Lighting accounts for around 20% of electricity usage in the US. Solid state lighting (SSL), primarily LEDs, represents a major opportunity for energy savings as their penetration was less than 1% in 2010 but projections estimate they could save 36-74% of current lighting energy usage if reaching 36-74% market penetration. SSL also provides the potential for innovative smart lighting applications integrated with sensors and wireless connectivity beyond simple retrofits. However, SSL adoption faces challenges including higher initial costs compared to incumbent technologies and establishing quality, lifetime and performance standards.

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The Lighting Revolution
Solid State Lighting – opportunity, challenges & the future
Sri Jandhyala
Marketing Director – LED Lighting
ON Semiconductor

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THE OPPORTUNITY

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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

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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

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Government Regulations
Source: McKinsey & Co (2012)

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Need for Efficient Solutions: Energy Security
Source: McKinsey & Co (2012)

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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

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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

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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

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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

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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

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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

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THE CHALLENGES

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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

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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

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“Lamps”
A-lamp
Standard incandescent Linear Fluorescent Compact Fluorescent (CFL)

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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

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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

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The LED replacement/retrofit lamp

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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

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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

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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

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THE FUTURE

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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

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• “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

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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

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“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

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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

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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