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23 April 2013

LED lighting market consolidation to continue

The lighting industry is in the early stages of shifting away from established technologies -- fluorescent, incandescent, and high-intensity discharge (HID) lighting -- toward light-emitting diodes (LEDs). Hence adoption rates of LED lighting are expected to grow in the coming years as the efficacy and quality of LEDs surpass those of competing technologies and as prices fall to enable reasonable payback periods, according to the new research brief ‘LED Supply Chain Dynamics’ from Navigant Research.

The transition has been widely expected for a number of years, leading to the launch of new LED-focused companies and to the repositioning of existing lighting firms to take advantage of LED sales. Now that the rise of the LED has begun, the repercussions are rippling up and down the LED supply chain, says Navigant.

The total number of vendors involved in the LED supply chain will shrink over the remainder of this decade, the firm forecasts. “Driven by a desire for vertical integration among the larger lighting companies -- fueled, in turn, by the relentless demand for lower prices and higher quality -- consolidation in this sector is likely to continue,” says research analyst Jesse Foote. “Other factors, including the expiration of existing patents, new interchangeability standards, new technologies, and an expected upsurge in creative product designs, will create opportunities for new entrants at each level of the supply chain.” Navigant Research forecasts that annual revenue from LED lamps will grow from just over $1.5bn in 2013 to more than $8.5bn in 2021.

While LED makers in China have attempted to master the process of epitaxial deposition of gallium nitride (GaN), they have had only limited success with the high-quality wafers needed for the high-lumen-output LEDs used for lighting, according to Navigant’s report. The market is hence led by US, German, Japanese and Taiwanese firms such as Cree, Osram, Nichia and Epistar.

The report examines the specific trends that affect the manufacture of the primary components of an LED light, as well as the broad trends reshaping the industry. Regional influences and applicable international standards are detailed, and an industry map shows how some of the larger vendors fit within the supply chain. Recommendations for how industry players can best take advantage of the global opportunity presented by the shift toward LED lighting are also included.

Tags: Lighting market


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