting with a purpose.” He said lighting will specifically target needs such as human wellbeing, productivity, security, and safety.

Smallwood asked the audience, “Would you ever have thought Cisco would present a keynote at Strategies in Light?” Indeed, that company did.

FIG. 17. The global luminaire market will grow slowly through 2022, but LED-based products will represent an increasingly large share of that revenue.

FIG. 16. Global lamp revenue will peak in about four years as socket saturation with long-life LED-based products takes place.

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LED integratedIncandescentHID

HalogenFluorescentCFL

2022 $66B2017 $64B2014 $59B


ORIGINALLY PUBLISHED APRIL 22, 2014


Bracketing the keynote presentations at Strategies in Light,

Strategies Unlimited analysts reported positive developments in

the LED component and lighting markets, reports MAURY WRIGHT,

with both projected at double-digit growth through 2018.

THE PLENARY SESSION at the Strategies in Light (SIL) 2014 conference held February 25–27 in Santa Clara, California again featured analysts from Strategies Unlimited presenting their most recent research on the packaged LED component and LED-based general lighting markets. Packaged LED revenue was reported at $14.4B (billion) for 2013 with projection that the total will reach $25.9B in 2018. The general lighting market will grow even more steeply. The SIL presentation focused on LED replacement lamps, with that segment alone generating $4.8B in 2013 and projected to reach $12.2B in 2018. In both cases, the revenue growth will come amongst price decreases with the next five years being an exciting time in the maturing solid-state lighting (SSL) space.

FIG. 1. Cree announced the CXA1310 (pictured), CXA1850, and CXA2590 COB LED arrays leading up to Strategies in Light.



The LED research was focused on packaged components, as it has been in the past. It does not include the sale of bare die. It also excludes products such as infrared (IR) and ultraviolet (UV) LEDs that are sold into industrial, security, and other applications.

The LED research does include chip-on-board (COB) LEDs such as the recently announced Cree CX A1310 pictured in Fig. 1. Analyst Katya Evstratyeva made the point during her presentation that the line between such COB LEDs and other light engine or modular products is blurring. Indeed, many companies use the COB term to describe larger light engines based on printed circuit boards in a variety of form factors. Conversely, some modules look more like a COB LED than a module, such as the new Xicato XTM module.

Evstratyeva said that the research firm is planning a report to address the modules and light engine space. The universe of manufacturers of modular products will be significantly broader than that of packaged LEDs, and that research will surely be of interest.

LEDs by regions

Diving into the packaged LED revenue research, Evstratyeva first broke down the revenue by region and compared 2012 and 2013 data (Fig. 2). There was modest 7% growth in 2013, although as we mentioned previously the ramp will be steeper — projected at 13% CAGR (compound annual growth rate) — going forward. Companies based in Japan remain responsible for the largest sum of global LED revenue. Certainly, market leader Nichia is in part responsible for that country’s position, although Strategies Unlimited

FIG. 2. Packaged LED revenue grew 7% in 2013 with Japan remaining in the top spot in revenue production.

Source:Strategies Unlimited

2012 Industry revenues$13.3 B

2013 Industry revenues$14.397 B

Taiwan/SE Asia16%

Taiwan/SE Asia14%

USA13%

USA12%

Europe8%

Europe8% China

10%China8% Japan

27%Japan32%

Korea27%Korea

26%



tracks the five largest LED makers in Japan. The analysts also track five companies in Korea that in aggregate earn the second highest revenues.

Outside of Japan and Korea, however, the story is far more interesting. In the US, for instance, the revenue is generated by only three companies and in Europe only one is tracked. In contrast, Strategies Unlimited tracks 13 companies in Taiwan and nine in China. Those numbers are indicative of the upstarts attempting to win space in what is already a crowded market.

Application segments

Now let’s discuss the application segments for packaged LEDs. The Strategies Unlimited team has long broken the market into five segments plus a catchall other category:• Backlights for displays, monitors, and TVs• Mobile devices• Automotive lighting• Signage• General lighting• Other

Fig. 3 depicts these market segments and the contribution of LED revenue that is attributable to each segment. Clearly, the general lighting segment will drive the LED component market going forward. Indeed, general lighting displaced backlighting as the growth driver, as we reported in our SIL coverage last year. Still, all of the segments are significant and worth further discussion.

FIG. 3. Packaged LED revenue growth segment by application projected through 2018.

Revenues (US$B)

$14.4B

$25.9B CAGR13%

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SignageAutomotive lightingMobile devicesBacklight in displaysand monitors



Given that backlighting has been such a significant market, let’s begin in that application. Strategies Unlimited is projecting in a decline in the segment at a 7.74% CAGR from 2013 to 2018. There are several factors that are combining to portend the decline. First of all, the application segment is virtually fully saturated with a transition to LED backlights at this

point. Second, brighter LED components mean that in many cases fewer LEDs will be needed to backlight a screen. Third, the price drop in LED components has been especially acute in the mid- and low-power LED space and those are the predominant LEDs used in the application.

Fig. 4 details the backlight segment. The peak in the 2011 to 2012 timeframe came as there were still legacy fluorescent-based backlights in use and more potential for market share gains for LEDs. Still, the projected $1.7B in 2018 is a very significant market.

Mobile applications

Moving to mobile, Strategies Unlimited primarily focuses on mobile phones, including smartphones, and tablets. The mobile sector is projected in a more moderate 2.36% decline (Fig. 5). As with the backlight segment, lower LED prices and brighter components are part of the story.

FIG. 4. LED revenue in the backlight application will decline going forward, driven by lower component prices and brighter LEDs.

Revenues (US$B)

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FIG. 5. The mobile segment is in a gradual decline in terms of LED revenue, although the camera flash sub-segment lessened the impact of lower-cost LEDs.

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$2.6B$2.3B

CAGR-2.36%



There are market dynamics, however, that have made the revenue decline for mobile more shallow than for backlight. In many cases, mobile devices have displaced dedicated digital cameras as the primary camera used by consumers. Higher pixel counts in image sensors and lower cost have enabled better cameras in mobile devices. And now the market is demanding better LED-based flash for cameras. We discuss the trend in the companion story on the SIL conference. In many cases, mobile device makers are including an LED-based flash on both the forward- and rear-facing cameras in mobile devices.

Evstratyeva said LED revenue sold into flash applications is in the $700M (million) range in 2013. Moreover, she said that sub-segment will continue to rise in revenue through 2018, albeit not at a rate that will eliminate the aggregate projected decline.

Automotive lighting

Now we will transition into growth segments including automotive lighting and signage. There are a number of factors that will keep LED revenue on the rise in the automotive segment. For starters, the market is far from saturated. LED exterior lighting including headlamps has been primarily limited to luxury-level vehicles. But that situation is changing. Evstratyeva noted that Toyota is moving to LED-based headlamps on its Corolla model, which is a smaller economy vehicle.

LED headlamps are also moving beyond stylish cars. Ford recently announced that its best-selling F-150 light-duty truck will get LED headlamps across the model. Ford noted that the durability of LED lighting technology was a good match to the work truck market. Indeed, the company said it fired stones at the headlamp unit in tests. But the

FIG. 6. The automotive segment for LED lighting is far from saturated and is expected to deliver growth in terms of LED revenue.

Revenues (US$B)

0.5

0.0

1.0

1.5

2.0

2.5

’12 ’13 ’14 ’15 ’16 ’17 ’18

$1.4B

$2.3BCAGR10.16%

Exterior lighting

Interior lighting



company also noted a styling angle and the LED-lit light guide implemented around the perimeter of the unit that the company said will offer a signature look.

Fig. 6 details the interior and exterior sub-segments of the automotive market. The exterior segment will remain the larger of the two, primarily because of the number of different ways that LEDs are used in headlamps, turn signals, brake lights, and other functions. Still, Evstratyeva pointed out the in-cabin potential. She said auto makers are increasingly using LED lighting with features such as color tunability to add styling inside the cabin and to help drive sales.

Signage is also a growth market that totaled $1.8B in LED revenue in 2013 with growth projected to $2.4B in 2018 (Fig. 7). The bulk of the sign manufacturing is taking place in China, so that region is driving the LED purchases. The sign market itself will grow from $4.7B in 2013 to $6.1B in 2018 and that would indicate a market that is far from saturation.

General lighting

And now let’s get to general lighting and the largest market for LEDs going forward. Here we will look at both LED revenue trends and at lighting revenues. Moreover, we will consider the types of LEDs being used in general lighting and how specific LED manufacturers are faring in the segment.

The chart in Fig. 8 is a complex one that depicts the revenue forecast for packaged LEDs relative to specific sub-segments of the lighting market. While we regularly write about — and presentations at conferences such as SIL support — the premise that LEDs will fundamentally change the lighting market, presumably the bulb

FIG. 7. Signage will remain a growing source of LED revenue for the next five years.

Revenues (US$B)

0.5

0.0

1.0

1.5

2.0

2.5

’12 ’13 ’14 ’15 ’16 ’17 ’18

Channel lettersand others LED multi-color LED single-color

LED full-color

CAGR5.72%

$2.4B

$1.8B



form will begin to disappear in favor of luminaires with integral LEDs or modular SSL engines. And these new luminaires will truly leverage the compact size of LED light sources and the ability to distribute LEDs in arrays to cover large areas. Examples of revolutionary new designs include the planar fixtures based on light guides that are edge lit with LEDs.

LEDs may indeed yet revolutionize lighting product design. But Fig. 8 makes it clear that through 2018 the replacement lamp will be the most widely deployed lighting product consuming LEDs. The graph tells an interesting story. Lamps trailed the aggregate luminaire segment in 2013, although the overall lamps LED revenue was an impressive $1.5B. But soon lamps will account for half of the LED revenue for components sold into lighting. Ironically, socket saturation will happen in the lamps space toward the end of the projection window, and once again luminaires will become the larger sub-segment for LED revenues.

It is worth noting that the replacement lamps segment includes products sold into both residential and commercial applications. Strategies Unlimited includes LED-based linear tubes in the category, for example, and those products target industrial and commercial applications. Likewise, the MR16 sub-segment is mostly based on business customers whereas A-lamps are more prominent in residential applications.

LED lamp market

Taking a deeper look at the lamp market, Philip Smallwood, director of research at Strategies Unlimited, addressed the end product market at SIL. He presented the adoption graph depicted in Fig. 9 that pretty much confirms the LED research data

FIG. 8. The lighting market will consume the most LEDs by revenue, and the replacement lamps sub-segment will be the largest consumer through 2018.

’13 ’14 ’15 ’16 ’17 ’18

Revenues (US$B)

$4.4B

$14.9B

$0.5B $0.8B $1.4B $2.3B$3.5B $4.3B

$1.5B$2.5B

$4.0B

$5.0B

$6.6B$7.3B

0

2

4

6

8

10

12

14

16Replacement lamps

Strips and strings

Outdoor area

Industrial

Architectural

Commercial

Residential

Consumer portable

Entertainment

Retail display

Off-grid

Safety/security



in Fig. 8, the blue arrow standing for the penetration of LED lamps with regard to the total global installed base. The LED lamp market today is at the earliest stages in terms of technology adoption. Smallwood asserted that we haven’t even reached the early adopter stage at this point.

Still, the lamp market has racked up some impressive revenues. In aggregate lamps revenue totaled $4.8B in 2013. Smallwood projected growth to $12.2B in 2018 — a 21% CAGR (Fig. 10). What you may find surprising is that the MR16 segment is the largest segment at the moment and will continue to be so until A-lamps catch up in the 2015 to 2016 timeframe.

There are several factors at play in the size of the MR16 sub-segment. For starters, the lamps are primarily deployed in business applications, as mentioned before. And businesses have adopted LED lighting more quickly than residential consumers. There also have been many low-quality MR16 lamps made in China and sold into markets such as Russia. Smallwood said as many as 50M MR16 lamps were sold in Russia in 2013.

FIG. 9. In terms of the consumption of LED retrofit lamps, the market is still not at the early adopter stage.

Market share (%)

Innovators2.5%

Earlymajority34%

Latemajority34%

Laggards16%

Earlyadopters13.5%

100

75

50

25

0

FIG. 10. LED replacement lamp revenue is on a steep 21% growth path over the next five years.

Revenues (US$B)

’13 ’14’12 ’15 ’16 ’17 ’180

2

4

6

8

10

12

14

Re�ector

MR16

LFT

Decorative/other

A-19

2013$4.8B

2018$12.2B

CAGR21%

Revenues (US$B)

0.5

0.0

1.0

1.5

2.0

2.5

3.0

3.5

’13 ’14’12 ’15 ’16 ’17 ’18

2013$1.7B

2018$3.2BCAGR

13%

FIG. 11. MR16 LED lamps will be impacted by socket saturation earlier than other sub-segments.



The MR16 sub-segment is also instructive of what will happen across the lamps market because it is a year or two in front of the other sub-segments in terms of adoption. Fig. 11 shows that in the 2017–2018 timeframe socket saturation will impact MR16 lamps sales with a decline in revenue inevitable.

Conversely, Smallwood projects A-lamp revenue at $5.2B in 2018, exceeding MR16 revenue and still on a growth path at that point. But saturation will happen soon after, and with the long LED lifetime the lamps market will decline considerably. Smallwood said that North America has been consuming 1.1 replacement lamp per year based on legacy incandescent and compact-fluorescent technology. That per-year unit volume will be slashed by LED lifetime.

Smallwood also had an interesting outlook on the LED-based tube market, which as Fig. 10 shows is substantial but probably not as large as the participants in that space would hope based on the huge installed base of linear fluorescent lamps around the globe. While many prognosticators, including the US Department of Energy (DOE), have questioned the lighting quality produced by LED tubes, Smallwood based his thoughts on the incumbent technology. He said T8 and T5 fluorescent tubes perform well and the efficiency advantage of LEDs is not significant enough to spur a broad retrofit wave.

LED luminaires

Let’s briefly consider the state of the LED luminaire market. While comparing lamps and luminaires in terms of packaged LED revenue revealed that lamps were the larger segment, the opposite is true in terms of revenue of the lighting products. Consider Fig. 12. Luminaire revenues totaled $11.7B in 2013 and will grow to $21.3B in five years. Luminaires are simply much more complex products with more expensive subsystems such as driver electronics and housings. And LEDs with dropping component prices represent an increasingly smaller portion of the bill of materials cost for both lamps and luminaires.



The luminaire market is predominantly driven by four sub-segments. Architectural or façade lighting outdoors has been an early area of success due to both the energy savings associated with LEDs and dynamic color capabilities. Outdoor street and area lighting is a prime sub-segment because those products burn all night, and energy and maintenance savings are critical.

Likewise, the commercial and industrial sub-segments are very focused on energy and maintenance savings and, more recently, the quality of light that LED sources can deliver relative to fluorescent and high-intensity discharge (HID) sources.

Success in lighting

Having covered the lighting products, let’s return to a final discussion focused on LEDs relative to lighting applications. First, we will look at how well the LED manufacturers are penetrating the general lighting market. Strategies Unlimited does not break such data out per individual LED manufacturers, but we can make some inferences based on Fig. 13, and the discussion we had based around Fig. 2 and the number of LED makers that Strategies Unlimited tracks in each region.

In perhaps a surprising fact, Evstratyeva reported that LED makers in the US accounted for the majority of the LED revenue sold into lighting in 2013. The bulk of that revenue is surely attributable to Cree. While the company is only the sixth-largest LED supplier based on revenue for

FIG. 12. LED luminaire revenue is much higher than lamps due to the complexity of the products.

’13 ’14’12 ’15 ’16 ’17 ’18

Revenues (US$B)

0

5

10

15

20

25

Emergency

Outdoor

Industrial

Architectural

Commercial

Residential

Consumer portable

Entertainment

Retail display

Off-grid2013

$11.7B

2018$21.3B

CAGR12.3%

US$4.47B

Japan 21%

Korea 15%

China 11%

Taiwan 18%

USA 31%

Europe 4%

FIG. 13. US LED suppliers are leading the way in the lighting application.



2013, Cree is perhaps the top supplier in lighting applications and has taken good advantage of its early focus on the lighting application segment.

The real question is how the lighting market will proceed going forward. And much of that discussion could hinge on the types of LEDs used in various lighting products. Strategies Unlimited continues to segment the LED market into low-power, mid-power, high-power, and super-high-power sub-segments. The key differentiating point has been the line in the middle where mid-power LEDs are operated at 0.5W and below and high-power LEDs in the 0.5W to 5W range. High-power LEDs have been dominant in lighting applications.

LED categorization

The boundary between mid- and high-power LEDs has also been neatly aligned with plastic or hybrid-plastic packages used in the lower-end LEDs and more-reliable ceramic packages being used in higher-power devices. But the boundary lines are being crossed from every perspective. Mid-power LEDs are being operated at power levels above 0.5W and increasingly include architectural elements that were developed first in high-power LEDs. For example, Philips just announced high-voltage mid-power LEDs, and added epoxy-molded-compound packages that should deliver better reliability. Cree continues to push ceramic packages into smaller footprints — smaller than mid-power LEDs — while delivering the luminous flux of larger high-power LEDs.

Evstratyeva readily admitted in her SIL presentation that new thinking was needed in the area of segmenting the LED market by type of device. Still, she presented

’13 ’14 ’15 ’16 ’17 ’18

Revenues (US$B)

0

1

2

3

4

5

6

7

8

Super-high power

High power

Medium power

Low power

FIG. 14. The replacement lamps market will consume LEDs across the power sub-segment categorization.



some projections based on the conventional segmentation tied to power level. And the results were surprising to some in the audience.

For example, consider the replacement lamps market depicted in Fig. 14 segmented by LED type. Strategies Unlimited projects high-power LEDs to remain dominant in terms of revenue in the retrofit lamps segment. A number of attendees at SIL questioned that projection in networking events after the Plenary session.

We’d speculate, however, that the devil is in the details. If you stick with a categorization based on power level, then LEDs packaged in a plastic or hybrid-composition package, and that operate above the 0.5W level, are in the high-power category. Moreover, remember that the breakdown is based on LED revenue and not unit volume. High-power LEDs sell at higher price levels; therefore, the products that use high-power LEDs will contribute more to the high-power category measured by revenue.

The surprising angle to the category-based breakdown is the increasing prominence of COB LEDs across many different lighting applications. Some in the industry have the mistaken idea that COBs deliver more uniform light. In reality a careful optical design can almost always deliver better optical performance with discrete emitters. The fact is that COBs are easier to design into products. Driving the COBs is easier and the thermals are in part handled in the LED package. Coming out of SIL the prevailing thought was that you should expect COBs in virtually every lighting application, with lighting manufacturers trading simplicity of product development for less-precise beam control.


ORIGINALLY PUBLISHED MARCH 26, 2013

Packaged LED market resumes moderate growth while the SSL market will enjoy 12% CAGR through 2017

General lighting applications are now the largest market,

measured by revenue, for packaged LEDs, reports MAURY WRIGHT

from the Strategies in Light conference, and the SSL market

has grown to $11.8 billion for lamps and luminaires.

OPENING AND CLOSING the Plenary session at the Strategies in Light (SIL) conference, Ella Shum and Vrinda Bhandarkar of Strategies Unlimited reported on the 2012 market for packaged LEDs and SSL products respectively. Packaged LED revenue hit $13.7 B (billion) in 2012, while solid-state lighting (SSL) revenue for lamps and luminaires combined reach $11.8 B. Both markets will continue to grow through 2017 although LED revenue growth will be moderated by falling component prices even as more LEDs are manufactured.

Shum, director of the LED practice at Strategies Unlimited, reported that the global market for packaged LEDs in 2012 totaled $13.7 B. That total does not include the sale of bare die or modular lighting products, but solely packaged LEDs whether the product in question is a single-emitter LED, a multi-die package, or a chip-on-board (COB) LED array. The total market was up from $12.5 B in 2011 as we covered in our SIL report from last year.


Packaged LED market resumes moderate growth while the SSL market will enjoy 12% CAGR

LED market by segments

Shum segments the packaged LED market into backlight (TV/monitor), mobile, signage, automotive, lighting and other categories. For the first time in 2012, general lighting became the largest market for packaged LEDs globally at $3.1 B. Fig. 1 depicts the market breakdown by revenue for packaged LEDs across the segments and shows the growth or decline in the segments from 2011 to 2012.

Shum’s talk was entitled, “The art of war” and she opened saying, “We have had a bloodbath in the last few years in the LED industry.” As she reported last year, there has been an oversupply of components in the market driven primarily by a surplus of products made for the backlight segment. The TV market has been slower than some expected to transition from fluorescent to LED backlights while LED manufacturers sought to win in that segment.

The result of the surplus has been even lower LED prices than could be justified by advancements in LED manufacturing technology – especially in low- and mid-power devices. But the low prices have impacted pricing expectations even in high-power LEDs designed specifically for lighting applications. And LED manufacturers have competed tenaciously to win market share, leading to the title of the presentation.

Manufacturer rankings

Continuing with the battle theme, Shum provided her rankings of the top 10 packaged LED vendors for 2012 (Table 1) and then discussed strategies that different manufacturers are pursuing and specific challenges that some face. There was little change in the order of the suppliers relative to 2011, although Shum also

2011

2012

Revenue (US$, B)

BacklightTV/monitor

Mobile Sign Lighting Automotive Others

2.5

2.0

3.5

3.0

1.5

1.0

0.5

0.0

FIG. 1. Packaged LED revenue growth segmented by market over 2011 to 2012.



supplied growth/decline rates by manufacturer that could foretell future changes.

Samsung was a major mover in terms of growth, although its overall position in the ranking was unchanged. The growth, according to Shum, comes from its production of LEDs for use in Samsung consumer products such as TVs. Likewise, Lumens entered the rankings in a tie for the tenth spot – actually making the rankings a top-11 list. And Lumens is another major supplier to Samsung for consumer products. Samsung, however, seems intent on continuing to ramp its LED manufacturing numbers, becoming even more vertically integrated in terms of its consumer products. Toyoda Gosei jumped a spot in the rankings. Shum said that the company’s 37% growth came thanks to supplying LEDs for Apple mobile products.

Cree and Philips Lumileds appear to be the most prominent beneficiaries of the ramp in LEDs used for general

lighting applications. Both experienced growth in the 20% range. And as we will discuss in more detail shortly, general lighting is the segment with

the most long-term growth potential.

Shum said that the top 11 companies in her rankings accounted for 72% of the global packaged LED revenue. Manufacturers in Japan led with 30% of the overall market followed by

Korea at 28%, Taiwan and South East Asia at 15% and China at 8% (Fig. 3). It might be worth noting that Shum has expressed the opinion that China will have a player in the top ten within five years. Manufacturers in the US and Europe combined make up 19% of the total market.

1. Nichia 5%

2. Samsung 22%

3. Osram Opto 5%

4. LG Innotek -1%

5. Seoul Semi Philips Lumileds

14% 21%

7. Cree 18%

8. TG 18%

9. Sharp 14%

10. Everlight Lumens

-1% 32%

FIG. 2. Nichia’s 757 LED in a QFN plastic package.



In terms of strategy, Shum described different approaches that manufacturers are taking to differentiate their products and grow their market. For example, she cited the recent 100W COB LED announced by Sharp as an example of greater lumen output through larger size. She noted that Cree has continued to push performance in terms of efficacy, specifically mentioning the recently announced 200-lm/W XLamp MK-R LED. Shum said that Bridgelux was attempting to simplify luminaire design with its

Vero COB LEDs that separate the LED and plastic holder that can include either large solder pads or a connector.

Of course lower-component cost is a common goal among LED manufacturers, although the manufacturers take different approaches to the fact that higher volumes and maturing manufacturing technology is enabling cost reduction. Cree, for example, tends to try and keep LED cost relatively constant while offering higher performance – still providing cost savings at the SSL system level as fewer LEDs are required. Shum cited Nichia for being at the forefront of LED price drops and noted the company’s 757 high-power LED family that is packaged more like a low- or mid-power device (Fig. 2). Nichia packages the 757 LEDs in a plastic QFN (Quad Flat No-leads) package developed and widely used in the broader semiconductor market.

Separate from technology strategy, Shum also noted that LED manufacturers are taking different business and market approaches such as the aforementioned Samsung strategy of vertical integration. She siad that many companies were seeking to grow through mergers or alliances mentioning specifically Epistar and Huga Optotech; Nichia and Citizen; and Toyoda Gosei and Showa Denko. Cree, Osram, and Philips are all helping to drive the LED component market by pushing SSL deployment – essentially another approach to vertical integration. Shum

FIG. 3. Packaged LED revenue in 2012 by region.


Japan30%

Korea28%

US/Europe19%

Taiwan/SE Asia15%

China8%



did not have positive thoughts for the small- and mid-size LED manufacturers essentially predicting that most will not survive as independent LED manufacturers.

Market segment details

Getting back to market segments, Shum discussed each in depth. The 2012 sales were broken down by SSL at 23%, backlights for TVs and monitors at 22%, mobile at 19%, signage at 13%, automotive at 10%, and other at 13 %. Referring back To Fig. 1, it’s clear that most of the segments are saturated or are moving quickly toward that position, with the exception of lighting. The lighting segment experienced tremendous growth from just over $1.5 B in 2011 to the $3.1 B number in 2012.

Still all of the segments are substantial in terms of LEDs consumed and warrant further examination starting with the backlight segment that had been the largest growth segment for LEDs prior to 2012. Last year at SIL, Shum predicted that a new class of low-cost, direct-backlit TVs were headed to market and that the trend could greatly impact LED sales. At that time no companies were actually producing what Shum calls chubby TVs. She said that from March to December of 2012, however, there were around 20 million such TVs sold globally.

The driver behind thicker TVs is lower cost. Making the TV thicker allows the TV manufacturer to use fewer brighter LEDs to effectively backlight the screen. That may seem completely ironic given that the value proposition of LED-based TVs has been either super-slim edge-lit models, or direct-lit models that greatly enhanced picture quality via large numbers of LEDs and local dimming. But now LED backlighting can be a low-cost play for TV manufacturers at the lower end of their portfolio.

TV trends

Shum predicts that the chubby TVs will represent an increasingly larger portion of the market over the course of the next five years. Fig. 4 depicts both the revenue value of the LEDs used in different types of TVs on the left axis and the number of



LEDs that the types of TVs will consume. You can clearly see the impact of reductions in LED prices going forward as the TV segment will consume more LEDs while the market value of those LEDs declines.

There are a number of factors that could yet impact the forecast. At the Consumer Electronics Show back in January, for example, a number of

companies demonstrated what are being called Ultra HD or 4k TVs that feature 4000×2000-pixel resolution – four times the resolution of today’s best HDTVs. It remains to be seen how fast those sets come to market or if consumers will pay a premium price for them. But they will use significantly more LEDs. Such TVs will almost universally use a direct-backlight scheme with local dimming. Shum said each set could consume more than 5000 7030-package LEDs.

Energy regulatory issues could also come into play including the Energy Star program administered by the US Environmental Protection Agency and at the state level by programs such as California Title 20. For example, Energy Star 6.0 requires that TV sets larger than 55 inches consume no more power than 55-inch sets. Direct-backlit designs with local dimming consume less power because the backlight LEDs for much of the display may be dimmed at any given time. So such regulations could increase the use of local dimming, or TV manufacturers could use the chubby model and further reduce the number of LEDs used and maximum light levels that TVs are capable of delivering.

Mobile, auto, and signage applications

Just behind the backlight market in terms of revenue, the mobile segment remains significant, consuming more than $2.5 B in LEDs and is comprised of both phones and tablets. The phone segment alone totaled $1.4 B in 2012. There are two factors

FIG. 4. LED revenue in the TV market segment by the backlighting scheme used.


3.02.52.01.51.00.50.0

1601401201008060402002011

Revenue (US$, B)Edge lit w/o dimmingEdge lit with dimmingDirect backlightLow-cost backlit

2012 2013 2014 2015 2016 2017

Units (M)Edge lit w/o dimmingEdge lit with dimmingDirect backlightLow-cost backlit



driving more LED sales – the transition to smartphones requiring more and better backlights and the broad inclusion of an LED as a camera flash on phones.

Fig. 5 shows Shum’s market projection for the mobile phone space over the next five years. Sales into the flash usage are the only place where she sees revenues rising. But the rising penetration of smart phones will to a degree mitigate the impact of falling LED prices. The tablet market is less certain at this point, although Shum did note the overall trend of an increase in tablet sales relative to decline in notebook computer sales.

The auto market includes both interior lighting and exterior lighting including headlamps. The latter promises to be the growth sub segment. It is being enabled by what Shum termed the magic bullet – new optics. Manufacturers are developing total internal reflection optics (TIR) that can enable a number of different headlamp types that will ultimately allow auto manufacturers to move to LED-based designs across their entire fleet.

At the low end of the auto market you will see reflector-type designs with a transition to projector-type headlamps that use TIRs on higher-priced vehicles. At the high end, there are products classified as direct-projection headlamps that have multiple LED/optic elements for different illumination angles that can go far beyond the legacy low- and high-beam settings in terms of beam control.

The total market for LEDs used in exterior auto lighting applications in 2012 was $737 million. Fig. 6 details the total exterior lighting market broken up by how the LEDs are used projected through 2017. The daytime running lamps (DRL) usage has been the largest consumer of LEDs although that will give way to headlamps in

FIG. 5. LED revenue in mobile phones segmented by usage in the phone.


Revenue (US$, M)

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700

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2011 2012 2013 2014

Flash

Smart phonedisplay

Feature phonesdisplay

Keypad

RGB multichipsringer

2015 2016 2017



the 2014-2015 timeframe. And the headlamp usage is growing at a CAGR of 36% based on LED revenue. Shum projects a relatively flat market for LEDs used in interior applications. More LEDs will be utilized in more ways than ever, including as backlights for what are becoming almost ubiquitous video panels. But LED component price drops will keep the market flat from an LED revenue perspective.

The signage market is one that is fully saturated in terms of using SSL technology. Still, Shum projects steady, although unspectacular, growth for the segment. In 2012, LED revenue for the segment totaled $1.7 B and Shum projects that it will cross $2 B in 2015.

LEDs in lighting

Coming full circle, the real growth in LED sales will come in general SSL applications. Shum projects that LED revenue from lighting to grow from the previously mentioned $3.1 B in 2012 to $4.4 B in 2017, representing a CAGR of 7% (Fig. 7).

The projected growth is especially impressive if you consider the rate at which prices are dropping. Fig. 8 depicts the increase in efficacy over the past five years plotted against the decrease in dollar per kilo lumen ($/klm) – the latter a metric that the US Department of Energy (DOE) tracks and projects in its SSL program. Indeed in the DOE’s latest SSL Multi-Year Program Plan

FIG. 6. LED revenue in auto exterior lighting showing that growth will come in headlamps.


Revenue (US$, M)

0

350

300

450

400

250

200

150

100

50

2011 2012 2013 2014

DRL

Headlamp

CHMSL

Stop/tail

2 wheel vehicles

Trucks, buses,warning signals

After market

Headlamp5 year CAGR

36%

Others

2015 2016 2017

FIG. 7. LED revenue in general lighting segmented by application.


Revenue (US$, B)

Off-grid

Outdoor area

Industrial

Commercial

Retail display

Other lighting

Emergency lighting

Consumer portable

Residential

Entertainment

Architectural

Replacement lamps

0.0

3.5

3.0

4.5

4.0

2.5

2.0

1.5

1.0

0.5

2012 2013 2014 2015 2016 2017

CAGR7%

$3.1B

$4.4B



published in April 2012, the agency projected that it would be after 2013 before packaged LED prices dropped to the $3/klm level and after 2015 before prices hit $2/klm. The $3.45/klm number in Fig. 8 represents the average for the year 2012. At SIL, Shum said she thinks the figure has already dropped to $2/klm via products such as the Nichia 757 mentioned earlier.

Later in the Plenary session Bhandarkar, director of research for LED lighting at Strategies Unlimited, presented data on the actual market for lighting products. Bhandarkar said replacement lamp revenue grew from $2.1 B in 2011 to $2.58 B in 2012. The largest jump came in Japan where energy concerns caused by the earthquake and tsunami that occurred in 2011 knocking out major energy-generation facilities.

In the luminaire sector, revenue grew from $7.2 B in 2011 to $9.2 B in 2012. The commercial market segment is leading the adoption of SSL, representing 23% of the market. Growth in luminaires is fairly consistent across the globe. For the first time, Bhandarkar also reported on another category that includes products such as flexible strings, furniture lighting, airplane lighting, toys and other products that totaled $2.75 B bring the overall market total to $14.5 B.

Bhandarkar also addressed some specific types of products. She said, “LED downlights became a commodity market in 2012 – more than 50% of products sold in Japan were LEDs.” Looking forward, she said “Troffers

FIG. 8. LED efficacy is steeply rising while price measured by $/klm is dropping.


Average lm/1W pkgPrice/klm

2007 2008

$32

$22

$16$13

130120

11098

7770

$6.25$3.45

2009 2010 2011 2012

FIG. 9. LED revenues across all applications will rise gently driven by lighting.


Revenue (US$, B)

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10

16

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8

6

4

2

2012

$13.7B

20132011 2014 2015 2016 2017

$15BCAGR1.8%

Backlight TV/monitor

Mobile

Sign

Lighting

Automotive

Others



will be the next major wave of SSL deployment starting this year.” She expects the troffer market to be strong in 2014 and going into 2015.

Overall, the SSL market will enjoy a CAGR of 12% through 2017. Bhandarkar projects that SSL luminaire revenue will exceed $20 B in 2017.

Projecting the packaged LED market

Given the push that packaged LEDs are getting from lighting applications, where are we headed you might ask? The news was better than last year. At SIL in 2012, Shum projected a slight increase in packaged LED revenue in 2013 followed by a -0.2% CAGR through 2016. Given the continuing price drop in components, the revenue forecast hasn’t changed tremendously but the five-year CAGR projected this year is positive at 1.8% as depicted in Fig. 9.

Lighting will continue to grow and drive the market. Shum predicts that packaged LED revenue will hit $15 B by 2017. For the first time, Shum also showed a chart reflecting the number of packaged LEDs sold (Fig. 10). We include it here to make the point that in terms of unit volumes, the industry is still in a tremendous growth mode. But as Shum pointed out, the numbers can be misleading because the units sold include everything from single-die packages to COBs that have dozens of emitters in a package. A chart that showed LED die unit volume would show even steeper growth.

FIG. 10. The unit volume of packaged LEDs produced is on a steep growth path.


Units (B)

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2012 2013 2014 2015 2016 2017

RGB

InGaAlP High power

InGaAlP Mid power

InGaAlP Low power

InGaN Super high power

InGaN High power

InGaN Mid power

InGaN Low power

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