Growing Market for LEDs (WSJ, Japan Times)

NOVEMBER 5, 2009, 4:12 P.M. ET
Cree To Light Up 650 Wal-Mart Stores' Aisles With LEDs

By Sari Krieger
Of DOW JONES CLEAN TECHNOLOGY INSIGHT
NEW YORK (Dow Jones)--Attention Wal-Mart shoppers: Cree Inc. light-emitting diodes will soon be lighting up the retail giant's stores in various aisles.

Durham, N.C.-based Cree said Wednesday that Wal-Mart Stores Inc. (WMT) signed a deal with the company to buy two kinds of its LED lights, which the retailer will install in 650 of its stores in the first year. Although the companies wouldn't disclose the value of this deal for Cree, or exactly how many lights Wal-Mart bought, this move has larger implications for the LED lighting industry and Cree.

"I think it's an important milestone in what we've been calling the LED lighting revolution," said Cree Chief Executive Chuck Swoboda in an interview with Clean Technology Insight. "It demonstrates that LED lighting really works in commercial lighting applications."

Swoboda called this deal an "initial roll out," but he wouldn't say whether Wal-Mart has expressed interest in buying more LED lights, otherwise known as solid-state lighting.

Wal-Mart didn't return a call requesting comment.

The adoption of LED technology, and Cree's products specifically, by the retail giant could soon bring other retailers knocking at their door. Swoboda said that once some municipalities started using outdoor LED lighting, others soon followed suit. The retail arena should be similar, Swoboda said he hopes, because he thinks that once some companies try LED lights and can show some positive results, others will be less gun-shy about switching to the technology.

Wal-Mart bought Cree's LRP-38s, a spot light, to illuminate some of its products. This light lasts 50,000 hours, consumes 82% less energy than the 70-watt ceramic metal-halide bulbs it replaces and can last more than five years when kept on all the time. These lights also make products displayed under them look more vivid and they don't radiate heat down, helping delay product spoilage, as the company demonstrated at the Lightfair International Convention in May, held in New York. Cree rolled out the LRP-38 at the convention.

The deal also includes use of Cree's LR6 recessed can lights in some Wal-Mart new construction, but the companies wouldn't give further details on how many or where they will be used. The LR6 has similar specifications to the LRP-38, but it is a more general-purpose light, rather than a spot light.

Theo O'Neill, an analyst with Kaufman Bros. LP, said in an interview that this initial roll out brings Cree about $4 million to $8 million in revenue.

"It's obviously a plus for Cree," O'Neill said. "Plus it will help with industrial expansion of this business. There are five billion light bulbs in the U.S. and they are all going to convert to solid-state lights eventually. Big, big business."

O'Neill has a "hold" rating on the stock and a $36, 12-month price target. He doesn't own shares of the company and Kaufman Bros. makes a market in shares of Cree.

Jed Dorsheimer, an analyst with Canaccord Adams Inc., who has been consistently bearish on Cree's stock, acknowledged the significance of the deal. He doesn't own shares of Cree and Canaccord Adams conducts no business for Cree. He has a $45 price target and a "hold" rating on shares of Cree.

"It's also great to see Wal-Mart transition to solid-state lighting, as they did with refrigeration," Dorsheimer said. "Typically, they lead the market by one to two years."

Bentonville, Ark.-based Wal-Mart has already installed LED lights in its refrigerator and freezer cases and is considering using LED parking lot lights, it said recently.

Shares of Cree climbed Wednesday $1.92, or 4.5%, to $44.70 on Nasdaq. Shares of Wal-Mart increased 89 cents, or 1%, to $51.27 on the New York Stock Exchange.

(Dow Jones Clean Technology Insight covers news about public and private clean-technology and alternative-energy companies.)

-By Sari Krieger, Dow Jones Clean Technology Insight; 212-416-2016; sari.krieger@dowjones.com



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BUSINESS SEPTEMBER 30, 2009
Lighting Firm to Unveil LED Bulb
By SARI KRIEGER

Lemnis Lighting Inc. plans to announce this week the full-scale release in the U.S. market of a light-emitting diode bulb, its entry in the race to replace 60-watt incandescent lights.

As consumers look to cut down on energy use and the federal government's 2012 ban on incandescent bulbs approaches, sales of compact fluorescent lights have increased. These spiral-shaped lights use much less energy than traditional incandescent lights, which waste most of the energy they draw. CFLs also last seven to 10 times longer than incandescents.

But light-emitting diodes, or LEDs, promise a next generation of lights that are even more efficient, last longer, are more easily dimmable and, unlike CFLs, don't contain mercury.
Lemnis Lighting says its Pharox light looks like a traditional incandescent light, with a metal piece wrapped around the midsection of the light that acts as a heat-sink, keeping the LEDs cool and ensuring a long life of 35,000 hours, or about 20 years of normal household use. The bulbs are pricey, though, costing about $40 each.

Its light output looks like what consumers expect from a soft white incandescent light, as opposed to the harsher, blue-hue from a cool white often seen from fluorescents in offices and hospitals.

The LED light draws 6 watts and puts out the same amount of light as a 40-watt bulb if used right-side-up, such as in a desk lamp, or the equivalent of a 60-watt bulb if used in an upside-down application, due to the nature of LEDs.

Lemnis Lighting is owned by Tendris Holding, a business incubator and operator in sustainable technology and services based in Naarden, Netherlands. Both Lemnis and Tendris are run by Warner Philips, the grandson of Royal Philips NV co-founder Anton Philips. Tendris was formed in 2002 with investments from its insiders and friends and family. Philips is a 10% shareholder in Tendris.

Mr. Philips said in an interview that Lemnis is in talks with major U.S. retailers to sell the Pharox product.

Coming up with a quality, affordable 60-watt replacement light has been a challenge for the LED industry, partially for the reason that LEDs are by nature directional sources of light, as opposed to traditional incandescents that shine in 360 degrees. Top LED companies have been concentrating mostly on directional light sources for commercial and industrial purposes, which make up the bulk of the lighting market.

But the Department of Energy recently established the Bright Tomorrow Lighting Prize, known as the L-prize, which is a competition for companies to come up with the best 60-watt replacement light. The DOE said last week that more than 425 million 60-watt incandescent light bulbs are sold each year in the U.S. alone, representing approximately 50% of the incandescent light bulb market.
So far Amsterdam, Netherlands-based Philips is the only company to submit a product.

The DOE said an LED replacement for this purpose could save 34 terawatt-hours of electricity in one year, enough to power the lights of 17.4 million U.S. households and avoid 5.6 million metric tons of carbon emissions annually.

New York-based Lighting Science Group Corp. has a 40-watt incandescent LED replacement that the company says draws about 7 watts, lasts 40,000 hours and is dimmable.

Thomas Griffiths, an LED industry expert, said in an interview that he sees these three companies as the main competitors at the moment on the LED replacement light scene. Griffiths said the Pharox light looks like a good product, but only time will tell for sure, and he thinks the $39 sticker price is still too high.

Lemnis offers a three-year warranty on the product and the company estimates that an average utility rate of 15 cents per kilowatt-hour, a consumer will achieve a payback within three years.

"I think they're representing where the state of the technology affordably has us right now, but there's still a ways to go before there's a real replacement, and right now Philips is the one to watch because of this announcement," Mr. Griffiths said.

Philips said in a statement that it is confident its product meets the criteria of the L-prize, which calls for a higher level of efficiency, better quality light and more light output than the Lemnis and Lighting Science products.

Although Philips and Lemnis are competitors in this context, Philips acquired an equity stake in Tendris in January.

Mr. Philips said that if Lemnis, with the help of Los Angeles-based partner Digital Light LLC, can reach its goal of selling 10 million lights world-wide within the next 24 months, the price could drop to $30 per bulb.

Griffiths said LED replacement lights need to reach the $15 to $20 range before they'll really be viable.

Tendris' first investment was Oxxio, a supplier of renewable energy, which was sold to Centrica PLC in 2005. That exit gave Tendris at least $39 million more to play around with. The same year, the Dutch National Postcode Lottery also bought a 10% stake in Tendris, giving the company more capital to push its innovations out into the market.

Lemnis, based in Hertogenbosch, Netherlands, was founded in 2005 and is on the verge of profitability, Mr. Philips said in an earlier interview.

Mr. Philips said he isn't looking for an exit with Lemnis, but he said long-term partnerships are always a possibility.

Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved


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LED light bulbs fly off shelves as price war starts


By YOSUKE FUKUOKA
Kyodo News
Light-emitting diode lights are selling like hot cakes since prices dropped by half this year.

The surge in demand for the new generation of light bulbs has quickly emptied store shelves, prompting more manufacturers to jump into the market.

LED lights first appeared about a decade ago, but their poor brightness limited them to emergency use. Recent advances in longevity and brightness, however, have turned their fortunes around completely.

Today's LED bulbs cost as little as ¥4,000 but boast a longevity of 40,000 hours, which is about 40 times the life span of incandescent bulbs. They also consume nearly 90 percent less electricity than incandescent bulbs.Compared with fluorescent light bulbs, LED lamps are six times more durable and use at least 40 percent less energy.

Rising public awareness of environmental issues is also boosting LED sales. Countries embarking on "green" initiatives are letting incandescent bulbs fall by the wayside as they move to save energy.

Under the previous government led by the Liberal Democratic Party, then Economy, Trade and Industry Minister Akira Amari announced a plan last year to cease production and sales of incandescent bulbs by 2012.

As a result, demand for LED bulbs is outpacing supply.

"We are swamped by orders and just can't keep pace with demand," said Takahisa Uzumaki, senior manager at Toshiba Lighting & Technology Corp., a unit of Toshiba Corp., which developed LED bulbs in 2007.

Sales of LED lights spiked this summer as prices began to come down. At one large store in Tokyo's Akihabara electronics shopping district, "Sold Out" signs were seen at the LED light section.

"Many customers buy LED bulbs just to try them out," said a shop clerk.

In June, Sharp Corp. unveiled a plan to sell LED bulbs for about ¥4,000, less than half the price of products made by other companies. Then more manufacturers, including Panasonic Corp. and NEC Corp., entered the fray.

Competition is heating up because startups founded only five or six years ago have entered the market, since it doesn't take large facilities to mass-produce LED bulbs. That's one of biggest differences of LEDs over incandescent and fluorescent lamps.

As new companies crowd into the LED business, Toshiba Lighting is taking on the challenge by halving its prices. Their bulbs now retail for under ¥5,000.

The Toshiba group is fostering the business and betting it will turn into a hot sector.

"We intend to boost annual LED lighting sales to ¥350 billion by March 2016 from the current ¥20 billion," said Masashi Muromachi, a senior executive at the parent firm.

Sharp aspires to raise annual sales to ¥50 billion in the near future.

With energy conservation a matter of global concern, manufacturers also anticipate brisk demand abroad. Toshiba aims to get overseas sales to account for 30 percent or more of its total LED sales by the year ending in March 2016.

Panasonic is also setting its eyes on foreign markets.

While they are experiencing a sudden burst of popularity, LED bulbs still leave something to be desired technologically. They are more expensive and less bright than their fluorescent counterparts.

The new type of light bulb can become standard in every household only when manufacturers address and overcome these weaknesses.

The Japan Times: Friday, Oct. 23, 2009
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