LED lighting ex-factory pricing has been falling to US$1/W in 2012. LED makers believe the ex-factory price of LED lighting will fall to US$0.70/W in 2013.
According to Jason Wu, chairman of Taiwan-based high-power LED packaging house Edison Opto, the ex-factory price in 2011 was US$4/W and in 2012, the price has fallen to US$1/W. If the ex-factory price of a 3W MR16 is around US$3, the cost of LED components accounts for about 20%, this means there is limited room for price falls for LED components, added Wu. Despite the limited room for a price decrease of LED components, the ex-factory price of LED lighting is likely to fall 30% in 2013.
Industry sources noted that the price drop of LED components has been easing but the price drop per quarter in the second half of 2012 continues to be around 5-10%. This is due to rising competition from China-based LED packaging houses. In addition, due to the debt crisis, demand for LED lighting in Europe has been weak. Nevertheless, demand in Japan in the second half of 2012 continues to increase.
Edison Opto stated that due to inventory accounting procedures for the year-end balance sheet, performance in the fourth quarter of 2012 is likely to be flat or show a 10% decrease. Also, demand in the first quarter of 2013 is unclear.
Edison Opto reported a third-quarter net loss due to falling operating gross margin. Also, gross margin of its parent company in the third quarter fell below 15%. The two factors caused a large decrease in operating profit.
Market observers believe that as Edison Opto's plant in Yangzhou, China, increases capacity, the firm can maintain its consolidated gross margin at 15%.
To comment on the strategic alliance formed by Formosa Epitaxy and Sanan Optoelectronics, Edison Opto noted that currently, the firm has yet to meet a suitable cooperation partner. The firm plans to continue expanding cooperation with downstream lighting fixture firms, which may include China-based firms.
Wu added that Edison Opto will shift focus to integrating resources and plans to invest in up to five downstream lighting fixture partners in 2013.
