Cree Inc (NASDAQ:CREE) (Analyst Report) has announced that the city of Gwangju in South Korea has joined its LED City initiative. Gwangju is the South Korean center for the advancement of photonics, housing more than 180 companies carrying out research, development and commercialization of LED lighting products.
The LED city program essentially converts an entire city to the LED lighting platform, studying the resultant impact on cost, energy savings and benefit to the environment. It is currently expected that the program will result in a 30% reduction in energy consumption, compared to compact fluorescent lamps. Power savings are expected to be 234,000kWh per year, and carbon emissions are expected to go down by 8,465 kg annually. The lighting installations will receive further exposure at the World Photonics Expo to be held in Gwangju from October 9 to November 5.
Cree is as close to an LED pureplay as one can get. The LED City initiative was intended to demonstrate the company’s technology to individuals and companies. We think this strategy is likely to be effective, and expect demand for LED lighting to increase at an accelerated rate.
The company is also pursuing other strategies to popularize its technology. Earlier this month, CEO Chuck Swoboda met President Obama to discuss energy efficient technologies. The Department of Energy has done a study according to which the rapid adoption of LED lighting in the next 20 years would reduce electricity demand by 62%, eliminate 258 million metric tons of carbon emission, avoid the building of 133 new power plants and result in financial savings in excess of $280 billion.
The company plays in a nascent market, and its main competitors -- Lumileds Lighting, Nichia Corporation and Toyoda Gosei -- are privately held companies. Therefore, the potential for growth both in the U.S. and abroad is enormous.