Despite a lingering slowdown in the LED market that began last year, analysts see brighter days ahead as technological breakthroughs — employed in myriad new applications — spur future sales. A recent study of the industry by the technology-research company iSuppli Corp. of El Segundo, Calif., shows that LED market growth dipped significantly in 2005, with a modest increase of 5.8 percent, or just under $5 billion in total revenue. That is far from the exhilarating pace just two years earlier when annual sales increased by almost 30 percent. There are several reasons for the sudden softening: Demand from the mobile phone market has slackened; there has been slower-than-expected adoption of the technology into new applications; and prices for some types of LEDs have sharply eroded with aggressive international competition.“It’s in a state of transition,” Jagdish Rebello, director and principal analyst with iSuppli, said of the current market. “We are waiting for things to take off in the next wave of applications.” The market for the tiny lights might well remain lethargic if not for the diode family’s most recent and gifted offspring: the ultrahigh-brightness LED.It is expected that the majority of industry growth over the next five years will ride on this photonic prodigy (see graph). Representing the latest wave in solid-state lighting technology, the ultrahigh-brightness variety has been available for only a few years. But in that short span, it has performed brilliantly, swelling from $17 million in sales in 2003 to $346 million this year. ISuppli forecasts that the pace of sales will quicken even further in coming years, earning an estimated $3.2 billion by 2011, nearly a third of the overall $10.6 billion LED market. This breakneck growth will be driven by an array of applications for the ultrabright, such as the backlighting of large-screen liquid crystal displays, new signage and decorative illuminations, and exterior automobile lighting.The market report further predicts that sales of standard LEDs, the oldest and least refined member of the family, actually will decline over this same period, while the market for the middle-range high-brightness LEDs will continue to grow at a steady, respectable rate. Overall growth in the market is projected to remain solidly in lower double-digit territory over the next five years, buoyed chiefly by the ultrabright diode.And as improvements in LED performance continue, it is expected that the ultrabright will whittle away at other areas long reliant on conventional lighting, including applications in homes, offices and even streets. LEDs have only a minuscule share of this multibillion-dollar market. But they are poised to challenge, and perhaps someday usurp, that dominance. “[The LED] has so many great features over the current market,” Rebello said.