LEDs: a Disruptive Technology

According to this recent AP article, LEDs could eventually replace light-bulbs as our primary source of lighting. Among the more interesting points of the article:

• The Department of Energy has estimated that LED lighting could cut national energy consumption for lighting by 29 percent by 2025. The total savings on U.S. household electric bills until then would be $125 billion.


• Current white LEDs will last up to 50,000 hours, about 50 times as long as a 60-watt bulb. That's almost six years if they're on constantly.


• The feature of LEDs likely to propel them into homes is aesthetic, not practical. Arrays that mix red, green and blue LEDs can produce any color of the rainbow. Instead of a dimmer, you might have three sliding knobs that let you mix color.

Another great article about LEDs can be found here. It is also worth mentioning that there are numerous exciting applications for LEDs outside of lighting, including use in televisions, computer displays, cars, and camera flashes.

A word from myself:

I was inspired to mention this topic after the stock of LED maker Cree (CREE) rose 11.84% yesterday, on a 25% percent rise in revenue and a 37% rise in net income. (The stock is still down ~35% for the year despite this jump, a drop which occurred primarily because of gross margin concerns.)

Personally, I rarely invest in companies that make semiconducters, computer hardware, electronics, and the like - Cree included. While such companies may enjoy high margins at first, it is always just a matter of time before learning curves flatten, patents expire, and margins become razor-thin. Technology by itself is not a competitive advantage that is sustainable over the long-term.

With that said, I look forward to watching Cree and other companies from the sidelines should this "LED revolution" take place.

Full disclosure: I do not own shares of CREE.