It doesn’t happen very often, but I’ve heard it used that way. It’s usually obvious from context, like I think I heard with “OLED vs. LED”. And as @brachypelmasmithi@lemm.ee mentioned, it’s used a lot in languages other than English, in my experience in many slavic ones, for example.

Haven’t ever heard it in English either, but it’s very common in Polish. In Polish LED can even become a proper adjective, e.g. “światło ledowe” (LED light), with the initialism even losing capitalisation