GLOBAL LED LIGHTING MARKET: SHINING BRIGHT

Expanded, LED means light emitting diode. It is a light emitting electronic device whenever electric current passes through it. Initially LEDs generated only red light, but due to technological advancement now these devices can emit red, green, and blue colored lights; and this combined, can give us soothing and bright white light too. The market for these devices was estimated to be US$ 45.57 billion in 2018; it is projected to expand at a CAGR of 11.8% over the next 5-6 years. This attractive growth opportunity is on account of decreasing price of the device, increasing demand for non-power guzzling systems for residential, commercial, and industrial sector, cool nature of the emitted light, and rising environmental concerns leading to increasing demand for renewable sources of power. Moreover, LEDs are highly efficient have a longer life span, reliable, and non-polluting (unlike CFLs), though a little expensive when purchased. However, these lights are cost effective over lifetime, compared with incandescent lights, delivering around 50,000 hours of illumination, or, in other words more than 5 years of life 24*7! That is quite a lot of light, that too with a small amount of energy and a very low cost. This lower cost of operation and reduced heat loss is leading to them replacing the incandescent lights, even in developing countries like China and India where the purchasing power is low. The unit price is declining continuously making them more and more affordable, however. To this can be added the growth inducing factors of deployment of enhanced energy efficiency standards and strict regulatory policies relating to conventional lighting and energy consumption across globe.

In the larger community interest, many national and local governments including in a large market like India, are providing various inducements-rebates and incentives-to replace traditional lighting sources with LED products. This is giving a big boost to their demand. Demand from all, residential, commercial, and industrial sectors is growing by leaps and bounds for these smart illuminations. Since they provide focused light, LEDs have the capability to provide lights in controlled zones only, say a painting, a jewelry display, etc. All across the globe the concept of digitally influenced smart cities is gaining ground, where, inter alia, there is a focus on lessening overall energy consumption and reduce peak power demand with an eye towards creating a sustainable world. LEDs make their own contribution there.

Spurred by the growing demand technological developments and innovations are being undertaken at a rapid pace by the dominant players. Thus, Samsung has designed and launched H influx specially for lighting spaces like covered parking lots, warehouses, and factories. The product is being offered in different luminous flux for different needs and with varied color temperatures. Cree has expanded its smart cast intelligence platform incorporating in its multiple capabilities like wireless enabling smart building solutions that cater to the rising demand for internet of things. Collaborative efforts are also on to create technological synergy Universal Display Corporation, for example, has agreed to supply its proprietary universal PHOLED phosphorescent materials and technology to the Sharp corporation for latter’s OLED displays. Many such joint efforts are bringing about revolution in the industry leading to innovation led demand creation.

The LED lighting system industry has many hardware players, prototype designers, and OEMs including Philips, GE, OSRAM, Cree, Virtual Extension, Samsung, Sharp, and many more from as many countries. The field is still very virgin, promising, and open to profitable exploits. Hence no capable company from any country wishes to be left behind. Sensing the opportunity for making fast bucks, forward integration is also apace. Semiconductor manufacturers are seeking to enter as lighting producers. In turn light manufacturers are seeking greener pastures by serving the end users through establishing their distribution network and then selling directly. All this increases the economies of scale and operations, which then translate into improved bottom line. Quick money prospects had meant that assemblers would outnumber core manufacturers, since they could import low cost components from the factory of the world-china- and simply apply “screw driver” technology to turn out a finished product which would then be sold at a good margin. However, in recent years Chinese components have been frowned upon under stringent compliance regulations since they don’t quality under prescribed energy labels and other regulations. Consequent cheap assembling is not so much pratised now. As of now the global LED lighting market remains highly fragmented with the large number of small players operating across the world. This has generated a lot of competition. The only way forward therefore is to innovative in terms of better energy efficiency, longer life span, reliability, lower price, etc. These, coupled with the hygiene factors like consistent light, improved visibility, focused illumination, etc. will raise the demand both in residential and in commercial areas. LED lights can be paired with motion sensors, photocells, and timers to ensure an efficient and cost-effective lighting system in large spaces. All these factors can give a boost to the overall market, and especially to technologically innovative companies. Of course, regulatory adherence, safety tests, initial installation costs, etc. are the impediments that deaccelerate the forward march.

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Contributed by: Prof. K.K. Srivastava
KKS is an academic, author, writer, researcher, and corporate speaker. He writes regularly on Economics, Management, Technology, and others areas.