Distributors look to shine with HB-LED opportunity

HB LEDs (high-brightness light-emitting diodes) hold great opportunity for the electronics supply chain and are particularly attractive to distributors, as the technology will require full-system approaches from suppliers and manufacturers.

Analysts estimate that general illumination, signs and displays, and automotive applications will push HB LEDs' high-growth opportunities for driver ICs from 2007 to 2011. Those opportunities will record a combined compound-annual-growth rate of 38% and the total market for HB-LED-driver ICs is expected to grow to more than $1.9 billion in 2011, according to Strategies Unlimited.

Cary Eskow (photo), director of Avnet LightSpeed, at an EDS (Electronics Distribution Show and Conference) panel in May shed some light on what distributors need to do to win in the HB-LED marketplace. He noted three necessities for success, the first of which is specialized knowledge. “That's the distributor's ability to understand these new types of customers and to speak in their language. This is the language of light. It's not in diodes; it's not in capacitors or microcontrollers. It's a different world.”

Eskow said that distributors need to understand the market fully, comprehending its pressures and the legislation affecting it, and then be able to tie all of that information together, which led him to his second strategy for success: recognition that HB LEDs are not single components but full systems.

“It's the understanding that an LED is not a component. It requires thermal heat management and interconnect, knowledge of phosphors, microcontrollers. There's a lot of pull through associated with that. Typically, I would say, for every dollar in HB LED, there are $2 to $5 in pull through,” he said, noting that lighting sales leverage the sales of other products on Avnet's line card.

Eskow's third ingredient for success is patience. He noted that a lot of industry analysts, such as Strategies Unlimited, are predicting tremendous growth for HB LEDs but said that such growth is going to be incremental.

“That [growth] will happen, but … the next year or two are going to be slow as things engage,” Eskow said.