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LED Lighting Market Trends & ON Semiconductor

LED Solutions Overview

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Government Regulations

Source: McKinsey & Co (2012)

Global movement to ban incandescent and in some instances Halogen

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Need for Efficient Solutions: Energy Security

Source: McKinsey & Co (2012)

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Equivalency – in lumen-hours

Source: DOE LED Lifecycle Report, 2012

• Average output of a 60 W incandescent lamp is 900 lumens• 1 LED Lamp provides 800 lumens and 25K lifetime hrs 20 million lumen-hours

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LED Market is Rapidly Evolving• Lighting accounts for ~1/5th of total electricity world-wide

– With the adoption of technology available today, 30% can be saved

• Beijing has set a target for LEDs to account for 30% of total general lighting market by 2015– Estimated to cut annual coal use by 35 million tons

• Taiwan can reduce electricity consumption by ~15% if LED lighting is fully adopted

• Japan already has 30 percent LED penetration

• Phaseout of incandescents in the U..S started in 2011– Energy Independence and Security Act of 2007– GE shut down last factory making incandescents in 2011

• IKEA will sell only LED lighting products starting in 2016

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LED Bulbs Reach Tipping Point in 2014

Aggressive Market Price Reductions in LED bulbs in the US

Source: DOE MYPP 2013, Datapoint

2013: CREE 60W bulb @ $12.97

2013 Retail: $14.97

-40%

LED Bulb Efficacy Improvement

Dramatic improvements recently and more projected before reaching theoretical LED limit of 268 lumens/watt

Efficiency improvements driving Cost reductions

LED Cost ($/Klm) Improvement

CREE 60W bulb @ $16/Klumen

$5 for a 60W bulb in 2020

Anticipate “tipping point” when LED bulbs reach <$10

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Market (R)evolution

• Drive for energy efficiency and tops-down push aiding SSL adoption• The volume & opportunity today is in “General Lighting”• “Smart” lighting will start to grow significantly in 1-5 years

- Driven by the “internet of things” & command/control

• Color / CCT Control• Spectrum Shaping• New applications /

uses

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The LED General Lighting Adoption Curve

PHASE 1

Introduction

PHASE 2

Rapid Growth

PHASE 3

Maturity

Compete on Performance

Compete on Cost and Scale

Compete on Quality and Breadth

• Cost still high

• Demand needs to be created

• Highly fragmented market with many new entrants

• Cost reduction on scale

• Increased public awareness

• Consolidation kicks-off

• Volume Surge

• Multitude of applications

• Industry profit growth slows

2013E 2016E

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Global Lighting Market

- Huge installed base of 40B units and growing

- In 2016, annual units shipped of LED lamps will surpass cell phones

- Even with 6B units shipped over the next 5 years, LEDs will only have sub-10% penetration

Source: Datapoint, Corporate Marketing

Lamp Sockets – Installed base by Lighting Technology

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Global Lighting Market

Source: Datapoint, Corporate Marketing

Lamps – Annual Unit Shipments & Penetration - Annual shipments of 14B

units – declining to 10B due to longer lifetime of LED Bulbs

- All lighting technologies flat, except incandescents that will decline

- LED experiencing explosive growth and capture 25% share by 2017

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The Opportunity

• Global Lighting Market is growing and will be $125B USD in 2017

• The General Lighting segment will be the biggest driver, by far

Eur

os

Source: McKinsey – Lighting the Way

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The Market Revolution

Source: Datapoint & ON Semiconductor analysis and estimates (2012)

TodayEmerging in volume – on the market today

“Bulbs get most of the attention due to the sheer size of the market, and this is an important step in adoption. However, bulbs will be a bridge solution and a Trojan Horse for a more sustainable content driven, networked, intelligent market” – CANACCORD, April 2013

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Complete Solutions from ON Semiconductor

Source: Datapoint & ON Semiconductor analysis and estimates (2012)

Today: ON Semiconductor offers LED Drivers + FETs + Power Discretes

LEDDriver

EMI Filter

/Protection

LED Driver + MOSFET

MCU

Sensors

Wired/ Wireless Comm

EMI Filter / Protection

ON Semiconductor will also provide additional solutions for wired and wireless communication, sensors

(Ambient, Light, Proximity, PIR) and control (MCUs) customized for Smart

Lighting Applications

The LED Bulb

Networked Lighting (“Smart Lighting)

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Complete Portfolio of LED Lighting Solutions• ON Semiconductor has leveraged its leadership position in the Power

Supply arena to provide complete solutions for Lighting applications• LED Drivers• High Voltage Power MOSFETs• High Voltage Rectifiers• Bipolar Transistors• Protection Solutions

• ON Semiconductor’s expertise in Industrial applications uniquely position the company to exploit the emerging “Smart Lighting” market

• Wired & Wireless Communication offerings (Zigbee, KNX, PLC)• Ambient, Light, Proximity and Passive InfraRed (PIR) sensors• Stand-alone and integrated MCUs for “Control”

• ON Semiconductor has a broad range of products and technologies that service all the requirements in the replacement/retrofit market

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Key Takeaways

The LED Lighting revolution is here• Global government regulations combined with market forces are

the drivers

The opportunity is real and large• The retrofit lamps will be the volume driver in the near term• “Smart Lighting” presents a significant opportunity

ON Semiconductor is well positioned to win with• Strong product portfolio• Complete turn-key solutions• Breadth of offering