LEDs offer rare ray of hope during electronics downturn

Paul Boughton
Aided by rising demand from LCD TV makers, the light-emitting diode (LED) market is expected to expand in 2009, providing a rare growth opportunity amid sharp revenue declines in most other electronics component categories, according to iSuppli Corp.

LEDs are expected to enjoy a revenue increase of 2.9 per cent in 2009, following 10.8 per cent growth in 2008. In contrast, the overall semiconductor market is set to decline by 9.4 percent in 2009.

“LEDs are forecast for growth this year — a highly unusual item in our semiconductor forecast, given that almost all other components will suffer revenue contractions in 2009,” said Dale Ford, senior vice president, market intelligence services, for iSuppli.

“Of the 12 major semiconductor categories tracked by iSuppli in its Application Market Forecast Tool (AMFT), nine are expected to suffer revenue declines in 2009 — ranging from memory chips, to logic Integrated Circuits (ICs), to power transistors. Although a 2.9 percent increase is only a moderate rise by the standards of the semiconductor industry, any revenue growth at all this year will be a remarkable accomplishment.”

The LCD TV market in 2009 will consume $163 million worth of LEDs, up 221.9 percent from $51 million in 2008, according to iSuppli. By 2012, LCD TV LED revenue will grow to $1.4 billion, a nearly nine-times expansion from 2009.

LEDs are used in LCD TVs to illuminate the display. LCDs are a transmissive display type, meaning they do not generate their own light and therefore need a separate illumination source, known as a backlight. Most LCD displays traditionally have used Cold-Cathode Fluorescent Lamps (CCFLs) as the backlight. However, the declining prices of LEDs are making them a viable competitor to CCFLs.

While the overall mood of television makers at the Consumer Electronics Show (CES) in Las Vegas this month trended toward gloom and doom, there was some optimism regarding the use of LED backlighting in new LCD TVs.

“One positive message was issued by LCD TV makers at CES: LED backlighting and thinner form factors represent the future of the market,” said Riddhi Patel, principal analyst, television, for iSuppli. “These two things go hand in hand, with edge-mounted LED-backlight systems enabling thinner sets, which are more attractive to consumers.”
LED-backlit LCD TVs also consume less electricity than their CCFL-equipped counterparts.

“A majority of LED backlit LCD TVs comply with Energy Star requirements,” Patel observed. “This is an attractive feature for consumers, who have come to view the Energy Star label as a guarantee of greenness and reduced energy costs.”
Declines in prices and newer higher-brightness LEDs are enabling their usage as backlights in LCD TVs. Average pricing for LEDs is on the wane, allowing LED-backlit sets to become more price competitive with comparable CCFL sets. Patel estimated the price premium for 40- to 42-inch LCD TVs using LEDs now is as little as $200 to $500 compared to CCFL alternatives.
At CES, some premium LCD TV brands showed new lines of LED-equipped sets, which are expected to be introduced in the June timeframe. These brands include Samsung and Sony.

Meanwhile, second-tier brand General Electric (GE) sees LED backlighting as a chance to carve out a new market niche.

“GE in combination with Tatung entered a joint venture will produce LED-based LCD TVs and to try to do what Westinghouse did a few years ago, when it came into the market with lower-priced LCD TVs — opening up the market for value brands,” Patel said. “As more LED-backlit LCD TV brands enter the market, competition will intensify and prices will decline.”
While the energy consumption and form-factor benefits of LED backlighting are unquestioned, there is some debate over how much the technology actually improves the image on LCD TVs.

Most of the current LED-equipped LCD TVs use edge-mounted designs that place the diodes at the borders of the display. This allows for the thinner form factors that consumers appreciate, but it does not provide any major improvement in contrast ratios, according to Sweta Dash, director of LCD research for iSuppli. Contrast ratio is the ratio of the luminance of the brightest color to that of the darkest colour that a television is capable of producing. Televisions with superior contrast ratios get rid of excess off-state light when a LCD pixel is turned off, delivering a better picture.

“In terms of image quality, using a edge-mounted LED backlighting design in a large sized LCD TV is like putting a Ferrari engine in a Ford Pinto,” quipped Jagdish Rebello, director and principal analyst for LED research at iSuppli. “There is no improvement in picture quality and the color gamut of the display is actually less than when using a CCFL.”

An alternative approach to using LEDs in LCD TVs, the full-array backlight, provides sharp improvements in contrast ratio, according to Dash.

“The highest-quality images on LCD-TVs will be on sets that use the full-array backlight approach because it provides the best dynamic contrast ratio, which in turn improves perceived image colour and sharpness.” said Randy Lawson, senior analyst, digital television semiconductors for iSuppli.

iSuppli expects LCD TV makers will offer a mix of thin form-factor edge-mounted designs and high image quality full-array alternatives during the coming years.
Another aspect of image quality hinges on the type of LEDs used in LCD TVs. Most LED-backlit LCD TVs now employ white LEDs, rather than the more costly Red, Green, Blue (RGB) alternatives. RGB LEDs provide a superior color gamut than white LEDs, providing richer and more varied colours in television sets.

“RGB LEDs are tidy and are the ideal best solution for LCD backlighting,” Patel said. “But pricing is still too high and these won’t show up in LCD TVs in significant numbers until 2010.”

Beyond televisions, LEDs are used for backlighting of desktop monitors and notebook PC LCD displays. LEDs also have strong growth potential as replacements for light bulbs in general illumination applications.
For more information, www.isuppli.com