Complex sentence: The LEDs replaced tungsten bulbs that controlled punched card readers (infrared light was sent through the holes or blocked by the card), which not only significantly reduced the size and power required, but also improved the reliability.
Split into simpler sentences: The LEDs replaced tungsten bulbs that controlled punched card readers. Infrared light was sent through the holes or blocked by the card, which not only significantly reduced the size and power required, but also improved the reliability.