Bridgelux Bets the Company on New Technology and a Big Deal with Toshiba

Bridgelux, hoping to leapfrog competitors in the LED lighting business, is pioneering a new technology for LED chip-making and betting the company on its success.

The Livermore, Calif., cleantech company that has received $296 million in venture funding took another step toward that goal by announcing on Thursday a key deal with its new technology partner Toshiba. Terms of the deal were not disclosed, but it includes both an equity investment from the Japanese technology giant and a technology transfer agreement.

Bridgelux’s venture backers include Chrysalix Energy Venture Capital, VantagePoint Venture Partners, DCM, El Dorado Ventures, Craton Equity Investors, Invus Group, VentureTech Alliance and Harris & Harris, according to Thomson Reuters, publisher of this blog.

The new technology that Bridgelux and Toshiba have been working on together since January holds the promise of significant cost reduction, according to the company. It does so by shifting LED production from hard to process sapphire wafers to semiconductor industry standard silicon wafers. The companies are not the only ones examining the switch.

“Everyone said it can’t be done,” said CEO Bill Watkins. But “the yields are better than what we thought. We think we’re a year ahead of everybody.”

LED chips, or light emitting diodes, are particularly promising in lighting because they emit a relatively bright light far more efficiently than incandescent bulbs and compact fluorescents, when measured by lumens per watt. Trouble is they are relatively expensive, which is why driving down the cost of production is so important.

At present, the chips are generally made on relatively small wafers of sapphire in a somewhat labor-intensive process. Watkins said he was hit by a stark reality. While Bridgelux and competitors have improved production efficiencies to lower costs, the cost improvements are projected to tail off or end in roughly three years. So sticking with them meant becoming one in a pack of producers in an increasingly commoditized market.

Switching to silicon opens new doors. The change should allow the company to push costs lower. Bridgelux said it should be able to produce a chip in two years with 1,000 lumens of light for 50 cents, compared with roughly $18 industrywide in 2010. This could amount to a four-fold advantage over projections for current sapphire technology. That in turn could mean $4 to $5 bulbs.

The improvements will come in part because by using silicon the company can take advantage of the enormous infrastructure of factories and equipment already available in the semiconductor industry.

Bridgelux also foresees production on 8-inch wafers, twice the size of sapphire ones. The extra size could permit the company to integrate extra features into its product. Lighting controls and optional colors might be examples.

But considerable risk remains. The technology needs to be scaled to production volumes, which Watkins anticipates next year, and the yields need to improve from where they are today.

What’s more, Bridgelux isn’t the only company eying the possible technology change, and many of them have considerable resources.

Bridgelux may have a long list of backers to rely on, but it needs to see quick success with its new direction.

Photo courtesy of Shutterstock.

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