The LED packaging industry’s value is anticipated to only rise an estimated 3.2% on-year in 2015, from this year's US$14.6 billion to US$15 billion, according to the latest “Global LED package Industry Report” released by LEDinside, a division of Taiwan based market intelligence firm TrendForce. “With growth in the LED package market slowing and competitive pressure coming from China, the LED industry will face some major challenges next year,” said Roger Chu, research director at LEDinside.
The massive influx of lighting manufacturers from Asia has turned the LED industry into a fiercely competitive marketplace and is forcing traditional lighting manufacturers such as Philips and OSRAM to change their strategies. The three major trends that are expected to emerge in the LED industry in the near future are as follows:
1. In the era of low-priced lighting, LED manufacturers can achieve cost advantages through economies of scale
Given the low prices of LED lighting products, LED specifications are gradually becoming standardized, in particular in the China market. Chinese LED manufacturers have a strong grip on the low-end market thanks to government grants and other funding perks. That has allowed them to achieve economies of scale.
Mid-power LED has replaced high-power LED as the mainstream LED product. Chinese LED manufacturers have strong advantages in the 2835 LED market, in part because they have invested considerably in production capacity. 2835 LED has many advantages, including low cost, economies of scale and its suitability for alternative bulb and lamp lighting products.
2. LED lighting manufacturers will look to emerging markets for growth
With fierce competition in Asian countries such as Taiwan, China and Japan, LED lighting manufacturers are looking to expand to emerging markets to boost profit margins. LEDInside believes a number of factors augur promise for LED lighting manufacturers in emerging markets next year. Those factors include the drop in price of LED lighting products, to the extent that their cost is comparable to traditional lighting products, the relative ease of acquiring a patent in emerging markets, strong population growth, and government support in developing countries.
3. Some SMEs to exit from LED market as consolidation continues
Globally, LED manufacturers will seek to build strategic alliances again in 2015 whether through stock investments, joint ventures or other means. Yet at the same time, small and medium-sized LED lighting manufacturers will face challenging conditions. Unable to compete on cost and without a niche market, Unable to compete in cost and without a niche market, some SMEs in the lighting market will eventually exit.
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