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Ninety Percent of Notebook PCs will Feature LED Backlights by 2012

By Luke Yao

Building LED backlight units (BLU) in notebooks can offer three major benefits: low power consumption, slim product design and a more environmentally friendly product (due to the absence of mercury in LEDs as opposed to its presence in CCFLs). We are convinced that LED light sources will largely replace cold cathode fluorescent lamps (CCFLs) for notebook backlight units in the next four years. We forecast LED BLU penetration will exceed 10% starting this year, and will grow to 50% in 2010 and over 90% in 2012. We believe most panel makers will remove CCFLs from their notebook BLUs within the next four years.

“Thin-and-light” notebooks have been the early and obvious targets of choice because, even more than other notebooks, they place a premium on long battery life (low power consumption) and slim and lightweight design. Further, buyers in this segment are clearly willing to pay a premium that easily covers the additional cost of a relatively small edge-lit LED BLU.

But the module design that’s essential for thin-and-light notebooks brought unanticipated challenges, slowing the adoption rate for LED BLUs. Replacing CCFLs with LEDs does not automatically achieve a substantially thinner LCD module, and panel makers cannot assume that their module yield will be as good as it was with CCFLs, despite LED’s smaller size, greater ruggedness and longer lifetime.

To take additional advantage of the thinness afforded by an LED-backlit TFT-LCD module, panel makers may also engage in extra polishing of the TFT-LCD glass to make it thinner, and use a slim-type v-cut lightguide plate (LGP). Unfortunately, glass polishing and making v-cut LGPs currently have negative effects on production yield.

For thin-and-light notebook panels the LCD glass has to be as thin as 0.2 to 0.3 mm, and the LGP has to be 0.6 to 0.8 mm. Therefore, the cost challenge of an LED BLU depends not only on the higher cost of LEDs relative to CCFLs, but also on the costs associated with reduced manufacturing yields of the other components in the notebook panel.

When we develop a notebook LED backlight forecast, we do not treat the BLU as an independent component. Clearly, LED BLUs can add substantial value to notebook PCs and they will definitely increase their market penetration. However, the significant value proposition of LED BLUs cannot be realized unless they are developed as part of an integrated panel and backlight system. It is naïve and irresponsible to draw up a simple LED cost reduction scheme forecast and then claim that growth can be forecast based only upon the cost of one component.

Let us consider some messy realities. The yield rate of slim-type v-cut LGPs is only 50-60%, and that of polishing glass down to 0.2 to 0.25 mm is also quite low. The low yields of these associated components have kept the penetration rate of LED backlights for notebooks below 4% in 2007, although many BLU makers had, in good faith, projected 2007 as the blow-out year for LED BLUs.

But the LED outlook is becoming positive. With a year of experience now in producing slim LED-lit notebooks, panel makers and backlight makers now realize that the key benefit of LED BLUs for most notebooks is power savings rather than an ultra-thin package. In fact, the panel and backlight makers now understand they can split the LED-lit notebook market into several segments, each targeting the needs of a different user group. Specifically, power savings and environmental friendliness can be widely implemented with much less effort and cost than reducing panel thickness.

While there is certainly a high-value market in high-end thin-and-light notebooks, there is also a market for LED-lit panels in which extreme slimness is not critical. This segmentation is the key to rapid LED BLU growth. It means that LED backlights no longer have to be a costly, high-end feature; there is also a graceful way for them to enter the mainstream in the near term. Finally, we are beginning to see a business model that makes sense, and when the business model is right, rapid growth will follow.

The most common type of LED BLU today uses the kind of LGP developed for CCFL BLUs. This is a mature, high-yield technology that does not require expensive new injection molds. We believe this design will represent the mainstream of notebook LED BLUs. Panel maker AUO is so confident it has announced a target of 100% LED BLU adoption for their notebook panels shipped in 2012, and they are not alone.

It is an understanding of these complexities that allows us to develop reliable forecasts, rather than drawing a simple and misleading forecast based upon projected LED cost reductions over time.