LED lighting still too costly: Osram CEO

LOS ANGELES Wed Dec 2, 2009 4:54pm EST

LOS ANGELES (Reuters) - Demand for super-efficient LED lighting and other energy-saving lights will grow next year as both consumer awareness and the U.S. stimulus package spark sales, the head of Siemens AG-owned Osram Sylvania said on Wednesday.

Lighting companies including Osram, General Electric Co, Cree Inc and privately held Nichia Corp see a bright future for LEDs (light-emitting diodes) that use less power and have longer life spans than traditional fluorescent or incandescent bulbs.

While Osram Chief Executive Rick Leaman expects it will take five to 10 years for LEDs to take off, he sees growth in 2010 for "bridge technologies," such as halogen and compact fluorescent products, to help with the transition from traditional lighting and its phase-out starting in 2012.

"The incandescent bulb has been around for over 100 years. Consumers have become very familiar with that light bulb, with the shape, with the feel, with the lighting," Leaman said in an interview. "We believe it's important to provide the consumer with choices."

The unit of the German conglomerate that he runs is the world's second-biggest LED producer by sales. In 2008, Osram saw 12 percent of its global sales from LED products, or about 552 million euros.

Osram's halogen lighting cuts 25 percent of energy consumption while compact fluorescents and LEDs save about 75 and 85 percent, respectively, said Leaman, who replaced Charlie Jerabek as head of Osram in October.

Despite the clear benefits of LEDs, the technology is still too expensive, which would prevent a widespread take-off of the market for another five to 10 years, he said.

"The value proposition doesn't add up. It's an expensive product today .... The 40 watt (LED) replacement that we have on the market today -- $35," Leaman said.

"We need to target a number of around, I would suggest, $10 for an LED replacement," he added. "At that point you can, to some degree, justify the value of the product versus a standard incandescent product."

The company racks up about 60 percent of its sales from energy-efficient products and plans to increase that to 80 percent by 2012. Its sales of energy-efficient products in 2010 could increase 5 percent to 10 percent, Leaman said.

The executive sees incentives in the U.S. stimulus package for commercial buildings, school districts, colleges and other groups to invest in lighting as a "jump start to more installations for energy-saving lighting."

Osram hopes to capture about $100 million in sales from the stimulus package, Leaman said.

The holiday season also brings a prime opportunity for LED lighting as products such as artificial Christmas trees already packaged with LED lights become more standard, Leaman said.

He estimates sales of holiday LED products will grow this year by two to four times over last year.

(Reporting by Laura Isensee; Editing by Braden Reddall and Richard Chang)