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LED Manufacturers Scramble to Benefit from Market Surge

May 25th 2015 at 8:54 PM

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Img source:LEDlight

Looking ahead, under the condition of surging demand, manufacturers will see a turnaround in revenue and profit ratio. Mass production of public and commercial lighting as well as increased penetration rate for residential lighting has propelled the industry forward. The industry will continue to prosper throughout 2014 and anticipated to continue for the next two to three years. The LED replacement era is dawning as people environmental awareness heightens and recognize the need to conserve energy and protect the environment, which spurred LED product price drops and technology innovations. Revenue growth this rapid has only occurred once before in the LED industry, which was in 2010. The difference however, is that growth in 2010 stemmed from the financial crisis of the time while it now comes from industry demand. Osram's LED business also grew in 2013. The company's LED business revenue reached EUR 1.53 billion (US $1.1 billion), MoM growth of 11.4 percent, making up for 29 percent of the company's total revenue.


Osram's lighting business revenue was EUR 3.76 billion for 2013, MoM slid 6.7 percent. The company's target is to increase revenue proportion of their LED lighting business up to 50 percent or more of total revenue before 2017. Global LED stock prices have already seen an increase this year. Several companies listed in the A-stock had stagnated performance, due to underestimations of the impact of the soaring residential lighting market as LED industry rebounded. Short-term rebound in the industry will provide a golden opportunity for manufacturers to reset their business strategies. Midstream package manufacturers are able to directly benefit from industry growth. Starting this year till 2015 will be the LED package industry restructuring phase. During this period, many small to mid-sized companies will exit the market, stabilizing the industry.


Many package manufactures showed good performance in 4Q13 that is anticipated to continue into 2014. For downstream manufacturers, the luminaire field is most likely to become the largest field in the future. Globally, luminaire manufacturers generally control the right to speak in the lighting industry. A strong Chinese LED luminaire brand is yet to emerge. Most Chinese manufacturers who have traditional distribution channels are on even footing, but in the future companies that obtain strength in technology, product control, and management will gradually gain the upper hand. Traditional distribution channels still have the greatest advantages, however, internet channels are playing an increasingly important role. This year downstream manufacturers are keeping their eyes on whether luminaire manufactures will make large investments to their brands and expand investments in e-commerce. Traditional lamp manufacturers with brand and channel control in the energy efficient luminaire field are likely to emerge as early victors in future competition.

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