LED lighting market is approaching an outbreak

Since the beginning of this year, LED backlighting and lighting market demand has been strong, and chip, package and application vendors have full orders. Some entrepreneurs and industry analysts believe that the LED outbreak will start in the fourth quarter of this year, and the next will be a seven to eight-year boom.

LED industry space huge lighting market is approaching an outbreak

Authoritative data predict that by 2020 the global lighting market will exceed US$150 billion, an increase of 11.9% from US$134 billion in 2010. Although the overall scale does not increase significantly, the lighting product structure will change significantly. Among them, the LED lighting market share will increase from about 5 billion US dollars in 2010 to 75 billion US dollars. That is to say, 15 times expansion in 10 years. In addition, according to data from an industry research institute in Taiwan, the penetration rate of global LED lighting is currently only 10%. By 2015 or at the latest by 2020, the penetration rate will reach 50%.

From the LED front-line entrepreneurs feel equally optimistic, that "industrial outbreak is imminent." When interviewed by reporters, Gu Wei, Chairman of Mega International (002429), said, “The LED industry has huge room for growth and it is absolutely impossible to become the second photovoltaic.” The reason is that LED belongs to consumer electronics, and the biggest feature of consumer electronics is that it is widely used and the market is extremely broad. He judged that the critical point of a major outbreak in the LED market is already near, and that the industry will flourish in the next seven to eight years.

In fact, due to the high cost of chips and heat sink materials, the application of LED products, especially lighting products, has been limited for a long time. Relevant data show that at the beginning of 2013, the cost of LED lighting acquisition was 7-8 times that of ordinary energy-saving lamps and 2 times that of energy-saving lamps with dimming function. For example, LED lighting products from mainstream brands in Europe and America are priced at $19 per 1000 lumens, while conventional energy-saving lamps are sold for only $2.5 per thousand lm, and energy-saving lamps with dimming function are also available at $10 per 1,000 lm.

However, according to the reporter, there are many places where LED lighting can save costs, and the space is not small. For example, the chip is expected to continue to drop by 20% in the future, and the heat-dissipating aluminum material can save 30%. Gu Wei said, "As the chip price continues to decrease, at the same time, the chip's luminous efficiency increases, and the heat sink is greatly simplified. The price of LED lighting products is continuously approaching energy-saving lamps."

The quote from the merchant confirms this. According to the data of Jingdong Mall in May 2013, the price of a lighting brand of 800 lumens (equivalent to 60W incandescent lamp brightness) is only RMB 50, which is equivalent to US$ 10 per 1,000 lumens. If you take into account the export tax rebate, the export price is about 9 US dollars / 1000 lumens. This is already possible with the energy-saving lamps with dimming function as a “respect for courtesy”.

A securities analyst predicts that LED light sources will be able to slip to $15 per thousand lumens by the beginning of 2014, and some of the aggressive lighting manufacturers in the Asia-Pacific region will lower their light source prices to $8 per 1,000 lm. In about two to three years, the cost of LED lighting products will drop to the critical replacement point for large-scale replacement of global energy-saving lamps (US$5).

He reasoned that the LED lighting market may erupt in the fourth quarter of this year or the first quarter of next year. From a product perspective, large-scale replacement of traditional light source products by LED may be the first in the commercial lighting field, especially the market segment that needs dimming function. In terms of sub-regions, regions with higher electricity and industrial prices such as Europe and Japan may be the first to start. Taking Japan as an example, the cost of using an LED light source over an ordinary energy-saving lamp can be recovered in two years. “It is expected that the home LED lighting market in Europe and Japan will start in early 2015. At the same time, the industrial and commercial lighting market in developing countries will also start.”

The cost reduction space still has obvious advantages for brand manufacturers

Although there is a lot of space in the LED market, due to the low barriers to entry, brand manufacturers and cottage manufacturers are fighting fiercely. Some cottage products even have more price "advantages" than brand manufacturers.

Insiders pointed out that the brand manufacturers with the advantages of production scale and product cost performance will win in the future. First of all, compared with the cottage manufacturers, large-scale enterprises have strong bargaining power in chip procurement; secondly, brand manufacturers are more competitive in terms of product design process and technological innovation. Although the cottage products are cheap, the main reason is the use of cheap chips and drive power, while the heat sink device also has to cut corners.

In fact, Siu Chi shares as early as in 2010 to plan the LED industry, and set up a subsidiary Shenzhen Zhao Chi Energy Saving Lighting Co., Ltd., plans to develop LED packaging, TV backlighting and lighting business. In 2011, the company officially launched LED packaging, TV backlighting and lighting production. In the second half of the year, the company achieved a complete self-sufficiency in TV backlighting; the lighting products achieved cooperation with first-line brands such as Oupu, Sanxiong Laser (Japan), TCL Lamps, Mitsubishi Chemical (Japan), and Supergigatronics GP (Europe). LED revenue reached 270 million yuan that year. The year of production, profitability in the current year, and sales in the current year were achieved.

Gu Wei said that the current LED is like TV in 2006 and 2007. You just have to invest in doing it all. This industry will grow quickly because the market is infinite. The company considers that it will tilt its resources to LED in the future, continuously expand its quality customers at home and abroad, and quickly increase its production capacity, turning LED into the company’s second largest performance engine. Income should be 50% or even more of the company's revenue.

It is understood that Zhao Chi shares currently has 50 LED packaging lines and 8 lighting assembly lines. Next, in order to meet the needs of market development, the company will rapidly expand production capacity. "Whether it is to make DVDs or to make television, Siu Chi is the first, and the worst is also the top 3. To do LED, we will also hold high and fight high, and strive to be the industry's industry leader," Gu Wei said.