Philips and Cree Ink Cross-Licensing Deal

July 9, 2010
As the technology behind light-emitting diodes (LEDs) for general lighting begins to mature, we're seeing more companies choose up sides and cut deals

As the technology behind light-emitting diodes (LEDs) for general lighting begins to mature, we're seeing more companies choose up sides and cut deals for access to the most promising technologies. Cree, Inc., Durham, N.C., and Royal Philips Electronics, Eindhoven, Netherlands, announced this week that they've signed a comprehensive, worldwide patent cross-license agreement to further accelerate the growth of the LED lighting market.

Cree and Philips both hold “broad and substantial” opto-electronic patent portfolios that underpin the growth of their respective LED lighting offerings. This agreement gives Philips Lighting and Cree access to each other's patents relating to blue LED chip technology, white LEDs and phosphors (including remote phosphors), control systems, LED luminaires and lamps and LEDs for backlighting liquid crystal displays (LCDs), as well as the array of patents in the Philips LED Luminaire Licensing Program.

Cree's product families include LED-fixtures and bulbs, blue and green LED chips, high-brightness LEDs, lighting-class power LEDs, power-switching devices and radio-frequency or wireless devices. Philips Lighting, one of the largest lamp manufacturers in the world, has been introducing its own LED products at an accelerating pace.

“Philips and Cree have significantly invested in innovation in LED lighting solutions. The wide-ranging IP portfolios of the respective companies reflect the outcome of this effort,” said Rudy Provoost, chief executive officer of Philips Lighting. “We wish to see the accelerated adoption of LED lighting, and are therefore delighted that Cree will be joining our LED Luminaire Licensing Program.”

Stock analysts have been bullish on the fast-growing Cree for some time. Stearn Agee analyst Andrew Huang, who recently started coverage on the company's stock called Cree the leader in technology and market share in LEDs for general lighting, and expects the company to grow profits 30 percent to 40 percent annually over the next five years. The company's share price has more than doubled over the past year.

The potential for LEDs in general-purpose lighting has started a race among manufacturers to produce a replacement for incandescent lamps at a price point consumers can accept. Certain general-purpose incandescents will come under a U.S. ban starting next year, and compact fluorescent lamps continue to gain share, but many in the industry believe once the price for a high-quality replacement lamp falls below $20 or the payback from energy savings approaches one year, LED growth will explode.

A recent study by Lux Research, Boston, forecasts that LEDs will capture 42 percent of the residential lighting market and 60 percent of the commercial, industrial and institutional markets by 2020, and they'll dominate exterior and decorative lighting.