Expect 15-20% price declines for light emitting diodes

By Jim Carbone -- Purchasing, 8/7/2008 1:26:00 PM

Buyers can expect continued price declines for high-brightness light emitting diodes (LEDs), despite strong unit demand growth, as LEDs are designed into everything from cell phones to ceiling lights.

LED prices will drop because of oversupply and intense competition among manufacturers, such as Cree, Lumileds and Nichia for market share and as suppliers improve their manufacturing efficiencies.

“Simply put, demand is healthy but supply is greater than demand,” says Robert Steele, director optoelectronics for market researcher of Strategies Unlimited in Mountain View, Calif. “There are a lot of companies in Asia making LEDs and prices are being driven down,” he says.

The average price of a high-brightness LED was 19.5¢ in 2004. In 2007 it dropped to 11.7¢. Prices will fall 15-20% in 2008, says Steele. Despite falling prices, the global high-brightness LED market will grow from about $4.5 billion in 2007 to $5.1 billion in 2008. By 2012, the LED market will reach $11.4 billion.

Also see: LED prices expected to fall