Philips Plans LED Plant in Singapore

Monday, September 4, 2006

Singapore - Royal Philips Electronics announced today that it will open a LED factory in Singapore, hiring 1,000 workers, in an attempt to keep up with lightning-fast growth in that new, high-tech segment of the lighting business. Philips will sink about $80 million into the LED production facility, sources close to Philips said.

The investment "further strengthens Philips' leadership position in the global lighting market by investing in the high-growth and huge-potential LED market," said Philips Chief Executive Gerard Kleisterlee, as he announced the move in Singapore. "This will be a world-class, high-luminence, high-power LED production facility that will serve our customer needs in the areas of city beautification, LCD displays, automotive backlighting, as well as various other professional applications."

LEDs, or light-emitting diodes, are essentially semiconductor chips that emit light when they come in contact with electricity. Materials at the base of the chip determine the color of the light. Several of the chip-based lights could fit on the face of a watch. Compared with traditional lights, LEDs are more energy efficient, less fragile and have far longer lifespans; they last about a decade.

LEDs are most commonly used as backlighting for cellphone screens and keyboards, but are increasingly finding other uses. They are used to light up car dashboards and taillights, are made into flashlights and traffic signals. Boeing plans to use LEDs in the interior of its 787 Dreamliner. Vast numbers of LEDs can be assembled into scoreboards and giant billboards and programmed to give sports scores or to show advertisements.

The modern LED market is relatively new --scientists only discovered how to create the full color spectrum on LEDs in 1993. It is growing fast: the high-brightness LED market was $3.7 billion worldwide in 2004, Kleisterlee said, and is growing at 25% a year. The industry is expected to have sales this year between $4-$5 billion, and to grow to $10 billion by the end of 2010. The total lighting industry today is around $26 billion a year.

Philips made a big bet on the LED business last year, when it spent $950 million to buy out Agilent Technologies' share of Lumileds Lighting Int. B.V. In the fiscal year ending July 2005, Lumileds sales jumped 28% to $324 million, and operating profit reached $83 million. Lumileds forecast it would have operating margins of 25% in the coming years.

Like Philips, other big lighting manufacturers are rushing to produce LEDs. General Electric and Osram GmbH are placing big bets on LEDs. Smaller manufacturers like Cree in Durham, N.C., and Japan's Nichia Chemical sell LEDs to other companies that make the finished lights. Canada's Carmanah Technologies makes LED-based outdoor lighting, such as airplane runway lights. Scoreboard makers Lighthouse Technologies and Daktronics of South Dakota are building ever-bigger LED-based boards.

Philips, the huge Dutch conglomerate, got its start by selling light bulbs in Europe. Kleisterlee, the CEO, said the increased investment in LEDs is part of the company's ongoing attempt to transform itself into a health care and lifestyle company rather than a sprawling conglomerate that makes everything from semiconductors to televisions to electric toothbrushes.