Bright idea will have to wait

LEDs have clear advantages but the cost of making them has to fall before they can be widely adopted

The humble light emitting diode might have a bright future if backers of the technology succeed in replacing traditional tungsten and fluorescent lighting found in homes and offices with LEDs.

The advantages of LEDs are clear. They last as long as 100,000 hours, compared with about 5,000 hours for tungsten lighting. In addition, LEDs burn brighter and are more efficient, consuming about 30 per cent of the energy of a tungsten light bulb.

The key factor hindering the adoption of LEDs in homes is the higher manufacturing expense, which is as much as five times greater than tungsten lighting.

Richard Sy Yuk-tsan, general manager of Hong Kong-based LED manufacturer Cotco International, said it would be three to four years before the technology appears in the home.

'It will be like plasma TVs replacing CRT TVs in your home ... The only concern right now is the cost.'

Mr Sy said cost reductions would be achieved through greater economies of scale and improved manufacturing processes, such as making the diodes on larger semiconductor wafers. United States-based Cree, which licences LED technology to Cotco, manufactures on three-inch wafers but recently added a more cost-efficient four-inch wafer line.

Market researcher Strategies in Light estimated the market for so-called 'high brightness' LEDs - or lamps strong enough to replace traditional lighting - to be worth US$3.7 billion, climbing to US$7 billion by 2009.

Much of this will come from white LEDs, the colour needed to replace tungsten and fluorescent light bulbs in home and office environments. Cotco expected about 20 per cent of its forecast US$100 million revenue would come from white LEDs this year.

White LEDs are expected to contribute 30 per cent next year, with sales growing 20 per cent to 30 per cent. Mr Sy said Cotco typically earned a 10 per cent net profit on revenue.

The company had 70 employees in Hong Kong and 2,000 in Huizhou producing about 55 million pieces a month.

Due to the high manufacturing cost, Cotco is focusing on niche markets before taking on the broader home and office sectors.

It believed the transport sector would be big buyers of white LEDs. Because the lamps last longer they do not need to be replaced as often, which makes them ideal for tunnels and other road lighting where maintenance costs are a factor.

Cotco recently started a tunnel project in the United States that it hopes will prove the technology to other buyers.

Road signage is another application, as is outdoor media advertising with LEDs arranged into a full-colour video screen.

'In LED, you can create whatever colour you like. We can create a very cool white like snow, to a very warm white,' Mr Sy said.

Cotco is also targeting the car industry, arguing that the small size of its LEDs makes them ideal for designers wanting to create sleek-looking vehicles.

While bright colour LEDs have been around for years, the market had been held back due to patent concerns surrounding white LEDs. Four companies produce white LED technology: Japan's Nichia, Germany's Osram and Lamina Ceramics and Cree of the US.

'We believe Cree's patents are the most comprehensive,' Mr Sy said.