June 18, 2009...After a whirlwind 6 weeks that included Light Fair in New York, and trips to both Korea for their annual LED Expo, and Taiwan for our own Blue 2009, it's fair to say that the solid state lighting revolution is underway, but in different ways in different places. We'll all grant that the "brass ring" that everyone on the LED merry-go-round is grabbing for is the general lighting market, but the volume is being driven by other applications, and in visibly different ways in the US, Korea and Taiwan.

In Korea, the LED expo is held concurrently with the flat panel display expo, and that pretty much tells the story of what's driving things there. The big guys in FPDs, LG and Samsung, have taken the downturn as a market-share buying opportunity, both to move their product lines rapidly towards LED-based backlighting as well as to build out LED manufacturing capacity of their own. Backlighting has been a consistent winner in market performance the last few years, driven by marked increases in sales of LED-enabled mobile appliances, notebook computers and displays. According to Bob Steele of Strategies Unlimited, who provided a mid-year update at Blue 2009 in Taiwan, mobile appliances and signage/displays accounted for 60% of the US$5.1 billion packaged LED worldwide market numbers. While standard handsets remained the volume king despite a slight decline, the "other" category, which included smart phones/PDAs, media players and notebook displays turned in an astounding 93% growth from 2007 to 2008. Korea sees that as an opportunity to leverage up their domestic LED production and has reportedly been heavily investing in the fabrication equipment, including MOCVD reactors, which they need to make it come true. One speaker, from the Ministry of Knowledge Economy, stated that it was Korea's goal to place itself in the top 3 of LED producing countries in the world. "The competition" in his view, was not a series of companies, but a series of countries, and I suspect that neither the US, Japanese, or Taiwanese LED manufacturers plan to step aside and let it happen. (China wouldn't seem to be sitting on the sidelines either, based on the continuing series of news releases from epi-reactor maker Aixtron, regarding their China wins, including their largest single order ever coming out of that country from a company just entering the HB-LED market). As one element of that "grand plan", in April of this year, Samsung formed a dedicated LED company, equally capitalized by both Samsung Electronics and Samsung Electro-Mechanics (SEMCO).

The ministry speaker also made it clear that he felt that the recent resolution of several major pieces of IP litigation involving Seoul Semiconductor effectively cleared the path for the continuing growth plan, as well as shaped the Korean government's resolve to involve itself in future litigation that other of the country's producers may encounter. In one curt exchange, the ministry official made it clear that he felt that smaller companies should look towards sharing IP to keep from diffusing the country's efforts, and that anyone who felt differently was "carrying forward a myopic view of the future". As we heard from Prof. Moo-Whan Shin of Myong Ji University in his "Korea country report" at Blue, the government is putting its money where its mouth is in other areas, including a big push for LED lighting in government facilities. The plan is to begin by moving Korea's post offices to all LED lighting starting immediately, and ban any incandescent lights in government offices starting this year (fluorescents are still allowed... for now). Another 300,000 "projects" are ready to be undertaken at the state and local level, and the goal is that 30% of the government's indoor lighting is generated by LEDs by 2012. They are serious, but LEDs manufacturing isn't new to either LG or Samsung, and as one senior exec at Blue noted, "They haven't managed to consistently use internal sources for LEDs in the majority of their products so far, so do we need to worry?"

Taiwan is providing a contrast of "quiet action" in some respects. Having typically been limited to Taipei and the LED heartland of Hsinchu, we decided to undertake a bit of a broader "eyeball survey" of where LEDs are showing up in Taiwan. To that end, after completing Blue in Taiwan, we rented a car to tour around the eastern side of the island, with a return trip through the mountains, and up one or two major expressways that connect the north and central parts of the country. And yes, for those familiar with the driving style in Taiwan, we really did drive it ourselves, making use of every bit of "shoot for the hole" snap that our rental VW Passat Turbo had to offer. Decoding street signs was a small challenge (Jhung, Chung and Joung are just some of the different English spellings for just one Chinese character), not clipping the scooters in Hualien and Hsinchu were a bigger challenge, and shooting through a few hundred kilometers of winding, wet, tunnel-laden, landsliding 1 or 2-lane roads in a path from sea level to 3300m (11,000 feet) pretty much defined insanity. The car didn't get returned clean, but it was undamaged and passed more cars and trucks than passed it (although we were memorably humbled by one amazing truck driver who navigated his rig down a mountainside with the skill of a Formula One driver, leaving the Passat in the dust... well, actually in the mud spray, since the road was wet and I will stick with that as my excuse).

Of note in the trip from the LED standpoint? Well, Taiwan "gets it". There was not a city strip that wasn't featuring a substantial number of LEDs beckoning you to stop in to buy something. The department stores almost exclusively used LEDs in the jewelry display cases, and notably for a portion of the overhead lighting in the more difficult to maintain or high liability areas, including the escalators. Outdoor LED signs and displays were prevalent (I think we have something like 10 here in Austin), and interestingly, LEDs were used for direct illumination of a number of advisory, caution and exit-type signs on the main expressways. What a good idea. Why use fairly expensive lighting-quality LEDs to shine at a road sign, when you can use multiple colors of lower lumen devices to make up the outline and information on the road sign? And the LED presence wasn't limited to the expressways and big towns. Once we came down off the mountain, we were greeted by LEDs in front of shops and in road signs in the surrounding smaller resort towns. LED heaven itself appeared when we needed to grab some fuel at one of the freeway service centers. It seems you don't need to just expect gas and some fast food, but 24-hour mechanic services, and a shopping megaplex, including entertainment and restaurants. All without ever touching a side street.

We haven't been to Japan yet, but clearly Taiwan and Korea (as well as mainland China) are ready and willing to adopt LED technology everywhere it can fit, whether that is in a fancy jewelry display case, or to replace the oversized CFLs that filled the portable generator-powered "night markets". With a manufacturing ramp-up benefiting from the big backlight producers, both in Korea and Taiwan, who will likely produce LEDs for both internal use and external sale, the pricing curve will continue its move in the right direction to support that adoption. If there is a missing link in those markets, we expect that it will be in understanding how to address the quality issues in general lighting, both in terms of design reliabilty as well as in the quality of the light produced. There is no lack of ability to produce quality when its the need is understood, such as in backlighting (how many loyal customers do you develop if you are Samsung and customers start to report the need to replace their 60-inch TV because the LEDs start dying in a year?). Understanding what quality is, and then designing it in to a general lighting product, is a substantial challenge those regions will face, which is one reason we're making that a principal goal for the 2009 SSLdesign Summit Taiwan this November. (For the September NY Summit, as well as October's LA Summit, the spotlight will only be shining on the manufacturers and enabling technology providers that are demonstrating quality in their products, but that is more to indicate where and how quality can be found, and less on what defines quality in the worldwide lighting market). From what we see, things remain bright and will continue to get brighter.