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Coke’s ad in Times Square.
June 8, 2006
Changing the Light Bulb
Changing the Light Bulb
Fast Growth in Once-Staid Industry
By EVAN RAMSTAD and KATHRYN KRANHOLD
June 8, 2006; Page B1
The future of lighting is in chips.
Light-emitting diodes — those tiny, chip-based lights that for years have
served as the power indicator on stereos and coffee-makers — are
shaking up the global lighting industry like nothing since fluorescent bulbs emerged just after World War
II.
The spread of LEDs into a wider array of products poses new challenges for Philips Electronics NV,
of Amsterdam; Siemens AG’s Osram unit, based in Munich, Germany; and General Electric Co., of
Fairfield, Conn. The three have dominated every step of making a light bulb, from tungsten mining to retail
promotions, for more than a century. But the LED arena is wide open, with the big multinationals going
up against start-up manufacturers in core chip technology and against niche producers of finished
products — far more competition than they faced in traditional lighting.
A traditional light bulb uses an electrified wire filament in a vacuum tube. An
LED, on the other hand, is a semiconductor chip that, when zapped with
electricity, emits light. The color of the light depends on the material at the
base of the chip. Like computer chips, LEDs can be very small — several
could fit on fingernail — and they can be programmed by software to light
up, for example, a stadium scoreboard.
Such flexibility first pushed LEDs into applications where traditional bulbs
wouldn’t work. Now, high-power LEDs are taking the place of bulbs,
showing up in cellphones, cars, televisions and elsewhere in homes, the light
bulb’s stronghold.
LEDs consume less electricity than many other types of lights and last longer
than most — around 10 years or so. Like other types of chips, their cost is
falling and performance is improving as manufacturers make advances in
materials and factory processes. “It’s going to open up and revolutionize the
way we use and think about lighting,” says Robert Steele, an analyst with Strategies Unlimited, a U.S.
market-research firm that specializes in LEDs.
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Miami Dolphins’ end-zone screen
Cellphones are the biggest new LED market, lighting up keypads and liquid crystal displays. (Computer
screens, in contrast, rely on fluorescent bulbs for light.) Sales of high-brightness LEDs, the kind used in
the new products, are estimated to be $4 billion to $5 billion this year. Sales are expected to hit $10
billion by the end of the decade.
Among the new applications fueling LED growth: Drivers of the new Ford Motor Co. Mustang can use
the “MyColor” feature to change the color of the lighting on their LED-laden dashboard. (A small line of
red, green and blue LEDs can, in varying combinations, produce 125 colors.) Boeing Corp. plans to use
LEDs throughout the interior of its new 787 Dreamliner commercial jet, creating lighting environments that
are supposed to help international travelers adjust to time-zone changes. Owners of a Louisville, Ky.,
restaurant, Proof On Main, eliminated dangling light bulbs and replaced them with LED lighting that
changes from amber in the morning to violet late at night. Already, some traffic signals in cities in the U.S.
and China use LED fixtures that switch between red, yellow and green, instead of separate colored
bulbs.
Philips is selling flameless candles, with LEDs providing the
“flickering” light source. It also is experimenting with LED-based lights
in the shape of bulbs that fit into existing lamps and offer a twist:
Squeezing or tapping the bulb turns it on or off, or makes it change
color. (LEDs don’t get hot because they use so little energy.) And
Philips is developing a remote-controlled LED room-lighting system.
LEDs’ rising influence is most visible in the growth of companies
working on the basic technology. Philips Electronics’ Lumileds, Nichia
Chemical Corp. and Toyoda Gosei Co., of Japan, and Cree Inc., of Durham, N.C., produce LED chips
and sell them to firms that build finished lights. In Asia, some packages for LED flashlights made by
Energizer Holdings Inc. are marked “LED by Nichia” — a marketing ploy similar to the “Intel Inside”
sticker on a computer.
Some start-ups are establishing early leads in market niches. Canada’s Carmanah Technologies Corp.
married LEDs with solar panels for marine buoys. It later expanded into aviation, selling easy-installation
runway lights to the U.S. military in Afghanistan and elsewhere.
The technology has driven Daktronics Inc. of Brookings, S.D., the largest U.S. maker of scoreboards,
into other types of outdoor signs, including some in New York’s Times Square and London’s Piccadilly
Circus. And LEDs have replaced incandescent light bulbs on many high school scoreboards. “It’s a much
more cost-effective and much better energy source,” says Chief Executive Jim Morgan.
Daktronics has edged ahead of an Asian rival, Lighthouse Technologies, of Hong Kong, in a race to
make the biggest LED screen. Two months ago, Daktronics unveiled a 50-foot-high by 140-foot-wide
screen for Dolphin Stadium in Miami, beating Lighthouse’s 132-foot screen, which sits above touristy
Nathan Road in Hong Kong.
A GE engineer, Nick Holonyak Jr., built the first LED in 1962, and the company patented the discovery.
Among the first big uses for LEDs were calculators, and manufacturer Hewlett-Packard Co. eventually
bought GE’s patent.
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Philips Electronics’ LED light ‘bulbs’ change color when squeezed.
But the technology remained on the
fringes of industry for decades.
Nichia and Cree changed that in the
1990s by broadening the LED color
palette, which previously had been
limited to red, yellow and green. The
breakthrough came in 1993, when Nichia, Toyoda Gosei (part-owned by Toyota Motor Co.) and,
soon afterward, Cree conquered blue, marking the final step to creating combinations that would fill out
the color spectrum, including white.
Major manufacturers took notice. In 1999, GE formed GELcore, a venture with chip maker Emcore
Corp., to get back into the LED business. The joint venture is looking to develop the perfect-white
lighting system, which could be used as general illumination in retail stores, industrial buildings and, some
day, homes.
“The game for us is white,” says Michael Petras, vice president of GE’s commercial- and
industrial-lighting sales. “It’s the lighting market.”
Nichia remains the biggest force in overall production of LED chips. Leading in the production of
high-powered chips are Osram Opto Semiconductors and Lumileds, a former joint venture of Philips
Electronics and the Hewlett-Packard spinoff Agilent Technologies Inc. and now 100% owned by
Philips. Gerard Kleisterlee, Philips’s CEO, says one need only look at the history of other electronics
markets to know how varied the future may get.
“We were founded around the manufacture of incandescent light, and that vacuum tube produced other
vacuum tubes for radios and picture tubes for TVs,” Mr. Kleisterlee says. Radio tubes gave way to
transistors, and TV tubes to liquid-crystal displays. “Now,” he says, “finally that same thing starts to
happen to lighting.”
Write to Evan Ramstad at evan.ramstad@wsj.com1 and Kathryn Kranhold at
kathryn.kranhold@wsj.com2
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Hyperlinks in this Article:
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(2) mailto:kathryn.kranhold@wsj.com
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