According to the Bible, "God said, 'Let there be light,' and there was light." Not long ago, Congress said, "Let there be no incandescent light of 100-watt capacity or more beyond 2012." Fortunately, this time, LED light is here to assist.
With demand for energy-saving devices going up, LEDs -- or light-emitting diodes -- might just be the next leading light of the market. For the Foolish investor, this could be a good opportunity to add some brightness to your portfolio.
Death of incandescence
A law passed in 2007 by Congress stipulates that bulbs that produce 100 watts' worth of lighting need to meet certain efficiency guidelines beginning in 2012. Since most incandescent bulbs do not meet the prescribed guidelines, many of them face a production or import ban starting in just a few months. By 2014, a similarly tough fate will be met by bulbs producing 40 watts' worth of light. Most lighting companies have, therefore, shifted their focus to alternative lighting technologies.
As the traditional incandescent light bulb starts to make an overdue exit, LED bulbs are likely to see the tide slowly turning in their favor. The path ahead isn't easy, though.
Technologies like the compact fluorescent light, or CFLs, are probably the most obvious choice after incandescent bulbs, in terms of costs and adaptability. But the disadvantages of CFLs include a shorter life span and slightly higher cost of usage than LEDs. The CFL's lifespan declines more in daily home usage where one needs to switch them on and off frequently. Clearly, there's an opportunity here.
LED by example
Among the movers and shakers of the lighting world, Philips
Chip on the shoulder
Apart from Rambus, several other chip makers are also looking to get a piece of the LED pie. One of them is Marvell Technology
Light of the Fool's eyes
While LED technology is all new and hot and has the potential to become the next big deal in green energy, there are some rough patches on the road ahead. Much like many other green technologies, LED tech has high upfront costs. Although LEDs come with long-term benefits like lower power bills, the high initial price might put off certain buyers.
Currently, the market also has several other competing technologies like CFLs and organic LEDs. But even with the OLEDs, the inhibitor for buyers is the price. Cutting costs on the technology should be the priority for the industry right now before it thinks of brisk business and wide integration.
For the Foolish investor, investing in different companies with LED exposure could offer good growth opportunities during the coming years. While the next best thing to the incandescent bulbs might be CFL, its reduced longevity in daily usage and less efficiency than the LED is most likely going to give way to the LED as the lighting for the future.
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Arunava De does not own shares of the companies mentioned here. The Motley Fool owns shares of Marvell Technology Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.