Don't Laugh. Light Fixtures Are Super-Hot.

Did LED lighting go mainstream already?

Last week's Lightfair trade show for the general lighting industry was all about light-emitting diodes. Analyst firm Needham notes that industry giants General Electric (NYSE: GE) and Philips (NYSE: PHG) both devoted some 80% of their precious booth space to LED solutions. "Most lighting companies are very focused on LEDs," noted Needham analyst Edwin Mok.

How to handle a dimmer dimmer
More specifically, many companies used Lightfair to unveil advances in the art and science of making LED lights work better with traditional dimmers. Though it may sound simple, dimming an LED light is actually a tricky technical challenge.

LEDs work best at full power and typically dim down by flickering on and off. The power cycles are too fast for the eye to notice. Simply reducing the power to an LED lamp will reduce the life of the LED with unpredictable effects on the amount of light actually projected. So semiconductors that can translate slow and steady incoming power into the right flickering pattern at full power are the bee's knees right now.

And this needs to be done while handling active-current waves that were never supposed to mean anything to sensitive electronics like an LED light. Many dimmers change the sine wave of a basic AC feed into their own waveforms of choice, and there are no standards for any of this. It just wasn't necessary when heating up a resistive wire until it glows was all you needed to worry about.

One obvious LED play
LED specialist Cree (Nasdaq: CREE) saw its share prices plunge nearly 70% in 2011 right alongside LED component prices. Now Needham sees strong value in the stock as Cree should capitalize on exploding demand for LED-based general lighting products.

The company used Lightfair to launch a dimmable LED lamp prototype last week in conjunction with semiconductor designer Marvell Technology (Nasdaq: MRVL). The drop-in replacement for good old 60-watt incandescent bulbs combines low cost, high efficiency at 75 lumens per watt, and increased performance when used with dimming light switches.

All the big names in general lighting are looking for better dimmers right now. In separate announcements, Philips and GE introduced 100-watt replacement bulbs at Lightfair, both boasting improved dimmer performance. These lamps also fall in the high-efficiency category, with lumens-per-watt ratings north of 60. That compares to about 15 lumens per watt for an incandescent bulb or 60 for one of those twisty compact fluorescent bulbs.

LED lamps come with a side of sticker shock in these early days of the new market. Philips expects its 100W replacement to sell for about $30 in your favorite home improvement store and GE's bulbs should land in the same ballpark. "Over time, higher production volumes and lower component costs should bring prices down," notes a spokeswoman for GE.

Pump up the volume
And volumes should indeed ramp up very quickly. According to GE, some 20% of the world's power is consumed by lighting today. More efficient light sources can put a big dent in that number, and LED technology is the frontrunner in the race to replace gnarly old light bulbs.

Following right on the heels of the LED revolution, organic light-emitting diode specialist Universal Display (Nasdaq: PANL) wants to replace light bulbs with ultra-efficient OLED panels. But Universal's presence at the Lightfair confab was rather modest this year. The OLED surge is still a few years off, giving LED players like Cree a sizable window of opportunity starting today. Like this stock, Universal Display could be the next rule-breaking multibagger in your portfolio -- if Cree doesn't do it first.