Affordable LED Lighting: Cost-Reduction & Optimized Manufacturing
Optimizing LED lighting production processes in order to manufacture more affordable LED illumination technology solutions brings immediate and tangible benefits to all peers in the industry and effectively boosts demand throughout the supply-chain both from wholesale distributors as well as from end-consumers.
This is the reason cost-reduction and process optimization has become a central mission for all leading manufacturers of LED lighting equipment, and all serious LED wholesale suppliers seek to streamline their supply-chain and delivery systems both for incoming inventory as well as outbound order streams.
LED lighting technology, as you certainly know, is currently taking over the illumination market by storm and is set to completely replace the conventional incandescent and compact florescent light bulbs or CFL rapidly.
The great thing is that LED lighting solutions are not only far more energy-efficient and more durable in lifetime than the conventional lighting methods, but LEDs are also ecologically much friendlier which is of gaining importance in today’s environmental state and operate with a much lower carbon footprint.
Because of this, manufacturers and upstream LED distributors are constantly optimizing their production flows and strive to find more efficient ways of packaging their LED illumination and luminaires in order to significantly reduce the price of LED light bulbs for downstream parts of their supply-chain.
LED Manufacturing & Cost-Reduction via Packaging
The benefits of LED lights clearly outweigh the costs, however the costs so far have been a drawback for many consumers. In order for the LED lighting industry to shine at its highest potential, cost-reduction in manufacturers and upstream LED suppliers processes is therefore a huge opportunity for further growth.
According to Yole Developpement market analysts in its LED Packaging report, the desired cost reduction will not be achieved as much industry standardization as rather with regards to reductions made by changes in packaging design.
New packaging technology innovation and developments with regard to LED packaging are expected to generate drastic savings in both production and manufacturing costs, leading to an impressive CAGR of a forecasted 20% from 2012 to 2017.
More efficient and cost-saving LED packaging will immediately show direct impact across the entire industry and on all peers and include savings also generated by more efficient handling and significant savings on shipping fees and delivery charges.
For both corporate wholesale customers as well as all businesses and consumers, this means that the future of LED light bulbs will come with major advantages led by significantly lower prices than ever before, thus delivering an even more attractive return on investment and swifter break-evens for all urban large scale commercial LED illumination and other infrastructure projects.
With packaging costs taking up to 40-60% of an LED unit’s cost, this is an area in which costs can and will be easily reduced.
The reason packaging costs in the past have been such a large part of the total manufacturing cost of LED lighting is because of the rich variety of and the seemingly infinite range of distinct LED packaging formats.
Some of the most common packaging types for LED lighting include single vs. multiple chips, ceramic-based LEDs, small vs. large arrays, low vs. middle-power plastic leaded chip carriers etc. Due to the large variety of different styles, LED manufacturing cost reduction is inhibited as the stock-keeping unit is multiplied and the further standardization of important process phases are prevented or otherwise affected.
Manufacturing Design Concepts & Process Optimization
In order to further reduce the total costs of LED manufacturing and thereby ultimately benefit the consumer, new manufacturing concepts are being developed in hope to increase a simplified and cheaper manufacturing process flow that helps to empower all peers in the supply-chain with more economical operation and helps both LED wholesale suppliers and end-consumers to boost their ROI significantly.
According to researcher over at Semiconductor.net, a variety of innovative concepts are created by LED manufacturers in order to reduce the costs and create more straight-forward methods. One concept is referred to as “design for manufacturing“, in which elements are simplified and standardized as much as possible as differentiation is pushed downstream in the process. Another manufacturing method is that of “design for cost”, where ownership or cost per lumen is favored over the end performance of the LED light.
Pars Mukish of Yole states that “technological developments are also impacted by the quest for cost reduction, and LED manufacturers are now searching for equipment and/or materials with the right mix between cost and performance.” Besides the LED manufacturers, other upstream material suppliers and LED wholesale suppliers are also working hard to propose equipment to fit these requirements.
These innovations in design, material and processing solutions are positive news for the entire industry and most of all for the consumer, who eventually receives a low-cost, environmentally friendly and long-lasting alternative to other conventional light sources that is truly sustainable and cost-saving.
With a predicted 20% CAGR over the next four to five years that is mainly accountable for by package substrate and phosphors, this market will grow to about $900 million by the end of this period.
With this new rapid economical increase of potential for the LED market, there is an accompanying growing competition amongst industry players trying to propose new and efficient LED packaging models.
Cost-Reduction of LED Manufacturing & Market Acceptance
Having plenty of room for innovations and creative solutions, it is of paramount importance that the central theme of cost reduction remains the priority and in order for the LED industry to boost market demand and peak worldwide LED lighting sales during 2017-2018 and because of the increased market acceptance.
Pars Mukish states, “the LED packaging equipment market, which stagnated in 2012 due to industry oversupply, is now growing again and will peak at nearly $650 million by 2016.”
With the large momentum the industry has gained in the past two years, LED packagers, though still depending mostly on retrofitting and optimizing existing packaging methods, are an appealing field for material providers and upstream suppliers of packaging parts to continuously develop more efficient manufacturing solutions.
Decreasing costs for LED lighting technology will significantly benefit consumers as packaging technology and methods are optimized and market demand continues to gain momentum during the next years.
With experts working hard at optimizing LED packaging methods, we expect to see a significant decrease in the costs, allowing LED light bulbs to be very affordable and ultimately replace other alternatives rapidly.
For the LED industry, this is great news as the market is expected to expand even further and for the consumer, this helps to allow LED light bulb investments to be affordable whilst ensuring a lasting energy-saving and environmentally friendly solution that is highly energy efficient and very cost-saving.