Potentially disruptive AC-LEDs

Novel AC-LED products have the potential to complicate the driver market. In its purest form, the AC-LED eliminates the driver, using the diode features of the LED to replace conventional diodes. Other designs use some basic components to limit the current, but sparingly. If highly successful, the AC-LED could make some LED lighting products – such as replacement bulbs – more competitive and greatly expand the LED-lighting market. Such a move could be good for both the LED industry and the end users, but would displace potential driver sales for those products.

However, we expect that AC-LEDs will have an impact only in certain product segments. In replacement bulbs, the pressure to innovate is so high that the AC-LED is just one of several novel solutions, and there is no room for older, less-innovative designs. Consequently, there are plenty of opportunities for everyone.

The high-voltage LED (HV-LED) is another buzz word but it will have minimal impact on the driver market. LED-based products commonly use long strings of LEDs in series. Until recently, the LEDs have been packaged in discrete packages and assembled together in the luminaire or lamp.

An HV-LED integrates the LED string onto the same chip or within the same package, gaining some advantages for the customer. It means little to the driver design, other than the usual considerations for the LED load that impacts every product design.

Estimates for IC pricing also complicate the forecast. It's obvious that IC prices decline over time as volumes increase and margins shrink. What's not as clear is the effect on the average price of changes in the product mix.

New products can appear at much higher prices than more-mature products in the same category, but can earn the difference via savings in component count or improved LED performance. The new products may be priced higher because they use a larger chip that takes up more wafer area, because they use a more expensive foundry process, or simply because they deliver more value, and can earn greater margin for the chip supplier.

Temporary oversupply or shortages of products within the supply chain – such as driver ICs, LEDs, or the end products – also create fluctuations in prices. We ignore these short-term fluctuations; in our studies we focus on the underlying medium-term trends in demand and technology.

LEDs are relatively uniform and easy to understand – compared to drivers. As one supplier said, explaining drivers requires a deep dive, but few customers have the patience or expertise to listen for very long. Yet, with some patience, LED drivers can be appreciated as a critical partner to LEDs, which garner so much attention.

Tom Hausken is Director of the Components Practice at Strategies Unlimited, a market research firm based in Mountain View, California. The company's most recent market-research report on LED Driver ICs was published in June 2011.