north carolina utility savings initiativevapor lamp 1970s first red led ~1990 “high brightness”...

North Carolina Utility Savings Initiative

LED Overview

July 10, 2007

Copyright © 2007, Cree, Inc. pg. 2

Cree Corporate Overview


Cree Heritage

Revenue (Millions US $)

$155

$230

$307

$389$423

$-

$50

$100

$150

$200

$250

$300

$350

$400

$450

2002 2003 2004 2005 2006

Fiscal Year

• Founded in 1987 to commercialize silicon carbide (SiC) semiconductors

• Introduced first blue LED in 1989

• Publicly traded on NASDAQ since 1993 (Symbol: CREE)

• Market capitalization $ 2 B USD


Cree Around the World

• Headquarters:

– Durham, NC, USA

• Global Locations:

– Santa Barbara, CA, USA

– Dulles, VA, USA

– Vienna, Austria

– Huizhou, China

– Tokyo, Japan

– Hong Kong

– Taipei, Taiwan

– Seoul, Korea

– Penang, Malaysia

• ~ 2,400 Employees *(* includes COTCO)


Cree Solid State Lighting

History

• Cree started packaged LED development in 2003 with the charter of creating an LED lighting revolution.

Product Development

• XLamp packaged LEDs shipped in July 2004.

• Currently providing full portfolio of LED lamps in color and white with currents up to 1000 mA.

• All package design, engineering, and reliability testing are done in house.

• Cree has an extensive library of patents & IP.


The LED Lighting Revolution


…A Brief History of Lighting

1879Edison Light

Bulb

U.S. 223,898

1901Fluorescent

Tube 1919Sodium

Vapor Lamp

1970sFirst RedLED

~1990“High Brightness”Red, Orange,

Yellow, & Green LEDs

1995“High Brightness”Blue, Green LEDs

2000White LED LampdemonstratesIncandescent

Efficacy (17 lm/W) 2005White LED LampdemonstratesFluorescent

Efficacy (70 lm/W)

• Current lighting technology is about 100 years old!

• LEDs began as just indicators, but are now poised to become the most efficient light source ever created – we call this the Lighting Revolution!


A Long History of Success for Solid State

VHS DVD

Vacuum Tubes

Transistors

Film Flash Memory

CRTTV

Flat Panel TV and

Displays

Light Bulbs/

Fluorescent Tubes

Solid State

Lighting

1940s – 1950s

1980s –1990s

1990s –2000s

1990s –2000s

2000s – …


0

10

20

30

40

50

60

70

80

Time

Market Opportunity

Color White (Today) White (Emerging) Backlighting Office/Home

Pote

ntia

l T

AM

= $

50 B

illio

n*

Drivers- Maintenance Benefit- Energy Savings- Battery Life- New Feature/Capability

*Source: Morgan Stanley Research

Emerging applicationsExisting LEDApplications


Why Now?

• Latest generation of High Power LED technology

– The brightest production devices available today are 300% brighter than just 18 months ago, also 30% cheaper

• Economics are starting to make sense

– Every time they get brighter and cheaper, the economics begin to work on more and more lighting applications…

• Combined with..

– Energy prices and volatility – world politics, oil prices

– Regulatory – Energy Star®, light bulb bans


Light Source Efficacy Trends

0

20

40

60

80

100

120

140

160

180

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Eff

ica

cy (

lum

en

s/w

att

)

Incandescent

CFL

Metal Halide

Fluorescent

High Volume LED

Production Best

Best Announced LED

R&D Capability

Cool White 1W Power LED*

LED Technology Is Accelerating

* US Department of Energy Projections, March 2007


Cree XLamp® Technology

7090 XR

First Generation Power LEDs

Second Generation Power LEDs

25% brighter & 11% better efficacy

XLamp XR-E100 lm

Today“Lighting Class”

LEDs

XLamp XR-E80.6 lm

OCT 2006

40% brighter & 50% better efficacy

FEB 2006


Basic Concepts of LED Light


PN junction semiconductor diode that emits a monochromatic (single color) light when operated in a forward biased direction.

Light Emitting Diode (LED): How it works

• LEDs consist of several layers of semiconductor material

• Light is generated in the active layer when a current is applied

• Unlike an ordinary light bulb which emits a continuous spectrum of light, the LED light is monochromatic or a single color

• The color of light from the LED depends on the materials used

• There are two material systems (AlInGaP and InGaN) use to produce LEDs in all colors from blue to red


XLamp® Packaged LEDs

LED die

ESD protection

Wire bondReflector

Lens

Substrate


Color LEDs: Monochromatic Light Output


Producing White Light

• Two methods: “RGB” and “Blue + Phosphor”

– RGB: Higher quality, but higher price and power

– B+P: Lower quality (improving), lower price and power

• Most apps focused on “Blue + Phosphor”


LED Advantages


Basic Advantages of LED Light

• Are very energy efficient �� >80LPW (still improving…)

• Are directional �� No wasted light, any pattern possible

• Have very long lifetime �� >50,000 hours to 70% LM

• Are inherently rugged �� No filament to break

• Start instantly �� nanoseconds vs. > 10 min (HID)

• Are environmentally sound �� no Hg, Pb, heavy metals

• Are infinitely dimmable, controllable �� New lighting features, power savings

• Love cold temperatures �� No cold starting issues

LEDs can technically replace ANY incumbent lighting technology. Lum/$ remains a barrier for some applications, but is improving


“The Promise” Energy Usage Comparison

0

10

20

30

40

50

60

Light Source

60W Bulb

CompactFluor.

LED

“Best” White LED and Compact Fluorescent vs. 60Watt Light Bulb ComparisonP

ow

er

Use

d (

Watt

s)

XLamp LED


The LED Directional Advantage

• Conventional lighting is inherently omni-directional

– Lower fixture efficiency or “usable lumens”

• LED Light is inherently directional

– Higher fixture efficiency or “usable lumens”

~90°view angle

XLamp LED

Conventional Lighting

Reflecto

r


Lighting System Efficiency

LumensPer Watt

Usable Lumens Per Watt

Fixture Efficiency

150 W Cobra Head Type II Streetlight

(HPS)

91 4650%

Luminaire Type

T8 FluorescentTube 80 6277%

400W HID w/Glass Housing (MH) 70 3854%

Incandescent 10 770%

CompactFluorescent 45 1533%


Directional LED Light = Better Fixture Efficacy

Fixture Efficacy

32 lm/W65 lm/W

CFL

Coefficient of Utilization

58%x =

* Including loss for thermal equilibrium @ Tj = 65°°°°C

Coefficient of Utilization 77%

Loss for thermal 90%*46 lm/W =

Previous LEDs x

xFixture Efficacy

32 lm/W

XLamp XR-E 56 lm/W =x

xCoefficient of Utilization 77%

Loss for thermal 90%*

Fixture Efficacy

39 lm/W


LED Lifetime and Lumen Maintenance

40%

50%

60%

70%

80%

90%

100%

110%

0 10 20 30 40 50 60 70 80 90 100

Operating Time (k hrs)

Lumen Output (%

)

100 W Incandescent

5mm LED

42W CFL

50 W Tungsten Halide

400 W Metal Halide

25 W T8 Fluorescent

Cree XLamp

• Operating under reasonable design conditions LEDS have a projected lifetime of 50,000 hours at 70% lumen maintenance

• LEDs inherently fail “gracefully” – no burn out, catastrophic failure

• Up to 100,000 hours (>11 years continuous life) can be projected


Light Source Comparison

20-24k<5091High-pressure sodium

20k55-6074T8 fluorescent

20k96107T5 fluorescent

> 50k50-7080Cree XLamp XR-E

> 50k40-4747Cree XLamp XR

18k65-70120Low-pressure sodium

5k-15k<4070Metal halide

20k45-5060T12 fluorescent

10k12-2020Halogen

3k10-1717Incandescent

Lifetime (hrs)Usable* lm/W

Data Sheet lm/W

Light Type

* Typical expected performance in real-life applications


Mercury Emission by Light Source

0123456789

10

Hg in CFL Hg in

Emissions

from Coal

Plant

60W Bulb

CFL

LEDMill

igra

ms o

f M

erc

ury

CFL Source: U.S. EPA Fact Sheet:http://www.nema.org/lamprecycle/epafactsheet-cfl.pdfLED Source: UCSB SSLDC estimate for 150lm/watt White LED


Incandescent

FluorescentHigh Intensity Discharge

Compact Fluorescent Halogen

Pros: Cheap, efficientCons: Poor color,

long restart, short lifetime

Pros: Very cheap, great colorCons: Very short lifetime,

poor energy efficiency

Pros: Cheap, energy efficientCons: Can not run in cold temp;

difficult/costly to dim, control, Hg

Pros: Energy efficientCons: Poor color quality,

Can not run in cold,High cost vs. Incand, Hg

Pros: Great color, focused lightCons: Very short lifetime,

poor energy efficiency

No Perfect Artificial Light Source Exists (yet)


Tipping Point is Close On All The Major Apps…

0

50

100

150

200

250

300

350

400

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Nu

mb

er

of

1W

LE

Ds N

eed

ed

0

25

50

75

100

125

150

175

Exp

ecte

d L

um

en

s p

er

1W

LE

D

150W Roadway

400W HID Met

4x T5 FL Troffer

Lumens/1W LED


LED Value Proposition & Applications


0

10

20

30

40

50

60

70

80

Time

Increasing the Adoption of LED Light

ColorSpecialty

White Specialty

Outdoor Light

Indoor Directional

Indoor General

XLampCool White

XLampWarm White

Market for LED General Illumination


Making the Business Case Work

Initial applications will be driven by maintenance avoidance & energy savings

– Street & Parking lot lighting– Parking garages– Atrium– Tunnels– Hazardous work areas


Light Source Comparison

2-3 Year Payback For End Customer

Conclusion: LEDs are now both bright enough and economical enough to work in outdoor lighting

Street Light Comparison Example

$-

$200

$400

$600

$800

$1,000

$1,200

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

HID Cumulative Cost

LED Cumulative Cost

Cumulative Value Created


Attractive Financial Proposition For Fixture Co.

Tota

l F

ixtu

re C

oO

*

Bulb

$200

$0

$400

* NOT including power or initial installation labor

10-year Cost of Ownership*

Conventional HID Fixture

Initial Fixture

Sale

35 – 45%

GM

$300

Labor

Labor

LED Fixture

Initial

Fixture

Sale

50% GM

LED

Fixture

Type II Cobra Head Roadway Light

$100

MetalHalideFixture

Maintenance

Events

Bulb

Bulb

Bulb

Labor

Labor

Labor

Maintenance

EventsLaborLabor


Cree LEDs in Emerging LED Markets

PortableLighting

OutdoorLighting

IndoorDirectionalLighting


Refrigeration Display

• Wal-Mart announced last fall that it would retrofit refrigerator cases in more than 500 of its stores with LED lighting systems

• Wal-mart estimates that this move alone will save $3.8 million a year and reduce carbon dioxide emissions by 65 million pounds

• Reduction in energy of 10% for Wal-mart EQUALS the entire cost of transportation – 950 million miles last year

Wal-mart Operating

Expenses by Category


Summary

• LED light offers significant advantages over traditional light sources– Long lifetime & rugged

– Efficient, directional light

• LED advantages create real value through:– Maintenance avoidance

– Energy savings

• Brighter LEDs = More LED lighting applications– Outdoor LED light revolution happening now!

– Indoor directional LED light revolution coming soon

• Need for efficient, long-lifetime light sources will help increase LED light adoption– LED City initiative

– CA Title 24, Australia, European Union, U.S. DOE


LED City Initiative Overview

• Joint initiative between Cree & City of Raleigh, NC

– Launched February 12, 2007

– Broad commitment to LED lighting across the entire Raleigh city infrastructure

• Funding and resources

– Multiple target applications

• Parking garages, Parking lots, Street lights, Pedestrian lights,Portable lighting, Outside buildings

• LED City website will act as a hub of information

– Community of LED Cities sharing information

– Joint testing, deployment and promotion of LED lighting

www.ledcity.org


One Tangible Example of Outdoor LED Light

Raleigh, NC, USA – “LED City” – Parking Garage

• XLamp LEDs in commercially available fixtures

• Delivering >40% total power savings

• Can deliver <5 year payback TODAY

100W HPS 75W White LED

north carolina utility savings initiativevapor lamp 1970s first red led ~1990 “high brightness”...

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