As I write this column, we are in the final stages of preparing for Strategies in Light. As is our custom, we will present recent research from our Strategies Unlimited business unit. The presentation will encompass horticultural lighting, lamps and luminaires, cannabis, and more. The highlight, however, will likely be preliminary data from our 2020 Worldwide LED Report. The report with final data will be available for purchase in a couple of months, but we will preview that solid-state lighting (SSL) data in a Strategies in Light Keynote/Plenary session.
I wish I could tell you that the forecast was sunny, but it’s moderate at best. Still, I do see opportunities revealed in the research. Our analyst Martin Shih reports that 2019 was a bad year for packaged LEDs. I think most of us could have predicted that. The worst news, however, was in the commodity mid-power sector. Based on pricing surveyed in Q4 2019, the components dropped 30% year over year. In isolation, such a drop would not be catastrophic, but this drop represents just the next in a series of price erosion cycles driven by Chinese manufacturers and oversupply. In contrast, the high-power packaged LEDs segment, where fewer Chinese manufacturers participate, the year-over-year drop was 10%.
The good news is in the application data. The data suggest it will be a very good year in automotive and signage applications. A positive auto market is always good news because that application requires premium components that aren’t so exposed to the price erosion cycles.
Signage has traditionally used a lot of commodity LEDs. But the trend is more capable video-enabled units. That market should see more use of premium-class LEDs, whether mid or high power. And larger displays will be going to finer pitches and higher resolution using more components.
We also believe that the mini and micro LED technologies offer great potential, although in both cases there are technology roadblocks as we discussed in recent articles. Shih expects significant mini LED revenue in 2020 and a robust three-year market spurt. That projection follows on with the expectation that commercial availability of micro LED technology is three years away.
I remain very excited about mini and micro LED technology. But I understand that we need a market boost now. And as I have said going back through most of last year, the answer is convincing the market of the value of high-quality components and the quality of light they produce. That push should carry through to end-product space.
I’ve mentioned one of the 2019 Strategies in Light keynotes in this space before. John Edmond, co-founder of Cree’s LED business, related that lamps in the 2013/14 era allotted the bulk of the bill of materials to packaged LEDs. He said last year that you could buy $1 lamps that utilized $0.10 worth of LEDs. As we can gather from Shih’s data, the erosion continues.
Now I have no problem with someone buying a $1 lamp. I use them in closets, the garage, and similar spaces. But I want better quality in our living space. And I want better reliability in places like a difficult stairwell.
Although this lamp example is oversimplified, the message is even more important in luminaires. The other good news — Shih said with the trade wars settled that he expects some revenue growth in 2020.
Maury Wright,
EDITOR
