LEDs: Good for Consumers, Bad for Photonics?

3 October 2014—Market research firm IHS Technology (Bracknell, England) released research results this week concluding that the average global retail price of light-emitting diode (LED) lamps fell 19.2 percent in the past year. The September 2014 release of the IHS Technology LED lamp Retail Price Tracker indicated that the global average retail price of LED lamps was $21, a fall of 4.9 percent over the month of September 2014 from August, and down 19.2 percent year-over-year from the same time in September 2013.

This may be good for consumers of LEDs. Over the past year, the lumens-per-dollar ratio of LED lamps has increased by 27.1 percent to 35.44 lumens per dollar. Consumers can buy more light for their buck.

But is this price contraction bad for photonics? U.S. LED manufacturer Cree (Durham , N.C., USA) announced 2 October in its preliminary financial results for its first fiscal quarter that the company missed its earnings target by 20 percent year over year, due to lower LED products revenue. The company’s expected revenue of $428 million was shy of its target range of $440 million to $465 million.

Principal analyst Jamie Fox at IHS says the notable reversal may be due to softer demand or the quarter, pricing pressure from competitors such as South Korea and China, and Cree’s focus on high-power LED production in a market in which mid-power products are expect to account for 48 percent of the market in 2014.