Solid State Lighting Boom Could Be a Boon for Chip Makers

led-greenLet there be light. The Obama administration unlocked $346 million in stimulus funds for energy efficiency earlier this week, including $50 million for advancing solid state lighting, or SSL, technology. The Department of Energy designed the program as “a coordinated development of advanced manufacturing techniques” and an effort to “reduce the first cost of high-performance lighting products.” So it doesn’t exactly have semiconductors written all over it.

But according to a recent report on GigaOM Pro (subscription only) from analyst Katherine Austin, President of KDA Consulting, SSL represents a big opportunity for chip makers as the technology gains a foothold in everyday applications beyond consumer electronics and displays.

The connection here lies in light-emitting diodes, or LEDs, which at this point are incorporated in most SSL technologies. As Austin explains, “LEDs are called ‘solid state’ because their light is emitted from a solid source — a wafer or semiconductor — as opposed to filaments.” So silicon chips are a key component of the technology that’s seeing double-digit growth rates and could reach an estimated $10 billion per year by 2012, according to a Bridgelux forecast cited in Austin’s report.

The DOE program will focus on reducing costs to make SSL more competitive with other types of lighting, which has been a major hurdle for the technology so far on the road to mass-market adoption on par with today’s incandescents. The DOE’s efforts to help build up that market with an injection of tax dollars comes at a time when the semiconductor market could use some new opportunities — as InformationWeek reports, it continues to face slumping demand for PCs and servers as a result of the global economic recession.

Earlier this year, we wondered if solar could save chip companies, as the semiconductor industry started eying opportunities in the solar industry. After all, chip companies have years of experience of building low-cost manufacturing processes to shape and slice silicon — the key ingredient in conventional solar modules.

There’s also an overlap of expertise for chip makers and LEDs, since all LED lighting fixtures require drivers that incorporate silicon chips. “Thus,” writes Austin, “solid state lighting represents an under-appreciated opportunity for silicon chipmakers.”

Photo courtesy Flickr user OiMax