White light makes right: will LEDs replace the light bulb?

IN the US, Light Emitting Diodes (LEDs) now account for 30 to 40 percent of all new signage. In Japan, that figure has hovered at less than 5 percent. But at Tokyo's annual Sign and Display Show this past September, there was ample evidence to prove that LEDs are a rising force-especially if they're white.

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ONE-HUNDRED AND SEVENTY-SIX companies exhibited, including lighting companies, sign makers, LED manufacturers and various companies involved in printing or electronic displays. There were many variations of LED solutions exhibited--with white LEDs heavily featured.

White represents a revolution in LEDs. The technology on which they depend is blue, but mixing blue from the ultraviolet end of the light spectrum with red and green enables engineers to produce white.

The revolutionary impact of white is that it opens up the possibility that LEDs could eventually replace other illumination devices--including the light bulb--and thereby create a completely new lighting market, with several attendant environmental benefits.

Maverick breakthrough

While it is relatively easy for LEDs to produce warm colors at the wider end of the spectrum, it becomes progressively more difficult to generate cool colors like blue.

It took twenty years before the breakthrough occurred in 1998, when a maverick corporate research warrior, Shuji Nakamura (see JI, July 2001) almost singlehandedly developed a method of using indium nitride as the semiconductor material which could generate blue light.

Everything about the story of how the blue laser diode was developed defied conventional wisdom.

The company where Nakamura conducted his research, Nichia Chemical, is located on the remote island of Shikoku in Japan's Inland Sea. Nichia's research budget was minuscule compared with the huge budgets available to the major lighting and semiconductor companies, but no other company in the multi-billion dollar semiconductor and lighting industries believed indium nitride was a candidate material.

Nakamura pursued his unorthodox research and was eventually proven right. Nichia then cross-licensed the technology and began commercializing blue LEDs.

As reported in these pages in May, Nichia was ordered earlier this year by the Tokyo Disctrict Court to pay [yen]20 billion to Nakamura as compensation for an original payment that was just 0.0000017 percent of the profits made on the blue LED. Nakamura subsequently left Nichia for a post at the University of California, Santa Barbara, where he is hoping to consolidate his achievements and continue his research in this field.

Fierce competition

Nakamura's blue light diode produced a pure green initially, which earlier technology could not achieve. He then found a way to produce a white light by developing a special phosphor. This generated enough lumens for commercial applications such as flashlights, which consumed so little battery power they could run for days rather than hours.

He also set himself up to become somebody who could follow in Edison's shoes as an entrepreneur-cum-researcher by throwing himself into the hurly-burly of Silicon Valley.

There are now many companies that have concluded cross-licensing agreements with Nichia. As a result, competition in the LED market is fierce, which is good for accelerating the development of white light applications. The value of further progress in producing white light by producing the right balance of brightness with longevity is substantial because of the environmental benefits.

Lighting accounts for over 20 percent of all electricity consumed in the US. On the other hand, LEDs use only 20 percent or less of the energy consumed by traditional lighting. This implies that LEDs could have the single biggest impact on demand for energy in the next two decades--and possibly as much impact on the problem of global warming.

How quickly this happens will depend on the speed with which the technology is adopted by the specialist end of the illumination market, notably in sign and display illumination, another multi-billion dollar market.

Signage is the driver

Sign and display illumination is where white LEDs will make their first significant contribution. Adopting white LED technology will help to promote the development of brighter white LEDs at more affordable prices.

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Traditionally, neon or fluorescent lighting has been used to illuminate displays and signs. These systems have their strengths still, but for most applications it is likely that LEDs will replace them.

The reason lies in the total cost of ownership. LEDs consume up to 80 percent less energy than neon, need almost zero maintenance and have both a long life (up to 100,000 hours) and extensive warranty coverage (up to five years). Because of these benefits, many companies can start earning a return only one year after substituting LED for neon.

One display which stood out at this year's Sign Show was produced by Osaka-based Daikan Company Ltd. Not only it did feature the brightest stand, it was also attracting more people.

This was largely the result of Daikan's quiet promotion of LED products made by the US industry's market leader, GELcore, which sells under the Tetra brand. GELcore is a joint venture between GE Lighting and Emcore Corporation.

Tetra White LEDs use a proprietary GE phosphor to manufacture their high-quality white LEDs. They also use a patented method of assembling LEDs on flexible, heavy-duty wire without making soldered connection, making the LED system more reliable and easier to handle for sign makers, and saving time and money.

Cross-border distribution

Daikan's president, Osamu Jingi, found GELcore at the US equivalent of the Tokyo Sign Show, called ISA, which held its annual event in May of this year in Orlando, Florida. Impressed with the company's technology, reputation and lengthy customer list--including global brands such as Hilton, Home Depot and Toyota--Daikan arranged to import the Tetra LED system from one of GELcore's Australian distributors, Switched On Innovations, since GELcore still had no distribution agreement in place in Japan.

GELcore is setting up distribution agreements across Asia, and is currently searching for two distributors to cover the market in Japan. Meanwhile, Daikan is preparing to continue importing from Australia.

There are two advantages in doing so, notes Jingi. The first is that Switched on Innovations has amassed technical expertise in installing GELcore's product, which it is already sharing very effectively with Daikan. In addition, Switched on Innovations is building up a range of multinational accounts in Australia, which Daikan can use as references when bidding for business from the same companies in Japan.

This will benefit both companies, as well as GELcore. And if the plan works as well as they hope, it will also serve as a model for how companies can ignore local dynamics to collaborate across borders.

The entry of GELcore into the Japanese market, along with the initiative taken by Daikan, can only accelerate the rate at which LED takes over from neon.

Switched on Innovation's president, Ed Darmanin, expects that 50 percent market penetration will occur fairly quickly. It will take at least five more years for LEDs to replace light bulbs, and possibly even longer. But the replacement will occur sooner if the signage market expands fast enough, as this will help to create the innovations and the economies of scale to drive the market.

However, the most significant driver spurring the market is likely to be the reduction in the total cost of ownership, combined with the environmental benefits, as new building codes and tighter environmental laws will force the adoption of technologies that meet more stringent standards.

Alex Stewart is president of Alexander Capital Access Co. Ltd., a communications and investment catalyst in Osaka. He can be contacted at: [e-mail]