TechPulse 360

Light-emitting diodes are more energy efficient than the incandescent bulbs still widely sold around the world – and more expensive.

The price of an LED lighting chip will fall to $1 by 2012, says Mark McClear of Cree.

This higher price could evaporate within two years, sparking a huge market for the electricity saving bulbs and light fixtures.

LEDs use as little as one-fifth the energy of incandescent bulbs and 12 percent less than compact fluorescents. (They also have none of the mercury found in compact fluorescents.)

But the costs of solid-state lighting come to $40 or so a bulb, and fixtures are much more. This is down from $80 or more a bulb just a year ago. By 2012 the price of an LED chip appropriate for lighting could fall to $1 from about $3 today, closing the gap, says Mark McClear, director of business development at Cree. Fixtures equivalent in intensity to incandescent products on the market today will need 100 chips to generate the same amount of light. Their price will be about the same.

The price of LED chips has fallen as brightness increased, McClear said at the Strategic Materials Conference in Half Moon Bay, CA.

Not long ago, 400 chips were needed, at $4 a piece, with the cost of the resulting fixture too high to be competitive. Improvements in light intensity have made that 200 today at $2 a piece.

With technology continuing to improve, the lighting market is on the cusp of a dramatic transformation with energy efficiency the force behind new business and consumer purchases.

Energy Department Secretary Steven Chu wants the U.S. to be the global leader in the emerging market for energy efficient LED and OLED lighting.

There is no guarantee. Big companies from around the world have the market in their sites, including consumer electrics giants Sharp, Toshiba and Philips.

On Friday, Chu hoped to put more wood behind his arrow by awarding stimulus act funding to 14 companies. It was the department’s third round of funding for solid-state lighting and the first to include manufacturing projects.

Departmetn Of Energy allocates another $37 million in stimulus funds to LED lighting

Still, the more than $37 million he allocated is a drop in the bucket. The $100 billion a year lighting market will bring much larger private investments from firms eager to secure places in such as lucrative business,

The Department of Energy money will go to 17 projects, with the majority ($23.5 million) slated for manufacturing efforts.  Ten million dollars is to be used for product development and $4 million is earmarked for research. Private funds of $28.5 million are being invested alongside the government money.

Among the companies collecting money are GE, Applied Materials, KLA Tencor, Ultratech, Veeco, Cree, Osram Sylvania and Cambios. The University of Rochester also is to get a research grant.

Also on the list is Philips Lumileds, a division of the Dutch company Koninklijke Philips Electronics.

Chu said the stakes behind LED and OLED bulbs and lighting are high. Lighting consumes a quarter of the nation’s electricity and solid-state products could cut that use by one third.

But foreign competitors will be angling for a piece of the pie as well. Earlier this month, Sharp and Toshiba said they will begin shipping products into the U.S. this spring. Other well heeled companies (perhaps Samsung) are expected to enter the market as well.

In addition, many of the top LED chip producers are in Asia. In other words, the U.S. has its work cut out for itself.