LED lights/cluster lamps

Rising demand for energy-efficient and environment-friendly products is driving growth in China’s LED lamp industry. Makers predict the young market will expand steadily in coming years as more countries adopt LED lights. The US, Canada, Australia and the EU are expected to start shifting from traditional incandescent lamps to LED-based lighting technology this year.

Increasing penetration in China’s domestic market bodes well for the industry. The demand upswing is driven by greater adoption among private and government enterprises and in events such as the Beijing Olympics. The use of LED lights in ongoing preparations for the Shanghai World Expo and 16th Asian Games in Guangzhou, Guangdong province in 2010 and the 26th Summer Universiade in Shenzhen in 2011 will showcase the technology’s benefits and boost user interest further. Some companies expect rising local orders will bolster margins and attract more newcomers in coming months.

According to LEDinside, a subsidiary of DRAMeXchange that offers research information on the LED market, lighting products using this semiconductor diode will grow rapidly in 2010-12, during which they will start breaching the mainstream supply. China’s expanding application range now includes traffic, landscape, indoor, decorative and automotive lights. Currently, models for traffic and landscaping make up the bulk of production. Makers predict output of the former will decline as the segment reaches saturation. Strong demand from the government and commercial sectors will fuel the rise of units for landscaping purposes.

Indoor LED lights will gain more ground, as colorful and energy-saving models become increasingly utilized in hotels, arenas, bars and bedrooms. More suppliers are also developing street, reading, safety and solar LED lamps. Products for use inside and outside automobiles have a strong growth potential, although demand for such units will likely drop this year due to a decline in automobile sales.

Companies expect the worldwide economic downturn will squeeze margins further and push smaller companies out of the line. Even so, a growing number of suppliers are confident that the rising interest in LED lights in many countries will boost demand. A few said that despite order cancellations, makers can still keep revenue at 2008 levels because some contracts require larger volumes and therefore compensate for lost transactions.

Export-driven companies such as Shenzhen Mason Technologies Co. Ltd are optimistic about growth this year. The supplier generated $7.3 million from LED lamps in 2008. It said makers engaged in encapsulation will likely be worse hit than those developing lighting products because the former caters to the consumer electronics sector whereas LED lights are increasingly gaining the support of governments and other segments.

Further, suppliers forecast the recent export tariff rebate adjustment will spur demand for various lighting products, including LED lamps. Some companies are hoping the rebate will be raised from 13 to 17 percent in coming months.

Projections from NextGen Research estimate 22 percent CAGR for LED lights worldwide in 2009-13. Strategies Unlimited, a market research firm on optoelectronic, optical communication and related products, has revised its forecast in view of the financial crisis, but still sees the sector as one of the fastest-growing segments in the LED industry.
Energy efficiency emphasized
Power output dictates prices
More new players enter line
Newcomers expand market
Broadening application drives growth

The selection from China consists of tube daylight lamps, light bulbs, LED strips, spotlights, floodlights, downlights, wall lights, wallwashers and streetlights. More makers are developing products for outdoor applications such as landscape, arena and street lamps. A few have released wallwashers, underwater lamps and tunnel lights.

Supply of LED-based street lamps is rising significantly, fueled by strong demand for government road projects. Taiwan’s Industrial Technology Research Institute estimates that global output of LED streetlights will reach 2.1 million units this year from 900,000 in 2008. Production will continue to rise to 4.4 million units by 2010, with mainland China accounting for nearly 50 percent of worldwide supply.

Shenzhen Mason Technologies has just launched a streetlight with 120 LEDs. It can replace a 250W high-power sodium lamp with up to 50 percent energy saving. It has good heat dissipation, a softswitch power-supply design and an IP65 rating with anti-wind structure. The intelligent control circuit enables it to work even on rainy days and reduces the operating time at night.

Companies that are focusing on indoor-use LED lamps are expanding their range of decorative and commercial products. Lianchuang Boya Lighting Co. Ltd has developed bulbs, daylight lamps, downlights and wall lamps. To blend well with interiors, especially in homes, makers emphasize stylish designs.

Shenzhen Topband Electronics & Technology Co. Ltd (LED Lighting Division) specializes in daylight lamps. The company also offers products for use in workshops, buildings and underground parking lots. It is securing UL listing to help bolster overseas business.

Compared with traditional lighting products, LED lamps have higher color temperature and lower color rendering and heat dissipation. They also cost more to produce.

Most makers see heat dissipation as their main challenge because it hinders companies from raising the power output of products. According to Smart Light, a 300W high-power LED module will exceed 100 C within 2s. To resolve this, more makers are using metal radiators, fans or circulating pipes in new releases. Suppliers such as Shenzhen Topband control the negative electrode temperature in daylight lamps to keep it below 65 C while running.

Product development activities also emphasize improved luminance, lower attenuation and water resistance. Because of the lack of industry standards on form factor and performance, suppliers stay abreast of trends in LED chip technologies and applications to remain competitive.

	Mainland China's Illusion offers model ILLM- PVC5060RGB3-12, an LED module that uses three superbright SMD 5060 LEDs

The LEDs, driver ICs and aluminum are the main components of LED lamps. High-power LED integrated products also use optical lenses.

LEDs alone account for 50 to 60 percent of the total cost. Many suppliers source these from local LED encapsulation makers. Large companies with their own encapsulation facilities use in-house products.

LED chips are sourced mostly from Cree of the US, although more midsize and small companies are considering using solutions from Taiwan suppliers. China makers generally ask their component providers to provide patent authorization for the chips.

The application and power output dictate the type and number of LEDs to be used and the structural design, which then influence the price. Some small, indoor decorative lamps are priced below $10. Models for daylight use that come with a T5, T8 or T10 tube range from $12 to $37. Ceiling lights with a 10 to 16W power output go for $60 to $90.

Outdoor lights are typically more expensive. Street lamps with 180 LEDs are quoted from $700 to $900.

China suppliers predict a 10 percent price reduction for most midrange and low-end products as component cost declines. LED chipmakers lowered their quotes by 10 to 15 percent in recent months. In the high end, the adjustment will not be that significant because the drop in the cost of Cree LED chips was only 5 percent.

Even though LED lamps are a young line in China, there are at present more than 1,000 makers. Many are small and midsize operations with annual revenue of $1 or $2 million and $7 million to $12 million, respectively. Large companies such as Kingsun Photoelectricity Co. Ltd generate more than $15 million a year from this segment.

The country has five national semiconductor lighting industrial production bases. These are found in Shanghai, Xiamen in Fujian, Shenzhen in Guangdong, Dalian in Liaoning and Nanchang in Jiangxi.

For LED lamps, Shenzhen and the nearby cities of Dongguan, Guangzhou, Zhongshan and Huizhou, serve as the main hubs with about 80 percent of makers. These areas have established a mature supply chain from materials to encapsulation technologies. Xiamen and Ningbo are also fast developing as major manufacturing centers.

The supplier base is expected to continue expanding as more newcomers join the line. In particular, many LED encapsulation specialists have been entering the sector in recent months. Shenzhen Mason Technologies, for instance, which is one of the leading LED encapsulating enterprises in Guangdong, is focusing more on LED lamps. These now account for 40 percent of the company’s sales.

Shenzhen Smart Light Optoelectronics is engaged in encapsulation and lamp production. The company said pursuing both lines allows suppliers to expand their market base, especially since more buyers are sourcing final products instead of just components. LED terminal makers that are keen to ensure the stable supply, cost and quality of materials are finding encapsulation a viable strategy toward achieving this goal.

Companies in China export their LED lamps to the EU, North America and Australia. Many suppliers are targeting new markets such as Japan, but are deterred by patent issues. Japan holds the most number of LED core patents and has a strong domestic LED market.

Hong Kong’s growing supplier base for LED lamps now includes nearly 20 small and midsize companies. Some have been engaged in product development since early 2000, and others are relative newcomers that joined the line in the past two years.

The supply range consists of desktop and street lamps, bulbs, tubes, recessed downlights and solar-powered units. Many companies also offer models for cupboards, bookshelves, gardens and Christmas ornaments.

Low-power LED lamps are suitable for decorative, mood and other special applications. Some come with E12, E17, E26/27, T8, T5 and similar fittings to replace traditional incandescent and fluorescent lights.

Current shipment volumes range from thousand to hundred thousand units per month, but most suppliers claim they are ready for large-volume manufacturing and are just waiting for a major spike in demand. Even so, a number of companies admit they face technical challenges in developing affordable, energy-efficient and long-life LED lamps. Those that focus on low-value products differentiate these in terms of aesthetic design and customizable features.

Companies monitor both technology and consumer trends to be able to cater to user requirements better. They especially keep track of market developments in countries actively supporting environment-friendly lighting products. As more new entrants are joining the mainland China supplier pool, makers in Hong Kong are strengthening their QA and QC systems to sustain quality upgrades and improve competitiveness.

Some companies receive support from local university-based research centers. For instance, the Hong Kong Polytechnic University has a research department that developed a long-lasting, energy-saving and high-power LED street lighting system that beat 1,000 other inventions from more than 700 exhibitors at the International Exhibition of Inventions, New Techniques and Products in Geneva, Switzerland in 2008. The Hong Kong University of Science and Technology also actively explores cooperative ventures with LED manufacturers.

One of the active suppliers in Hong Kong is Sunny Solar Technology Ltd, which offers LED bulbs, tubes, recessed downlights, solar-powered garden lamps and panels. Its 61 and 122cm LED tubes are available with a T8-G13 or T5 base and deliver warm white, day light or cool light. Its factory in Huizhou, Guangdong province in mainland China has a monthly production capacity of 2 million units.

Taiwan is one of the major manufacturing hubs for LED products worldwide. The island has more than 100 makers and supplies nearly 40 percent of the world’s LED diodes, according to the Industrial Technology Research Institute. ITRI projects double-digit annual growth through 2010.

LED lamps have been in an upturn as they are increasingly adopted for both outdoor and indoor illumination. The mainstream supply in Taiwan includes decoration lights, fixtures, building floodlights and LED bulbs. Despite IPR and luminous efficiency issues, many makers are developing new designs and upgrading features. The broadening application base is encouraging many companies to enter the line.

Suppliers emphasize high-power, high-brightness LED lamps. Mainstream units deliver 70 to 80 lm/W. Models designed for traffic signs, handheld devices, automotive instrument clusters, building decoration and navigation generally support 10 to 15 lm/W. Those used as ground, desk, fixture and emergency lights have 20 to 30 lm/W. Makers developing products for indoor illumination and automotive head and street lamps are targeting 80 to 100 lm/W.

Kingbright Electronic Co. Ltd is one of many companies in Taiwan with a range of LED products. It has developed a 1W white-light LED delivering 80 lumens. Its high-power lamps are suitable for architecture lighting and fixtures.

The company’s KT series uses a ceramic with high thermal conductivity. It is suitable for outdoor and indoor lighting. To fit various kinds of fixtures, the models have a footprint of 2.1x1.7 to 5x5mm and a thickness of 0.8 to 1mm.

The KASL series utilizes an aluminum substrate to improve the temperature tolerance. One of the models, the KASL-4805, is a high-brightness LED light bar suitable for general, ceiling, contour, decoration and architectural lighting. It measures 48x5x16mm and delivers high efficiency, long operating life and low power consumption.