Bridgelux a greentec manufacture of LED's will cut about one-fifth of its workforce in Livermore, a move brought about by its decision to shift to cheaper ways to produce light-emitting diodes, or LEDs. Livermore-based Bridgelux is cutting 53 out of 250 jobs at its head offices in the East Bay, said Bill Watkins, CEO of the company. Worldwide, Bridgelux has about 300 employees.

These cutbacks come on the heels of the Solyndra shutdown that erased 1,100 (Silicon Valley) jobs.

Bridgelux's products include LED chips that deliver electrical impulses to activate a light bulb or other lighting device. LED chips are the basis for light-emitting diodes in general lighting, cellphones, backlit units in flat-panel televisions, signs, automotive applications and camera flashes for mobile units.

Bridgelux has determined it needs to shift its focus of producing LEDs on sapphire surfaces to a less expensive system of putting them on silicon surfaces. The company is eliminating its current production of LEDs on sapphire surfaces, which is what triggered the job cuts.

"We are spending all of our dollars on silicon," Watkins said. "We feel that is a real game-changer." A switch to silicon from sapphire could slash production costs by 75 percent, Watkins estimated.  "We are trying to gain technology leadership by doing this," Watkins said.

Disclosure of the cutbacks comes just two months after Bridgelux revealed it had landed $60 million in venture capital financing. All told, Bridgelux has attracted $180 million in VC funding.  In late July, the company also said it was in a hiring mode. During 2010, privately held Bridgelux generated $35 million in revenue. The company's target revenue level for 2011 is about $80 million, the company says.

Switching from sapphire to silicon could be tricky, said Eric Wesoff, editor of Greentech Media, which tracks the clean technology sector.  "This is a major change, to go from sapphire materials to silicon," Wesoff said. "There is still a technical risk with silicon LEDs. Bridgelux is moving to something that is not a sure bet."

Analysts say production of LEDs on silicon substrates can be technologically tricky. In the past, silicon materials have not been able to handle the heat generated in the production process.  Bridgelux hopes to move to mass production of LEDs on a silicon surface within 18 months.  The company is negotiating a joint venture with an Asia-based company to conduct the manufacturing of the new generation of LEDs overseas. Watkins wouldn't identify the company.

At present, LEDs constitute 2 percent of the $19 billion global lamp business. In 2010, the U.S. LED lighting market generated $330 million in revenue, GTM Research estimated. The sector should expand 30 percent in 2011 and reach $1 billion in yearly sales by 2014, GTM estimated.

At one point, companies in the LED sector had placed a bet that the new devices would be in wide consumer use. But more specialized consumer products such as cellphones and flat-screen TV elements have been driving sales.

"The replacement of the incandescent light bulb has yet to take place," Wesoff said.  Despite the challenges, Bridgelux executives are so convinced they are making the right move that they have transformed their Livermore production center into a complex that is conducting research and development around the clock.

"The key for Bridgelux is to work very aggressively on developing silicon technology," Watkins said. "This technology is ripe for tremendous innovation. It's the Holy Grail."

By George Avalos
Contra Costa Times