A Glimpse of a Future in a New Kind of Light

tonyb

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Here is something Printed in Forbes Magazine a while back..

Semiconductors
The Next Lightbulb
Arik Hesseldahl, 06.17.02, 8:00 AM ET

It's a flashlight, and looks like millions of other ordinary flashlights. Press a switch and it lights up. Big deal.

But it is a big deal to Chuck Swoboda, president and chief executive of Cree (nasdaq: CREE - news - people ). What's producing the light is not a conventional flashlight bulb but a tiny chip inside a white light-emitting diode (LED) that's just as bright but consumes half as much power and lasts years longer.

"Lightbulbs have stayed pretty much the same for more than a hundred years," Swoboda says. "It's about time that business gets disrupted."

The LED business is a little-known segment of the semiconductor industry whose genesis goes back to before the creation of the first digital calculators. Those old enough to remember the first handheld electronic calculators will remember seeing digits composed of red dots. Those dots were the LEDs.

Now companies in the business are looking to put LEDs anywhere there's a need for light, from office buildings, to the car dashboard, to mobile phone displays, to Christmas tree lights. Don't laugh. The first LED-based Christmas lights, billed as a safer alternative because they generate little heat and last longer than conventional lightbulbs, hit the market last year.

They're also showing up in traffic lights. The new ones cost more to buy but require far less maintenance, and consume about 80% less power than conventional incandescent lights. During last year's energy crisis, California replaced 200,000 old traffic lights with LED-based models.

Instead of the filament used with conventional bulbs, the light in an LED is emitted from a tiny chip that Cree makes at its Durham, N.C., manufacturing plant. The light is produced as a basic byproduct of exciting electrons on one side of the chip, which are forced across a tiny gap to the other side. Changing the width of that gap alters the wavelength of the light produced and changes its color.

Creating LEDs that glowed red, yellow, orange and light green was easy, and billions of LEDs of that type are made every year. Getting to true green, blue and white has been considerably harder.

"The colors have been limited by the materials that were available," says Robert Steele, director of optoelectronic research at Strategies Unlimited, a Mountain View, Calif.-based research firm. "The older LEDs were based on gallium arsenside and gallium phosphide, and the physics of those materials were such that the wavelengths of the light they would emit was limited to only a few colors."

Later developments by a Japanese firm called Nichia, now Cree's biggest competitor, led to the development of a blue LED based on an exotic semiconductor material called gallium nitride. Cree followed that path, then combined gallium nitride with another material, silicon carbide, that had historically proved hard to work with. Cree's innovation involved figuring out how to grow perfect silicon carbide crystals that could ultimately be turned into wafers. Then it combined the silicon carbide with a layer of gallium nitride.

Blue ultimately led to white, and now Cree can produce LEDs that emit light bright enough that it's uncomfortable to stare at directly. Bright LEDs can be bundled together to make things like huge outdoor video screens and are already being used to light the dashboards of cars made by Volkswagen, among others. Steele estimates the current market for bright LEDs at $1.2 billion, and has forecast growth to $3 billion by 2005.

As it happens, blue LED research dovetails nicely with the burgeoning field of blue lasers. The process of producing the light is essentially the same, although a laser requires sophisticated optics to focus the light precisely. Blue lasers will power the next big advance in DVD technology. Current models use red lasers, which have a larger wavelength than blue ones. The smaller wavelength would allow a blue laser to record data on smaller areas of a disc than a red laser can, ultimately allowing a DVD or CD to hold a lot more information than it does now.

Cree's bottom line has suffered over the last year. It finished its fiscal year 2001, which ended last June, with a $27 million profit on sales of $177 million. That profit was down 8% from the previous year. Subsequent quarters haven't been as kind. It recorded losses of $79.2 million on sales of $117 million in the first nine months of the year, but recently said it's on track to boost sales by 8% to 11% in the current quarter. Swoboda says demand for white and blue LEDs is up, specifically for use in mobile phones.

Its biggest expense has been research and development, which, at $20 million so far this year, is more than double what it spent a year ago. With demand down, Cree redeployed its engineers involved in manufacturing toward research. Now that demand is picking up, that will be scaled back. But Swoboda confidently predicts that by next year 70% of sales will be generated from products invented over the last year.

Meanwhile, the federal government has fallen in love with the idea of LED lighting. Part of the Energy Policy Act of 2002 calls for spending $50 million a year through 2011 on LED research for what it calls "next generation lighting."

What would you pay for a lightbulb that lasts ten years?
 
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