Response to the Open Letter to Lumileds

Back in December, I wrote an open letter to Lumileds. In this letter, I basically asked them to allow their customers to specify which bin they would buy.

For those just tuning in, "bin" refers to the sorting of the LEDs into different quality levels.

During the Christmas holiday, I got an email from Dave Sciabica (Lumileds VP of sales for the Americas). Last week, we were able to have a good phone conversation about the issues brought up in the letter.

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My main point as you remember was that our LS products can only use a narrow bin of LED. Since we cannot specify which bin we will receive, we typically end up returning 90% of each shipment for credit. This really slows things down and ties up a bunch of money.

Up until recently, Future (the exclusive distributor for the luxeon line) was not allowing returns on the luxeon LEDs. In the past several months since they have allowed returns, their inventory has shown increasing signs of dilution with unwanted bins. Unwanted bins are simply placed back in inventory for us receive again in another order. We have seen yields of desirable bins per order decrease alarmingly in the past 60 days. It has become quite difficult to get a usable bin lately. I have had to return 100% of some shipments because no usable LEDs (for our usage that is) could be found.

Dave told me that the bins we use are in high demand and there is just not enough to go around for everyone. Lumileds is continously increasing capacity, but demand is exceeding that increase.

He recommended that we find a way (if we could) to use or sell the unwanted bins ourselves. But we are yet to find anyone willing to buy a bunch of greenish white LEDs and pay more than what Future is willing to credit us for them. This might help clean up the Future inventory but it does not help us produce more Arc-quality flashlights.

This is a very new technology and people need to realize that it is not an exact science yet. The luxeon star LED is still not a commonly available item.

I understand that some people (none from the CPF I assume) have called Lumileds and have been quite rude. Some even have threatened them with legal action, etc. They are doing the best they can to get the most top-quality LEDs shipped.

Until these LEDs become more common, supply issues will continue to be a challenge for us. I would expect that things will probally get worse before they get better. This will translate into fewer LED flashlights available at any given time.

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It is our goal at Arc to work with Lumileds and Future to develope and promote this new technology. I appreciate the fact that Dave took the time to explain some of the unique challenges they are facing and the remedies they have in the works.

Peter Gransee
Arc Flashlight

I have a problem from the other side of the coin: As a user of 'just a few' LEDs, I order from Future and just get the luck of the draw. If the 'desirable' LEDs are getting picked out of the pile by large customers, then I get stuck paying the same price for the bottom of the barrel.

Once Future started to permit returns, the quality of their stock went down. I'd bet that there is even a chance that if their entire stock becomes 'unacceptable' bins, that their stock would stop turning over; customers would buy and then return them, they would never get new stock from Lumileds, and the result is that no-one would get acceptable Luxeons.

IMHO the different bins should simply have different part numbers, with the 'better' bins costing more and the 'worse' bins costing less. Future should _not_ permit returns for a bad bin, but should instead sell at a premium parts that are guaranteed to be from a desired bin.

Also note that different manufacturers will have different bin preferences. I have to wonder if there would be a viable 'market' where different manufacturers could trade amongst themselves for the desired parts.

-Jon

It's not rocket science, they should just charge more for the more desirable items, maybe much more and less for the less desirable. Then everybody gets what their willing to pay for. Just like computer cpu's. They make a batch, grade them for speed and then charge accordingly.

I agree that lumileds should form a pricing ladder like CPU companies do. There is literally no difference (within the same family and stepping) between CPUs of different clock frequencies. For instance, if Intel is binning their P4 CPUs, and they have an uneven bin split (like too many 2.4GHz CPUs), they'll re-label some of those as a 2.2, 2.0, etc.

Lumileds should bin and price by performance. I would say that they should charge a little more for whiter and brighter, the same for "average" LEDs, and much less for dim & green (assuming white, brightness and color purity for other colors).

It wouldn't be a difficult sorting method either. For me, color would be more important than brightness.

Something like this would be neat (assuming 1W):
white-blueish white $+1
overly blue: $-1
greenish: $-1
very green: $-2

very dim (below M): $-2
Dim (below M): -$1
Brigher (P): $+1
Brigtest (Q): $+2

Low vF (H): $+1
High Vf (K+): $-1

Thus, the Q3H that everyone wants would cost $3 more than a "normal" bin (likely a M2J or N2J)

Likewise, an L1K would cost $4-5 less than "normal", and would be more likely to move as a "cheap" luxeon.

-Darin

I doubt that they would want to create part numbers for _all_ of the various possibilities. But a few specialized part numbers would be helpful

Future-Active and Lumileds already know about part number binning. If you want to buy 'superflux' LEDs, the part number has a bin code in it. You could get 'HPWT-MH00-00000', which means 'give me any bin'. Or you can buy 'HPWT-MH00-E4000' 'HPWT-MH00-F4000' 'HPWT-MH00-G4000' which are progressively brighter parts. Note that each part number spans _4_ bin codes, and they overlap, so an F4000 could be from bin F,G,H, or J, and an H4000 could be from H,J,L,M. I was also told that if I wanted to order 12000 pieces, my sales rep could probably convince the marketing department to let me specify the precise bin code...but only if it was in the middle of what gets produces; I couldn't 'high grade' if I did this.

-Jon

-Jon

Well, I don't think they'd have to create part numbers - they already have the bin number (unless you're talking about Future making new part numbers).

It wouldn't be much different than purchasing any other electronic component. If I want a generic rectifier diode, I have a zillion choices; current rating, breakdown voltage, voltage drop, switch time, etc.

Even getting resistors, you have a zillion choices; power rating, voltage rating, resistance, tolerance, resistance material, packaging, etc.

Bin-related pricing would offer fine grain control over letting the customer know what they're getting (and offering different price points for the varying performance).

-Darin

Whatever happened to the good old method of the OEM manufacturer supplying a (test) specification to the vendor and have the vendor provide a tested product that meets the OEM manufacturers specification?
If the vendor can't or doesn't know how to test, then supply the vendor with a test fixture, test methodology and specification limits.
This has worked well in the semiconductor industry for the last 40+ years.