Innovation in Global Industries U.S. Firms Competing in a New World (Collected Studies) (2008) / Chapter Skim
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5 Lighting
5 Lighting
Pages 163-206
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From page 163... ...
Increasingly both lamp and fixture manufacturing have been shifting to offshore locations, primarily in Asia. Not only are North American and European lamp and fixture companies under the threat from low-cost imports, but solid-state lighting, a semiconductor- instead of bulb-based technology with greater potential energy efficiency and new capabilities, is poised to revolutionize the industry and change how we understand and use lighting -- a change that will affect both traditional lamp and fixture producers.
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From page 164... ...
Traditional lighting technologies we define as incandescent, gasdischarge, and electric arc lighting (which includes fluorescent, high-intensity discharge, mercury and sodium vapor, metal halide, and neon lamps)
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From page 165... ...
(2004) cite the figure of $40 billion, one-third of which represents lamps, but publicly available estimates of the size of the global lighting industry vary greatly, and the firm Color Kinetics in a communication with us cites the figure of $100 billion based on data from Fredonia Marketing Research.
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From page 166... ...
, high-intensity discharge (HID) , and LED lamps and is conducting research on solid-state lighting to remain the premier fixtures company while the industry transitions to new lighting technologies.
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From page 167... ...
. As early as the mid-1890s, GE and Westinghouse controlled a 75 percent market share.
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From page 168... ...
Traditional electric lighting patent applications during the period 1990-1993 were identified using data for the United States and Western Europe. As noted earlier, we define traditional lighting to include incandescent, gas-discharge, and electric arc lighting (which includes fluorescent, HID, mercury and sodium vapor, metal halide, and neon lamps)
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From page 169... ...
Combining all economic sectors (residential, commercial, industrial, and outdoor) , incandescent lamps represent 11.0 percent of lumen-hours of light output, as compared to about 57.5 percent for fluorescent, 31.0 percent for HID, and 0.01 percent for solid-state lighting (Navigant Consulting, 2003a, p.
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From page 170... ...
In the United States, residential homes largely use incandescent lamps (90 percent) , whereas commercial and industrial sectors use mostly fluorescents (Hong et al., 2005)
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From page 171... ...
. Although advances in energy-saving lighting technologies such as CFL have been an important part of the strategies of the big three lamp producers, the big three have had some difficulty getting residential customers to give up incandescent bulbs and replace them with the more energy-efficient but initially more expensive bulbs.
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From page 172... ...
have led to low adoption in residences. Optimal lamp choice involves not only energy efficiency but also replacement costs for burned-out lamps and labor costs to install lighting systems.
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From page 173... ...
White LEDs have been created by coating blue LEDs with a yellow phosphor, yielding a blue and yellow glow that appears white to the human eye. Another approach, taken by GE, uses UV LEDs driving phosphors, and a third approach is to use multiple colors of LEDs and combine them to create white light.
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From page 174... ...
However, with the exception of laboratory devices, LEDs still fall short of fluorescent sources for many white light applications. Nevertheless, they are semiconductor devices and LED lighting is thought to follow an equivalent of Moore's law in computing, advancing rapidly and continually because of the pace of electronic circuit improvements.
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From page 175... ...
The big three traditional lighting companies have all set up joint ventures to profit from OLED technology for the display market. 13 Other limitations of LEDs are areas of active work.
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From page 176... ...
Moreover, Kevin Dowling, Chief Technology Officer at Color Kinetics, stated to us that "the vertically integrated giants of the semiconductor world such as Intel and Applied Materials are becoming less numerous and rapidly becoming more the exception rather than the rule." Data on the participation of firms in each stage of the LED supply chain are available from solidstatelighting.net (2006)
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From page 177... ...
. LED technology has some clear advantages over traditional lighting, which have allowed LED manufacturers to displace traditional lighting in niche markets (Griffiths, 2006)
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From page 178... ...
Government funding has filled key technology gaps, provided fund 17 Wal-Mart installations developed in collaboration with GE and Philips represent "the biggest investment to date in LED lighting for interior application [$30 million] , and it is also the single largest installation of white LED lighting replacing fluorescent lighting in a display lighting application" (Griffiths, 2006)
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From page 179... ...
We will return to the role of national policies and government initiatives later in the chapter. CORPORATE STRATEGIES TOWARD INNOVATION The "Big Three" The big three traditional lighting manufacturers, Philips, OSRAM, and GE, have responded to the opportunities in LED lighting by creating joint ventures with semiconductor firms that had preexisting expertise in these technologies.
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From page 180... ...
Ltd.21 Asian LED Producers Beyond their expanding importance in the traditional lighting industry, Asian firms also play a significant role in the global LED market. Japan's LED industry leads with $918 million in sales, or a world market share of 47 percent, although a portion of these revenues are shared with some U.S.
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From page 181... ...
For instance, Taiwan is strong in R&D and manufacturing of LEDs, whereas Korea specializes in packaging, and China, a late entrant, is setting up epitaxy, and wafer and chip production 22 Recall that "lamp" as used in the traditional lighting industry means "bulb," and note that the former term is most appropriate for LED lighting as no glass bulb is involved. Lamp here means a light-producing device, not a fixture.
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From page 182... ...
In August 2007, Philips acquired Color Kinetics, which became Philips Solid-State Lighting Solutions, a business unit of Philips Lighting's Luminaires group. LED LIGHTING R&D The big three producers are dominant in traditional lighting technology, as shown earlier using data on patents for these technologies.
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From page 183... ...
Since both the traditional and the LED lighting industries are global in terms of the firms involved and startup efforts, we obtained data for patents issued in most nations worldwide, although we focus initially on patents granted in the United States and Europe.26 For logistical reasons (we had to look up information by hand from actual copies of thousands of patents) , we restricted the sample in the latter analysis to patents whose title included either "LED(s)
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From page 184... ...
Based on U.S. and European patents, the number of LED patents granted quintupled from 200 in 1990-1993 to 1,000 in 2000-2003, as shown in Figure 7.28 Globalization of LED R&D: U.S.
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From page 185... ...
. Taiw an UK Netherlands Belgium 2% 2% 1% 1% Other France 2% Korea 2% 3% Sw eden 3% Germany US 8% 48% Japan 28% FIGURE 8 Invention locations of LED patents granted in 1990-1993.
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From page 186... ...
between Germany and Sweden (p = .0525) , using exact p-values from exact Poisson regressions.
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From page 187... ...
During the period 1990-1993, the United States was the only country whose companies supported substantial LED R&D abroad.32 LED patents were filed by inventors in Japan, the United Kingdom, and Germany for firms headquartered in the United States. Of the nine U.S.
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From page 188... ...
This a substantial shift, but far from complete globalization, as even in 2000-2003 only 5.2 percent of LED patents involved work outside companies' headquarters nations; the vast majority of patents still used inventors in firms' home countries. As Table 4 shows, there was a shift from 1990-1993 to 2000-2003 in the dominant firms in LED patenting.34 Dominant firms are ranked here in LED applications generally, including LED-type displays and LED backlights, not just 34 The shift in firms' rank ordering from 1990-1993 to 2000-2003 is statistically significant (p < .001)
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From page 189... ...
Many LED patents came from firms not in the traditional lighting industry, including established semiconductor firms. Semiconductor firm United Epitaxy, founded in 1993, is one of several such Taiwanese firms.
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From page 190... ...
. 35 Nonetheless, the evidence shows an important role in LED technology of Asian firms, representing half the firms listed in Table 4.36 Hence, the big three lighting firms have managed to established dominant positions in LED lighting technology.
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From page 191... ...
Other Indicators of R&D Other indicators of globalization and Asian strength in LED innovation are international joint ventures and licensing agreements. Joint ventures in LEDs occurred between each of the big three traditional lighting firms and other international firms, as discussed earlier, all in 1999, with all three subsequently acquiring the joint ventures.
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From page 192... ...
aOSRAM has white LED patents licensed to Harvatek, Vishay, Samsung SEM, Everlight, Ya Hsin, Lednium (Optek) ; a cross-license with Avago; and a resolved dispute against Dominant.
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From page 193... ...
With the exception of Belgium, each of these countries has a national program dedicated to development of LED lighting, with goals to improve energy efficiency and gain market share in general illumination, as outlined in Table 6. Often the dedicated lighting program benefits from other supporting legislation or programs.
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From page 194... ...
: develop 1 Yen 6 bil ($52 mil) Japan R&D Center of Metals estimated $7.5 mil/year New Energy and Industrial GaN-based LED technology for (JRCM)
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From page 195... ...
: improve 2 2004-2005: NT$383 Consortium of 11 companies estimated $4.0 mil/year Project performance of white LEDs mil ($11.5 mil)
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From page 196... ...
National Solid State Lighting • 015 goals: savings from large-scale 2 2006-2010: $44 mil 15 research institutions & project as part of 11th 5-Year conversion to LED; 100 bil kW/h 2,500 companies Plan annually by 2015 • 50 lm/W LED and capture 40% of 1 incandescent market • educe environmental pollution R • evelop strong industrial base D • nternational cooperation if necessary I E.U. Sixth Framework program • trengthen science & S $1.3 bil earmarked for estimated $16.3-32.5 technology base for international nanotechnology (with mil/year (2002-2006)
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From page 197... ...
. South Korea's lighting program is supported by a government-backed organization, Korea Photonics Technology Institute, which aims to produce 80 lm/W white LEDs by 2008 and invests $20 million per year.
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From page 198... ...
. A push is also being made to pursue good white LEDs, the "holy grail" of LED lighting.
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From page 199... ...
While the early traditional lighting industry was dominated by three big companies -- GE, Philips, and OSRAM -- as production of lamps became commoditized competitive pressures in lighting increased. Lower prices and margins shifted production of traditional lamps to Asia, especially China, the largest source of lamp imports in the United States.
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From page 200... ...
Investments in the development of white LEDs are setting the stage for the use of LEDs as general illumination and threaten the traditional lighting industry and its three big players. LEDs are a disruptive technology that has allowed many new players to enter the lighting market.
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From page 201... ...
China, which is still at the early stages of ramping up capacity and technology to produce LEDs and therefore lagging behind other countries, is addressing R&D in solid-state lighting as part of its 11th Five Year Plan and is setting up five business parks dedicated to these new lighting technologies. China has a strong interest to meet its own energy-efficiency needs.
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From page 202... ...
A 20-Year Industry Plan for Lighting Technology. Office of Building Technology, State and Community Programs, Energy Efficiency and Renewable Energy.
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From page 203... ...
Technical report prepared for Building Technologies Program, Office of Energy Efficiency and Renewable Energy, U.S. Department of Energy by Navigant Consulting.
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From page 204... ...
Technical report prepared for Building Technologies Program, Office of Energy Efficiency and Renewable Energy, U.S. Department of Energy.
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From page 205... ...
. Light Emitting Diodes (LEDs)
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