Cree Targets Higher LED Adoption With New Products
Last week, Cree (NASDAQ:CREE) became the first company to comply with the recent voluntary standard set by California regulators to make bulbs more closely resemble the warm white light from traditional incandescents. The company launched a new LED bulb, called the TrueWhite series, which comes close to the quality of light from a 60-watt incandescent. Available in the range of $18 – $20, the Cree LED bulb has a color rendering index (CRI) of 93 and a score of 100 is the closest to natural light that a bulb can get. The True Light bulb uses 78% less energy and lasts 25 times longer compared to traditional incandescent light bulbs.
With widespread awareness about their economic and environmental benefits, the adoption of LEDs is rising fast. LEDs offer energy savings of 50%-60%, leading to lower greenhouse gas emissions and a much higher lifespan compared to conventional technologies. LEDs offer a cost effective option to lower global electricity consumption, and as economies around the world aim for greater economic and social development, we expect LED adoption to accelerate in the future.
There are around 5 billion lightbulbs currently being used in houses in the U.S. alone that can be converted to LEDs. [1] LEDs are forecast to account for 25% of the total demand for new lighting by next year, and 80% by 2020. [2]
Cree is one of the leading global LED manufacturers which remains committed to accelerate LED adoption and closing down the gap with conventional lighting through innovation. Its product innovation has opened new applications and improved LED payback, in turn driving demand for its products. In the long run, the company aims to drive mass LED adoption and achieve 100% upgrade to LED lighting by its customers. The TrueWhite Series follows the launch of the $10 LED bulb by Cree, which consume 84% less energy and provide similar levels of brightness compared to traditional bulbs, in March this year. High price point is one of the factor responsible for the slow LED adoption and thus the introduction of the $10 bulb is an important milestone for the LED industry.
Though there is intense competition in the LED market from GE, Nichia Corporation, OSRAM Semiconductor, Toyoda Gosei and Epistar Corporation, Cree has managed to prove its competitiveness over the years with superior R&D technology and a focus on driving growth via innovation. We expect Cree’s market share to reach 13% over our review period.
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Our price estimate of $63 for Cree is almost in line with the current market price.
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Notes:- Cree Management Discusses Q4 2013 Results – Earnings Call Transcript, Seeking Alpha, August 13, 2013 [↩]
- Cree’s New LED Bulb May Be The Closest Thing to an Incandescent, Greentech Efficiency, September 11, 2013 [↩]