Trade Resources Industry Trends LED Technology Is Taking Over The Lighting Business

LED Technology Is Taking Over The Lighting Business

Amid falling prices and rising consumer acceptance, light-emitting diode (LED) technology is taking over the lighting business, spurring a 96% increase for global revenue for packaged LEDs used in lighting applications, from $3.6bn in 2013 to $7.1bn in 2016, according to the report 'Packaged LEDs – World – 2013' from market research firm IHS Inc.

Revenue for Packaged LEDs for Lighting to Nearly Double in Three Years

"As retail prices for LED lamps have fallen, it has become more obvious that they are an attractive alternative to conventional light bulbs, providing long-term savings in energy and replacement costs," says Stewart Shinkwin, market analyst, lighting and LEDs, for IHS. "Because of this, shipments of LED lamps for lighting are set to increase dramatically in the coming years, rising to 2.4 billion units in 2016, up from 520 million in 2013," he adds. "The rapid expansion of the lighting market will come as a major boon to suppliers of packaged LEDs, which are seeking the next growth opportunity following the slowdown of the backlighting business."

Looking back at backlighting

In the past, rapid growth in the packaged LED market was driven by LCD display backlighting in applications such as mobile phones, notebooks and TVs. Most of these applications have completed their transition to LED technology. Therefore, while LED demand for these products remains stable, annual unit growth is largely limited to single-digit percentages.

The lighting market, however, is predicted to provide the next wave of explosive growth for packaged LEDs.

Let there be lighting

In 2012, the lighting sector became the largest end-application for packaged LEDs, having finally overtaken TV backlighting. Market saturation for LED backlighting has resulted in a number of leading suppliers shifting their focus and development resources toward the lighting industry.

With LED lamp retail prices decreasing and more consumers realizing the cost savings that LED lamps can provide over long periods of time, penetration of LEDs into the lighting market is set to increase significantly, reckons IHS.

Light fight

Along with great opportunity, the projected growth in LED lamps will result in intensified competition among suppliers vying to capture market share, reckons the market research firm. This competition will continue to further drive down prices. IHS forecasts that average selling prices for packaged LEDs in lighting will fall from $0.41 in 2013 and $0.25 in 2016 to $0.19 in 2018.

The price erosion, in turn, will reduce the consumer payback period for LEDs, helping to increase adoption. However, declining profit margins will be undesirable for suppliers.

LED lamp penetration is already significant in a number of lighting applications such as the retail and hospitality sectors. However, it is the residential sector that IHS forecasts will provide the largest opportunity for packaged LEDs. Packaged LED revenue in the residential sector is forecast to grow from an estimated $850m in 2013 to nearly $2.7bn in 2016. Manufacturers that carve out share early on in this market could garner significant returns as the market booms, HIS concludes.

Source: http://www.semiconductor-today.com/news_items/2013/OCT/IHS_111013.shtml
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Revenue for Packaged LEDs for Lighting to Nearly Double in Three Years