Cost is the name of the game with LEDs, but most of the time, the focus is entirely on the package. Significant opportunities for cost reduction lie in materials and technology innovation in the balance of system, including thermal management, drivers, and optics. In this respect, today’s technology solutions fall short of the dramatic cost reductions needed to mirror the LED package and alternate solutions are ineffective and uneconomical – presenting opportunities for technology innovation. Based on an LED bulb equivalent to a 60 W incandescent, with a SMD configuration, aluminum based thermal management, non dimmable drivers and standard lenses for secondary optics, thermal management accounts for about 27% of the bulb cost in 2011, or $6.00. While this figure will fall to $3.95 in 2020, that figure will amount to a larger share of the bulb cost, at 36%. The size of the heat sink and the choice of material largely determine the cost – aluminum is the incumbent heat sink material and the cheapest option on the market today. Switching to more thermally conductive materials such as copper can improve performance of the heat sink, but they are currently about two to four times more expensive, and can thus increase bulb costs by 50% or more.
Material replacements with better conductors like copper are unlikely to result in cost savings in the next 10 years, and while active thermal management is a promising approach to cost savings in LEDs, its impact is unlikely to be felt outside of niche, newly enabled, applications. Further opportunities to improve thermal management will be critical for ongoing future LED cost reductions. The share of the cost stack will only rise and serve to cap device capabilities unless the opportunity is addressed.
Source: Lux Research report “Cheaper, Brighter, Cooler: The Need for Cost Reduction Past the Package” — client registration required.