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Why Are LED Lights Expensive [An In-Depth Look ]

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Over the months, I have on numerous occasions seen where questions are being asked over the price tag of certain LED lighting product.

Myself being an LED lighting enthusiast decided to dig deeper than the information I was already getting on why LED lights are expensive.

After hours of surfing the net, I found out that LED lights cost as much as they do because:

  1. The Semiconductors(for producing LEDs) called wafer are not cheap to manufacture.
  2. It cost a fortune to set up semiconductor plants.
  3. Cleanroom Equipment like Probing Machines, Polish Grinders, and precision dicing blades don’t come cheap.
  4. Manufacture of semiconductor involves expensive manpower and Very High-Tech methods.

Before I continue,  let me provide w glossary of terms I will be using on this post.

  1. Wafers: In electronic terms, these are thin slices of semiconductors like silicon crystals used to manufacture LEDs and other electronic components.
  2. Stepper: A stepper is a machine used to project the image of a circuit in photolithographic semiconductor fabrication.

Let us delve into the details.

High Cost of Wafer Production

Wafers are a very thin slice of complex semiconductors that are manufactured from very pure and defect-free crystalline materials.

The techniques and processes involved in the manufacturing of wafers make it expensive, difficult and very time-consuming.

Wafer for Semi-conductor| why do led cost so much more
Wafer for Semi-conductor

In producing wafers, chemical elements like gallium, arsenic and/or phosphor are heated under very high pressure and temperature into a molten concentrated solution.

After the elements have mixed in their molten state, a thin rod is placed into the mixture and then slowly pulled out. while this happens the solution crystallizes on the rod forming a long crystalline block of steel.

From this stage, the blocks of crystalline blocks are sliced into thin sheets of semiconductor called wafers.

They are sanded, brushed and polished so to have a very smooth surface.

The polishing is usually done carefully and thoroughly because it is important for adding more layers of coating for semiconductors. The number of layers a wafer has is dependent on the specification of what it is going to be used for.

Care is taken during this process to ensure that the cut blocks of the wafer semiconductor are properly buffed to remove impurities because impurities are not needed at that stage of production. This process takes between 15 to 30 days to complete.

As you can see, the process that goes into the production of wafers is very complicated and is one of the reasons why LED lights tend to be costly.

Also, it is important to mention that little has changed in this method of producing wafers used in the manufacturing of LEDs.

Expensive Set Up Cost of Semi-Conductor Plant

A semiconductor plant is also known as a Fab or a foundry is a factory where Semiconductor wafers are manufactured and also undergo other micro-fabrication processes like doping, ion implantation, and etching.

Foundry requires complex and expensive devices to function. Industry estimate put the cost of setting up a foundry at above $1 billion, There are other similar projects that have cost up to 4 Billion dollars.

The Taiwan Semi-Conductor Manufacturing Company Limited(TSMC) said it invested 9.3 billion in it Fab-15 300mm wafer facility in Taiwan. The same company gave an estimate that their next foundry plant might cost about 20 billion.

One principal facility in a foundry is called ”Cleanroom”. This facility is a highly controlled environment that is specially designed to eliminate even the most minor particles like dust, airborne organism, and even vaporized particles.

Cleanroom standards are insanely critical of cleanliness level that it is measured by the number of particles per cubic meter.

To further illustrate this, the typical outdoor air outside your house contains massive 35,000,000 particles for each cubic meter, with each particle having a size range of 0.5μm and above.

While by comparison, a clean room does not permit particles of that size and allows just 12 particles for each cubic meter and only particle sizes below 0.3 μm.

Clean room of a semiconductor manufacturing- why Led light are expensive
A Foundry Cleanroom

High Cost of Manufacturing Equipments

Furthermore, in a cleanroom set up, you will find Steppers which is a device used for photo-lithography, etching, cleaning, and doping. also, there are machines used for dicing wafers.

Below is a simple demonstration of photolithography from the “Too Small to See” exhibition at the Cornell Nanotechnology Facility:

On figuring out the cost of some cleanroom equipment, this is the information I found.

  1. Wafer Dicing machine cost from $700,000 to $4,000,000 each.
  2. Steppers cost as high as $130,000,000 each.
  3. Semiconductor Plants have several hundreds of this expensive equipment like Probing Machines, Polish Grinders, and precision dicing blades.
Stepper for wafer production-why led light are expensive
a stepper equipment

The Stage of LED Development

The LED technology is relatively still at it early stage of development. And due to this factor, LED lighting system is still undergoing a period of gradual integration and will still need a few more years before the LED technology become a conventional lighting system.

If you remember the early years of the Microwave ovens, a single unit cost over a thousand bucks today, you can get one that is less than $50.

What I am trying to say here is that at this stage of LED lighting technology the cost of material and hours of manpower that goes into production is still high.

So while the industry is still expanding, LEDs technology had continued to be manufactured by few companies and sold in smaller quantities.

And for prices to drop, the frequency and quantity of production of LED related technology will have to increase, because as quantity produced increase, cost of production will decrease, and when that happens, more people will embrace LED lighting and buy more of its product.

Why LED Bulbs are More Expensive than CFL and Halogens

Heat Sink

LED light bulbs generally produce lesser heat than incandescent, halogen, and fluorescent bulbs.

For LEDs to maintain this minimal temperature, heat sinks which are made of aluminum (which is another pretty expensive material) are used because through them, heat can travel from the LED light source to the exterior of the lighting element.

The heat sink used on LED bulbs gives out heat in 3 major ways:

  • Conduction: Which is the transfer of heat from a solid medium to another solid medium.
  • Convection: This means the transfer of head from a solid material to a moving fluid like air.
  • Radiation: The transfer of heat from two bodies that have different temperature through a process called thermal radiation.

Use of LED Driver

Many LED lighting system makes use of drivers, the type of drivers that LED lights uses cost more than the type other lighting systems use.

This in turn add to the price tag of a LED light compared to a halogen or fluorescent bulb.

Quality Cost More

As you already know, quality has a higher price but the best thing about LEDs is that with their quality, they actually save you money in the long run.

Why Are Some LED Lights Cheap?

Above, we saw reasons why a LED light is expensive compared to it other lighting counterparts, now let see why you might still find some ridiculously cheap LED light in the market.

For starters, you need to know that wafer which is one of the primary raw materials for LED production has a varying cost which is dependent on certain factors which according to this responder are:

  • Firstly, the main price factor is related to the wafer technology node. This means that 65nm wafers will cost more than 180nm wafers.
  • Then you need to consider the total number of mask layers. This Means how many metal layers do you use in your design and whether you need additional layers for various options you might need: eFlash, MIM cap, HVT, LVT, etc all these features add more complexity to your wafer configuration and hence increase the price.
  • Process maturity – of course, the new processes will cost more money. A decade ago, I used 65nm process, the mask set price was 700K US$. This the price is half.
  • Process defect density, when you buy wafers from any fab, you buy the good and bad wafers. The bad wafers are still used in production(cheap ones in this case) Therefore, you have a big interest that the fab has high yield on the target process.

In a nutshell, the quality of materials used in producing an item will definitely affect its durability and efficiency.

It is due to this reason that you may see some crappy LED lights bulbs at ridiculously cheap prices that begins to flicker or even burn out after working for just few months.

What is the Future of LED Lights

The future is bright for LED lights as efforts being put into research and development are yielding good results.

With the state of affairs, wafers can be produced with higher purity and a lower cost than 5 years ago.

Also, Perovskite LED (PLEDs) which is a new member of the LED family has the ability to produce lights from electron is already challenging some of the best OLEDs after only just a paltry 4 years of discovery.

Their low production cost and low-tech methods make the possibility of having a very cheap end product very possible.

Finally, scientist have discovered something they described as 2-way LED. this involves the functioning of two nanorod semiconductors instead of one.

According to the research paper, one semiconductor allows the flow of positive charge while the other allows the flow of negative charge. The nanorod semiconductor can sense light, emit light and collect energy as well.

This infant technology so far is said to have the ability to only produce red light.