More on LED opportunities

Tony Edwards Everything Else, Perspective

I know you’ve seen them somewhere because this technology has been emerging around us for about 40 years now. You probably noticed them first on the face of your watch, or perhaps your alarm clock or stereo. Now they have found their way into hazard markers, flashlights, Christmas tree lights, signage, and an ever-widening array of other applications. It may take another ten years or more, but at some point in the not-too-distant future they will result in the obsolescence of the incandescent lightbulb, a relatively inefficient technology that has remained virtually unchanged since first introduced over 100 years ago.

Light-emitting diodes, or LEDs, are semiconductor devices containing a chemical compound that gives off light when an electrical current is passed through it. The problem with incandescent bulbs is that they are better at producing heat than light. LEDs overcome this design flaw. Hewlett-Packard first developed them in the 1960’s but they’ve come a long way since the days where their most common use was to light the face of your watch at night. It took until the 90’s for scientists to figure out how to create a ‘white’ light most suitable for general illumination and with this obstacle overcome, the game is really on. Advancing technology means that every 1½ years the cost of LEDs is halved while their efficiency doubles. They now use 90% less energy than a normal light bulb and will last many times longer. In fact, it is possible for a single diode consuming 1/10th of a watt of electricity to produce sufficient light to read by.

The benefits of this technology should be truly revolutionary. For instance, the miniscule power requirements of LEDs makes them an excellent partner with solar power. If you are one of the billions of inhabitants of this planet that is not plugged into the electric grid, how life-changing would it be if you found your bedside, or room, or house, or village lit for the first time? Mind-boggling. Perhaps even more significant, it’s estimated that lighting consumes approximately 25% of the world’s electricity supply, so a 90% improvement in energy efficiency would translate into a reduction of more than 20% in the global consumption of electricity. How in tune is that with the Kyoto disAccord?

As you might expect, the big boys are all over this one. Partnerships have been formed between Phillips and Agilent, General Electric and Emcore, and Siemens and Sylvania. I’m currently following three smaller companies that are leaders in either developing or applying LED technology, two of them based right here in British Columbia. I covered Carmanah Technologies (CMH-V) of Victoria in the September issue of The Island Word, this home grown developer of solar-powered hazard marker and transit shelter illumination has seen it’s stock price double in the last six months, and with their 2003 earnings due out shortly, it will be interesting to see if the company’s revenue growth can be sustained. Here is a short profile of the other two companies I’m watching with particular interest.

CREE INC TICKER CREE – NASDAQ

Cree is a US company that leverages its expertise in silicon carbide, gallium nitride and silicon materials technology to produce new and enabling semiconductors. Their products include LEDs, near UV lasers, radio frequency (RF) and microwave devices, and power switching devices. Targeted applications for these products include solid-state illumination, optical storage, wireless infrastructure and power switching. They sell their LEDs in chip form to customers who package them in a variety of ways, and LEDs represented 75% of the company’s revenue in fiscal 2003. Cree just reported record revenue for the second quarter of their fiscal 2004 of US$72.7 million, a 28% increase over the comparable period in 2003. The stock has recently risen to trade in the US$26 range (Jan 21, 2003), a nice jump over the last year but far shy of the US$100 it reached during the height of the tech bubble four years ago. More info on Cree Inc. is available on their website at http://www.cree.com/ .

TIR SYSTEMS TICKER TIR – TORONTO STOCK EXCHNGE

Vancouver-based TIR Systems Ltd. is a world leader in delivering specialty lighting systems and is building a foundation in enabling solid state lighting technology. TIR is developing and integrating high efficiency power supplies, full-range digital control, advanced optical films, thin coatings and next generation communications protocols to enable compound semi-conductor technology in the form of LEDs for lighting.TIR is committed to providing energy efficient, low maintenance, effective lighting solutions in an effort to decrease the world’s rising energy consumption and cost. With 122 employees working from a 39,000 sq. ft. production facility in Vancouver, TIR earned revenue of $7.8 million in fiscal 2002 and then almost tripled it to $22.3 million in fiscal 2003. They have secured significant new commercial orders from British Petroleum, have won a variety of industry awards, and appear to be one of the early movers in applying LED technology to lighting systems. TIR has recently been trading in a range just shy of $4 a share, a nice move from it’s price of $1 a year ago. They showed a small profit of $0.07 a share in fiscal 2003 and the future looks bright indeed for this BC company. You can get more info, including detailed financial reports, from their website at http://www.tirsys.com/ .