LED tags to fall in 2013
Prices for LEDs will fall as suppliers move production to larger size wafers and improve manufacturing efficiencies By James Carbone
Prices for high-brightness light emitting diodes (LEDs) declined by 30 percent or more in 2012, and tags will continue to drop in 2013, although not at the same rate.

“Last year the cost of LEDs fell 35 to 40% and some went down 45%,” says Vrinda Bhandarkar, director of research, LED lighting, for Strategies Unlimited based in Mountain View, Calif. She says oversupply last year is one reason for the price drops. “A lot of capacity was created, especially at the low end of the market.”

The good news for buyers is that prices will continue to decline, "but not as much as last year," says Bhandarkar. She says 35% to 40% price declines "are not sustainable" in the industry, but prices should fall another 10% to 15%.

Bhandarkar said the price for high-end LEDs is around $3.50 per kilolumen for high-end LEDs. Low-end LEDs are about $2 per kilolumen. Kilolumen is a measure of light output.

Suppliers, such as Cree, Osram, Bridgelux and others, have been able to drop prices because of greater efficiencies in the manufacturing of the chips, and because of reduction in the cost of LED packages.

One way manufacturing cost has been reduced is by the use of larger size wafers. Suppliers have transitioned LED production from 2-inch to 4-inch and 6-inch wafers and some are looking to produce LEDs on 8-inch wafers. Larger wafers mean that LED manufacturers can produce more LEDs per wafer and reduce cost.

Lower cost, more uses
As cost drops, LEDS will be used in more applications, including general illumination for homes and businesses.

In fact, declining LED costs in recent years have resulted in LEDs being designed into more electronics equipment, including televisions, computers, automobiles, electronic signs and traffic lights among others. The high-brightness LED market has soared, with revenue rising from $5.1 billion in 2008 to $13.7 billion in 2012, according to LED researcher Strategies Unlimited.