White light-emitting diode (LED) targets a broad range of applications, from backlighting for LCD panels for PCs to headlights and other automotive devices, as well as lighting products for outdoors, offices and homes. To win business and fuel further demand, LED manufacturers have become fiercely involved in technology competition to create brighter white LEDs in series.
Behind this competition are cross-licensing agreements between the major LED manufacturers of Japan, the US and Europe. The objectives of these agreements are to avoid patent-related disputes and enable concentration on technology development. This in turn helps application manufacturers select the most suitable products from the many LED products available, and reduces any concerns they might have about becoming involved in patent disputes.
Circumstances were completely different until four years ago. At that time, Nichia Corp, the leading manufacturer in the LED industry, stood against Toyoda Gosei Co Ltd of Japan, Cree Inc and Philips Lumileds Lighting Co of the US, OSRAM Opto Semiconductors GmbH of Germany and some other major LED manufacturers; numerous patent infringement lawsuits were filed.
Application manufacturers using LEDs in their products were never free from the risk of becoming involved in such disputes. In the second half of 2002, however, such lawsuits were settled in series, and five leading LED manufacturers, led by Nichia, emerged with the market firmly in their grip.
The white LED market, however, which has now become enormous, has begun to stretch beyond the size at which these veteran manufacturers can maintain control. It is no longer so easy for them to sit back in the knowledge that they would always prevail in the fledgling new LED markets for backlight systems for medium to large LCD panels, lighting systems and other applications. In addition, the industry is increasingly reorganizing to involve the LED manufacturers of Taiwan and Korea, which have been increasing their presence in the market (Fig 1).
If veteran manufacturers increase the number of licensees and licensing technologies, or LED manufacturers join hands as a result of the industry's reorganization, application manufacturers will be able to acquire low-price, bright LEDs more easily than before. On the other hand, though, if the industry's reorganization does not advance smoothly, LED manufacturers might revert to their custom of filing large-scale patent disputes. LED application manufacturers now more than ever need to monitor how LED manufacturers will move.
White LED for LCD Panels
The industry looks increasingly likely to reorganize, in part because of the increasing presence of Taiwanese and Korean manufacturers, and also because of the increasingly complex relationships between LED manufacturers over patents and other intellectual properties. As for the market's structure, the main driver of the white LED market is expected to shift from mobile phone handsets to large LCD panels for notebook PCs featuring 10-inch or larger displays (Fig 2a).
According to a survey conducted by Nomura Research Institute Ltd, these markets are expected to swap positions in terms of market size towards 2010. But in terms of unit shipments, the white LED market for mobile phone manufacturers will still grow. This is because the mobile phone handset market will continue to expand, supported by the growth of new markets, primarily BRIC (Brazil, Russia, India and China) (Fig 2b).
However, in terms of value, the size of the LED market for mobile phone application is expected to shrink in 2010 to about 60% of that in 2005 due to rapidly lowering unit prices. If they continue to depend on mobile phone manufacturers, LED manufacturers' earnings will not grow. In other words, LED manufacturers that cannot build up their business in the notebook PC and other new application markets will lose out to the mobile phone market's slowdown.
Rise of Taiwan, Korea
In addition to the mobile phone market's slowdown, the recent rise of Taiwanese and Korean LED manufacturers is also forcing the more established LED manufacturers of Japan, the US and Europe to revise their business. In contrast to stagnant sales growth at many Japanese, US and European LED manufacturers -- including Nichia, which logged a decline in sales in 2005 compared to the preceding year for the first time since 1993 -- Taiwanese and Korean LED manufacturers are showing favorable sales growth (Fig 2c). For example, Seoul Semiconductor Co Ltd, whose shipments to Korean mobile phone manufacturers account for more than half of its total shipments, is seeing its business expand, supported by growth of the mobile phone manufacturers. Arima Optoelectronics Corp of Taiwan has been enjoying huge sales growth, according to its president, J Wang: "Our monthly sales currently rise by more than 50% on a year-on-year basis."
Startup manufacturers' output capacity and technologies have also almost reached par with those of established manufacturers. Excluding Japan, the US and Europe, Taiwan has become the world's major production base for blue LED chips, which are made into white LED, and now "produces 40% of global output of blue LED chips," according to Noboru Tazaki, executive vice president and senior operating manager, Nichia's Opto Electronics Products BU. Although the amount of Taiwanese chips that actually enters the market lowers to "20% to 25% of total amount dealt on the global market," said Tazaki, Taiwanese chips still account for nearly a quarter in the global market for blue LED chips due to product yields, operating ratios and other factors. Many LED engineers agree that the brightness of Taiwanese LED chips is "comparable to chips made by Japanese, US and European manufacturers, excluding high value-added products."
According to B J Lee, president of Epistar Corp, the largest LED chip manufacturer in Taiwan, "Compared to the 1,700mcd achieved by high value-added, side view LED products shipped from Japanese, US and European manufacturers, Taiwanese manufacturers, excluding Epistar, can only achieve 1,400mcd at their best. Epistar, however, can manufacture a blue LED chip applicable to 1,700mcd white LED products. We have not launched such a chip onto the market yet only because we are still not sure if our product infringes other companies' patents or not." In other words, if veteran manufacturers contract out their LED manufacturing to Taiwanese manufacturers, they are ready to provide LED chips with equivalent performance to their own.
Patents, Expiry Dates
Along with the growth of Taiwanese and Korean LED manufacturers, disputes over patents, design rights and other intellectual properties have also been increasing. Although veteran LED manufacturers have never directly fought against each other, they have recently confronted each other indirectly (Fig 3). For example, claiming infringement of its patent related to white LEDs, OSRAM Opto filed lawsuits against Citizen Electronics Co Ltd, which is licensed its white LEDs by Nichia, and Kingbright Electronics Co of Taiwan, which is also licensed its white LEDs by Cree.
The circumstances are made more complicated by the fact that the content of LED-related influential technology patents varies by geographic region. In the Japanese market, for example, Nichia's patent rights extend to cover a broad area. In particular, "Nichia's white LED-related No.3724498 is a very influential patent. We have quitted bringing into the Japanese market Taiwanese products marketed outside Japan," said Masao Kumura, president of E&E Japan Co Ltd, which markets LED products from Everlight Electronics Co of Taiwan and Epistar. In the US market, Cree's white LED-related US patent No. 6600175 is said to cover a broad range of rights, and some even say anyone will infringe this patent if dealing in white LEDs in the US market.
Owners and the coverage areas of influential patent rights vary by market, but what should not be forgotten is that every intellectual property has its expiry date. Patents applied from the early 1990s will meet their expiry dates 20 years after filing, from 2010 onwards. Since many of the important patents owned by the older LED manufacturers came into effect in the early stages of development, patent networks built up by each of these companies are supposed to gradually lose their effect.
New Markets, Protection
Amid this drastically changing environment around the white LED market, regardless of whether they are established or startup, all the LED manufacturers are evidently considering the same strategic move (Fig 4). That is to enhance their product lineups for new LED markets for backlight systems for medium to large LCD panels, lighting and other products, so they can become established in these markets as soon as possible; and at the same time to expand their current shares in the existing market for mobile phone manufacturers, which is still large despite its anticipated decline in returns.
As for LED products for new markets, many LED manufacturers are developing with great haste. According to Philips Lumileds, which handles the "Luxeon" series of high-power white LED products, the high-power white LED market is steadily growing, with worldwide Luxeon sales reaching 1.5 times more than they did a year ago. The company also predicts that these new markets are likely to be established earlier than expected.
Meanwhile, under further attack from Taiwanese manufacturers, Nichia and other long-established manufacturers are struggling to protect their current shares in the market for existing applications.
Light Output to Double
To take advantage in the new application markets, LED manufacturers can take three key actions: 1) develop a low-price product that achieves a luminous efficiency equivalent to current LEDs for mobile phones, while boosting light output by almost one digit; 2) increase white LED's added-value by adding optical components; and 3) supplement what is lacking in technology by joining hands with manufacturers from other industries.
The values to be targeted in order to achieve (1) are a luminous efficiency of 100lm/W and a unit price of ¥1/lm. The former value has been achieved with a 0.07W class product and now the focus is on whether the same efficiency can be achieved with a 1W class product.
Luminous efficiency of 100lm/W may be achieved by a 1W class product before long. Cree has released a blue LED chip for white LED, whose light output reaches 370mW with 1W input. Compared to the company's previous chip, light output has been doubled. "This product boasts the highest light output in the blue LED market. It can promote the replacement of existing light sources with LED," said Hiro Masuda, LED-Related Business general manager, Electronic Materials & Equipment Dept, Sumitomo Corp, a trading company marketing Cree's blue LED.
When making blue LED chips into white LED, they are combined with fluorescent materials. At the LED Technology Symposium 2006 event in June 2006, Cree explained that 100lm/W white LED can be created with about 360mW output from blue LED chips.
¥1/lm within Range
Citizen Electronics, a manufacturer of products driven at 1.5 and 3.5W, will boost the luminous efficiency of all of its models to 85lm/W, if not 100lm/W, in 2007. Unlike Cree, which uses a 1mm sq large chip, Citizen uses several normal blue LED chips measuring 3 x 3mm to crank up brightness. Citizen explained that this scheme makes it easier to take out the light generated by a chip. The company uses blue LED chips formed on sapphire substrates, and since this kind of chip emits approximately half the light generated inside from its side faces, it is more effective to arrange a few smaller chips instead of disposing of one larger chip in order to increase the light emission from the side.
"The goal is within the reach," said Nichia regarding the target of \1/lm. The 1W product is likely to appear as early as 2007, although the timeline is yet to be determined. In order to achieve higher efficiency and lower cost at the same time, Nichia too uses plural normal sized blue LED chips.
Larger Chips
The number of products with larger chips is also increasing steadily. The larger chips result in a smaller package size because they require a fewer pieces to be mounted in the package whereas the smaller ones involve a number of pieces. "Larger chips can meet the clients' demand for a brighter point light source," said Hiroyuki Hashimoto, marketing manager, OSRAM Opto Semiconductors Japan. The technology developed to answer these demands is OSRAM Opto's ThinGaN. This enables the extraction of 97% or more of the total light emission from the chip's surface. Volume production of ThinGaN chips began in 2005.
The ThinGaN chip is built by forming a blue LED structure on a sapphire substrate, which is then replaced with a Ge substrate. Taiwanese manufacturers are also working on the development of blue LED chips based on substrate replacement technology. Arima Optoelectronics plans to start volume shipment of blue LED chips manufactured by replacing the sapphire substrate with an Mo or GaP substrate around summer 2007. The target applications are not low price products for use in mobile phone keypads and such, but automotive devices and medium to large LCD panels which require a high output.
Optical Components
Companies focusing on the package optical design in a bid to enhance the versatility of white LED as a light source include OSRAM Opto, Philips Lumileds, Nichia, Citizen Electronics and Stanley Electric Co Ltd. The requirement values for the emitting angle of light from white LED are diverse in relatively new markets such as in computers, automotive devices and lighting equipment, so the lens design is adopted according to these requirements (Fig 5).
"With more bright LED chips coming onto the market, the value of chips lowers accordingly. Optical techniques, on the other hand, can increase white LED's added-value," said Shinichi Katano, managing director, Stanley Electric.