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The Way I See It: LEDs: Another Wild West
Monday, September 19, 2011 | Ray Rasmussen

Editor's Note: This column originally appeared in the August issue of The PCB Magazine.

A few years ago, I wrote an article about the crazy solar industry. The photovoltaics (PV) industry is enticing, with huge growth rates and tons of opportunities for the right companies. Back then, the consultants were coming out of the woodwork trying to lead board fabricators and assemblers into what I termed the Wild West. As you can imagine, the article generated quite a bit of interest in the industry and many folks sent in comments or commented to me privately. In addition, believe it or not, most fagreed with me that solar just wasn’t a good fit for most businesses in our industries. In the article, my advice was to go slow and be careful not to get caught up in the hype. Although exciting, solar is best left for the big boys. There are very few opportunities for small fabricators or assemblers who would need to compete with well-funded, global manufacturers. Even the giant EMS companies are only dipping their toes into the water at this point, still not sure if they can make a go of it. In an interview with Irene Sterian of Celestica, who’s in charge of their solar efforts, she talks about the company’s efforts to date. They certainly haven’t gone “all-in” yet. Watch her interview here.

So, this brings me to the exciting, but very solar-like world of LEDs. 

Certainly LEDs will change the way we light our homes, businesses and communities. It really is a done deal--LEDs are here to stay.  But because of cost, primarily, that industry is still in flux with dozens of competing technologies mostly focused around cost reductions. In order to achieve its market potential, LEDs need to move from the $40 to $50 price for a replacement bulb to somewhere between $5 and $10. And, because the numbers are so huge, with billions potentially being sold per year for decades to come, a ton of resources are being poured into materials and manufacturing techniques to get the price point needed for mass adoption. 

A Potential Catalyst

As a result of the crisis in Japan, and their immediate need to reduce energy usage drastically, I wouldn’t be surprised to see huge purchases of LEDs by Japan’s government to help ease the energy crisis. This could help shape the industry in the near term and drive the economies of scale needed to bring the prices in line with consumer expectations. The Japanese’s purchase of hundreds of millions of LED lights for office buildings, factories and homes will be a huge industry catalyst, which will then feed on itself bringing lower prices, and in turn, higher demand. It’s possible that the tragedy in Japan could be a major catalyst for the LED industry.

Another looming market driver is the phasing out of incandescent bulbs in the U.S. over the next five to 10 years. This, too, will have a major impact on the industry, which is why there’s so much activity. The LED boom is coming, and soon.

But, like the solar industry, the LED industry will likely be in flux for at least the next decade as companies ramp up production, discover new technologies which make LEDs even more efficient (still lots of wasted heat to deal with, as we all know) and find additional ways to drive down costs. 

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