The state of solid-state lighting

I’m not sure that I have seen anything in the electronics industry shift from an emerging technology to a commodity as fast as high-brightness LED lighting. Only 10 or so short years ago I was trying to talk marketing people at two major semiconductor companies into making parts for the market. 

Since they could not buy marketing reports showing how big the market was at this second or in next quarter, they brushed me off and said they needed a better business case.  Well, the business case opened up and dumped its entire contents on their heads like a tsunami so fast they could not react fast enough. The latest predictions are that LED lighting will be an over 43 billion dollar market growing at 13% between now and by 2020 according to Zion research.

Now the market is pretty saturated with everyone and their immediate family making things for LED lighting, as the market went from an emerging one to one flooded with offerings from LED protection to power supplies and controller ICs in less than 10 years. 

Parts of the market are like being in the 29-dollar DVD player business – impressive volumes, but single-digit margins, if any at all. Once the electromechanical parts, which used to inhabit this space – ballasts, arc lamps, fluorescent tubes, contactors – were replaced with sensitive electronics, we saw that proximate lightning strikes and transients would routinely wipe out the power supplies, LED’s and other components.  These transients would often exceed by several times the typical specifications that the power supplies were designed for. Unfortunately, transients and surges do not read specifications.  

This has lead to some key developments by companies like Littlefuse on protection devices which keep lighting strikes from taking out utility pole mounted streetlights. This will be the subject of an industry session on safety and compliance that PSMA is holding at APEC. 

Since electronics have seen a race the bottom, the amount of protection that can be added to a system is often lowered and then the proper protection is added externally if the system is going to survive the real world.  It’s an interesting situation. 

There are parts of the LED lighting business, which are not a commodity. High-bay lighting may not be.  Explosion-proof lighting for refineries and off-shore drilling platforms would be two examples.  Medical lighting might not be a commodity, while automotive lighting, while not a commodity, has pretty much standardized on LED lighting.  

The general lighting business has been a commodity low-cost business for a while before us electronic types arrived on the scene, so in effect the market started up into a commodity business. However, features are being added such as connectivity – IoT if you will - for lighting control and monitoring. 

Now that the regular lighting business is a race to the bottom, engineers are finding extra features and functionality, which can be added.   The payback of LED lighting especially with added PFC is tremendous – now that its becoming ubiquitous, engineers are asking what can we do next with sensing, control and connectivity, to move it from a commodity. 

I do think much of the LED lighting business will have similar attributes to consumer electronics.  It’s going to move fast, you have to have the best features, functions, and connectivity at a very value-driven price able to survive hyper competition.  If you are in this market, you are living in interesting times, as the proverb goes.

PSD