The Lighting Revolution

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Solid State Lighting - opportunity, challenges & the future

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The Lighting Revolution

  1. 1. 1 • The Lighting Revolution Solid State Lighting – opportunity, challenges & the future Sri Jandhyala Marketing Director – LED Lighting ON Semiconductor
  2. 2. 2 • Template • Nov-12 Confidential Proprietary 2 • THE OPPORTUNITY
  3. 3. 3 • Template • Nov-12 Confidential Proprietary 3 • 2010 Electricity Consumption in the US for Lighting Source: DOE MYPP, April 2012 • Lighting consumes ~20% of total electricity usage in the US • WW consumption is ~200 quadrillion BTUs; US consumes ~18% • LED Penetration was less than 1% in 2010
  4. 4. 4 • Template • Nov-12 Confidential Proprietary 4 • US Energy Consumption & Savings for Lighting Source: US DOE , SSL Energy Savings Report, Jan 2012 LED Penetration @ 36% LED Penetration @ 74% • In 2010, the cost of an LED Bulb was >$60!! • Last year, Japan had 30% LED penetration >> The point being – these projections are already looking very conservative
  5. 5. 5 • Template • Nov-12 Confidential Proprietary 5 • Government Regulations Source: McKinsey & Co (2012)
  6. 6. 6 • Template • Nov-12 Confidential Proprietary 6 • Need for Efficient Solutions: Energy Security Source: McKinsey & Co (2012)
  7. 7. 7 • Template • Nov-12 Confidential Proprietary 7 • The Potential • LED A-lamps have less than 1% penetration of the total installed base of 3.3B A-lamps in the US Source: US DOE , Adoption of LEDs in common lighting applications, May 2013
  8. 8. 8 • Template • Nov-12 Confidential Proprietary 8 • Global Lighting Market Lamps – Annual Unit Shipments & Penetration - Annual shipments of 14B units – declining to 10B due to longer lifetime of LED Bulbs - All lighting technologies flat, except incandescents that will decline - LED experiencing explosive growth and capture 25% share by 2017 Source: Datapoint, ON Semiconductor Internal Estimates
  9. 9. 9 • Template • Nov-12 Confidential Proprietary 9 • Global Lighting Market - Huge installed base of 40B units and growing - In 2016, annual units shipped of LED lamps will surpass cell phones - Even with 6B units shipped over the next 5 years, LEDs will only have ~10% penetration Lamp Sockets – Installed base by Lighting Technology Source: Datapoint, ON Semiconductor Internal Estimates
  10. 10. 10 • Template • Nov-12 Confidential Proprietary 10 • World Wide LED Lighting – Total Market Size • Global Lighting Market is growing and will be $125B USD in 2017 • The General Lighting segment will be the biggest driver, by far Euros Source: McKinsey – Lighting the Way
  11. 11. 11 • Template • Nov-12 Confidential Proprietary 11 • LED Market is Rapidly Evolving • Lighting accounts for ~1/5th of total electricity world-wide – With the adoption of technology available today, 30% can be saved • Beijing has set a target for LEDs to account for 30% of total general lighting market by 2015 – Estimated to cut annual coal use by 35 million tons • Japan already has 30 percent LED penetration • Phaseout of incandescents in the U..S started in 2011 – Energy Independence and Security Act of 2007 – GE shut down last factory making incandescents in 2011 • IKEA will sell only LED lighting products starting in 2016
  12. 12. 12 • Template • Nov-12 Confidential Proprietary 12 • Strong Fundamental Drivers of LED Lighting • Overall lighting demand increasing – Population growth – Urbanization • Need for more efficient solutions – Carbon emissions – Energy security – Japan has been 1st mover • Rapidly falling cost of LEDs and lamps – <$10 is viewed a key tipping point in developed markets – Over-supply in LED capacity has helped
  13. 13. 13 • Template • Nov-12 Confidential Proprietary 13 • THE CHALLENGES
  14. 14. 14 • Template • Nov-12 Confidential Proprietary 14 • Disruptive Innovation From the Innovator’s Dilemma by Clayton Christensen • A disruptive innovation initially offers “lower performance” as measured by the mainstream market • But, it also offers other features/benefits • As it improves along traditional metrics, it eventually displaces the incumbent • History is littered with examples playing out over and over – Telegraphy to telephones – CRT to LED TVs – Land lines to Mobile – And now, incandescents to Solid State Lighting
  15. 15. 15 • Template • Nov-12 Confidential Proprietary 15 • Where are We in the LED General Lighting Adoption Curve? Source: Morgan Stanley, 2011 • Volume surge • Smaller, niche applications – ala Smart Lighting • Industry profit growth slows • Cost still high • Demand needs to be created •Highly fragmented market with many new entrants
  16. 16. 16 • Template • Nov-12 Confidential Proprietary 16 • “Lamps” A-lamp Standard incandescent Linear Fluorescent Compact Fluorescent (CFL)
  17. 17. 17 • Template • Nov-12 Confidential Proprietary 17 • Equivalency – in lumen-hours Source: DOE LED Lifecycle Report, 2012 • Average output of a 60W incandescent lamp is 900 lumens • 1 LED Lamp provides 800 lumens and 25K lifetime hrs  20 million lumen-hours
  18. 18. 18 • Template • Nov-12 Confidential Proprietary 18 • The Retrofit Lamp • Performance is critical – manufacturers adopted voluntary/regulatory standards • Quality is key – lifetime warranties being offered • LED’s are changing rapidly – redesign is common • Many applications are regional specific requiring optimization • Smart Lighting adds further complexity Courtesy: IEEE Spectrum
  19. 19. 19 • Template • Nov-12 Confidential Proprietary 19 • The LED replacement/retrofit lamp
  20. 20. 20 • Template • Nov-12 Confidential Proprietary 20 • The CREE LED Retrofit Lamp • Total of 20 LEDs mounted in ten groups of two • Four LED die in each package for a total of 80 LEDs in series • Mounted onto a metal core PCB bent into a ten-sided shape
  21. 21. 21 • Template • Nov-12 Confidential Proprietary 21 • LED Bulbs Reach Tipping Point in 2014 Aggressive Market Price Reductions in LED bulbs in the US Source: DOE MYPP 2013, Datapoint 2013: CREE 60W bulb @ $12.97 2013 Retail: $14.97 -40% LED Bulb Efficacy Improvement Dramatic improvements recently and more projected before reaching theoretical LED limit of 268 lumens/watt Efficiency improvements driving Cost reductions LED Cost ($/Klm) Improvement CREE 60W bulb @ $16/Klumen $5 for a 60W bulb in 2020 Anticipate “tipping point” when LED bulbs reach <$10
  22. 22. 22 • Template • Nov-12 Confidential Proprietary 22 • Barriers to adoption • Awareness and education of SSL • Cost • Performance has reached levels matching incumbents – Continuous monitoring and voluntary standards • Quality across manufacturers has to be maintained – Back-up claims – Warranties being offered – Lifetime, Color quality, light output, etc • Higher initial cost still remains a hurdle – especially in Asia – Multiple drivers helping • Standards – Requirements are very regional – True inter-operability
  23. 23. 23 • Template • Nov-12 Confidential Proprietary 23 • THE FUTURE
  24. 24. 24 • Template • Nov-12 Confidential Proprietary 24 • What’s Next? • Growth in the replacement bulb market will slow down • So far, its been all about energy savings – Driven by governmental regulations and policies • In the future, it will be about new and innovative uses – Smart Lighting – Occupancy/Motion sensing
  25. 25. 25 • Template • Nov-12 Confidential Proprietary 25 • • “Bulbs get most of the attention due to the sheer size of the market, and this is an important step in adoption. However, bulbs will be a bridge solution and a Trojan Horse for a more sustainable content driven, networked, intelligent market” • “In the near future, adoption of SSL will have little to do with energy efficiency” – CANACCORD Genuity • Lifetimes, efficiency, energy star and the EPA do NOT matter – Vinod Khosla, Khosla Ventures
  26. 26. 26 • Template • Nov-12 Confidential Proprietary 26 • Market (R)evolution • Drive for energy efficiency and tops-down push aiding SSL adoption • The volume & opportunity today is in “General Lighting” – Retrofits • “Smart” lighting will start to grow significantly in 1-5 years - Driven by the “internet of things” & command/control • Color / CCT Control • Spectrum Shaping • New applications / uses
  27. 27. 27 • Template • Nov-12 Confidential Proprietary 27 • “Smart” Lighting – The next catalyst Source: Datapoint & ON Semiconductor analysis and estimates (2012) Today Emerging in volume – on the market today • SSL opens up new features – Occupancy, Ambient, Proximity sensors built into bulb – Wireless (Bluetooth, Zigbee, Proprietary) • Products are on the market now
  28. 28. 28 • Template • Nov-12 Confidential Proprietary 28 • A few possibilities for the coming years • Occupancy and motion based controls • Detection of your presence – and customized lighting • No more “fixed” lighting • Walls “painted” with different colors • Multiple light sources in a room – ala the automobile • No more light switches • Completely new form factors – paper origami fixtures • Individually addressable lamps can become a gateway • No longer about illuminating spaces alone – about lifestyles • “Adaptive learning” – machine learning similar to annoying internet ads; Naturally setting the personalized light
  29. 29. 29 • Template • Nov-12 Confidential Proprietary 29 • In Closing….. • It’s a matter of when, not if – and the opportunity is huge!! • So far the driver has been energy savings • As penetration increases, newer uses of lighting technology will accelerate • Many more new applications and uses for lighting will emerge

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