According to LEDinside, the LED research division of TrendForce, major lighting markets in the world have been affected by the European debt crisis to varying degrees. Certain Chinese LED firms whose business relies heavily on overseas markets have seen a decline in orders, which is particularly pronounced in the European lighting market. As a result, many LED companies are starting to shift their focus to the Chinese LED bidding market. In fact, In July, China restarted the bidding process for LED subsidies, providing hope for many LED firms.
As for the outlook for 2H12, with the stagnant global economy dampening the end market and many large-scale lighting projects coming to a halt, most export companies turned to on-going mid-scale and small-scale lighting projects and the commercial lighting market. On the other hand, large-scale LED lighting market demand will depend on the bidding project market in China in 2H12.
According to LEDinside, orders for LED lighting firms with primarily European clients plunged by more than 20% sequentially in 3Q12. European orders saw the most prominent downturn during May-July, 2012. Given the murky outlook for 2H12, European distributors have decreased their orders placed in the Asian market. Moreover, due to the payment delay, the large-scale lighting projects in Europe have come to a halt. Looking towards 2H12, the mid-scale and small-scale lighting projects are expected to continue as scheduled, but pricing competition is going to be fierce.
Aside from the European LED market, according to LEDinside’s latest research report in 2012, LED lighting demand (especially for LED light bulb and LED light tube) in the U.S. has been picking up on a monthly basis in 2012 due to the increase in new housing projects. The second half of the year is usually the peak season for the residential lighting market, and so far the U.S. market has been performing better than the European market, albeit the still uncertain global market outlook.
Due to the slump in the European and U.S. markets, global lighting giants such as Philips and Osram have started to place more emphasis on the Asian market. For example, benefiting from the summer energy-saving policy, people in Japan are more willing to buy LED light bulbs, contributing to a strong surge in LED demand in the Japanese market for 3Q12.
Furthermore, the LED lighting project market in China will be the target of most LED companies. In early 2012, due to the drastic differences in the product quality between the winning bidders, the bidding process for the 2012 Solid-State Lighting Product Subsidy was restarted in July for the 2012/2013 period, with outdoor lighting products such as LED street lamp, LED tunnel light and indoor lighting products such as LED down light, self-ballasted LED reflector lamp included in the subsidy scheme. The Chinese government has established new standards for the bidding process in order to increase the product quality of the winning bidders.
Although China’s LED subsidy bidding process in 1H12 did not go as smoothly as planned, causing many projects to be placed on hold, the new standards added to the new bidding process will help to raise product quality and establish the threshold for the companies planning to bid. Even though the subsidy amount has not yet been announced, support from the government will undoubtedly aid the development of the LED industry. Commercial, industrial and household lighting markets will gradually take off as the governments start to increase related subsidies and as the market acceptance begin to grow.
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Silver Member Report Content-3Q12 (Released in July 2012)
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