Osram: Office Lighitng Market Still Challenging for LED Manufacturers

The LED segment might have made significant technology advancements that have driven down costs, and made the bulbs more affordable to most households, the office lighting sector remains a difficult segment for LED manufacturers to tap into, said Michael Schmitt, Regional Market Director, Asia-Pacific, Osram Opto Semiconductors at LEDforum 2014, which took place in Taipei, Taiwan last Friday. 

Michael Schmitt, Regional Market Director, Asia-Pacific, Osram Opto Semiconductors speaking at LEDforum 2014 on Oct. 24, 2014.

Osram’s LED application market observations were very similar to Philips Lumileds, the only difference was the extent of growth. Citing figures compiled by consulting company McKinsey, Schmitt highlighted general lighting applications would continue to grow at Compound Annual Growth Rate (CAGR) of 6% from 2011-2016, but CAGR would eventually slow down to 3% from 2016-2020. General lighting market value is projected to increase from EUR 73 billion in 2011 to EUR 101 billion by 2020.

Autmotive lighting sector will have an incremental growth of CAGR 5% during 2011-2016, but eventually reach zero growth from 2016-2020. Estimations of automotive lighting sector market value growth is set at EUR 55 billion to EUR 83 billion from 2011-2020. The outlook for LED backlight market remains negative, with a projected negative CAGR of 18% for 2011-2016, and rebound slightly to negatvie CAGR 16% from 2016-2020. The LED backlight application market value will not see any growth from 2016-2020, where projected market value will only reach EUR 18 billion.

LED Market Application

2011-2016 Growth Rates

(CAGR %)

2016-2020 Growth Rates (CAGR %)

General Lighting

6

3

Automotive

5

0

Backlight

-18

-16

 

 

(Source: McKinsey 2012 Global Lighting Market Value)

 

Intitial LED prices are still crucial for consumers, said Schmitt. “We have seen in the residential lighitng market, one of the key purchasing optimum is the initial price,“ he explained. “Consumers don’t really spend that much time on calculating total ownership costs and payback times. So initial price is really important.“

The good news for manufacturers and consumers is prices of LEDs are now very close to that of CFLs, where payback time is around one year, said Schmitt. Lower prices are presenting greater opportunities for LEDs in the residential market, as consumers are more willing to replace CFLs or other conventional lighting with LEDs.

Attendees listen attentively as  Michael Schmitt, Regional Market Director, Asia-Pacific, Osram Opto Semiconductors shares his observations on LED price trends. (LEDinside)

In comparison, LEDs are still having a relatively difficult time competing with commercial linear fluorescent tubes, that are frequently found in office applications where payback time is much longer. “The reason is linear fluorescent lamps are very efficient already today, and the prices are already quite low today,.“ said Schmitt. “Therefore, we have longer payback time cycles today, so (market) penetration rates for this market application are also expected to be lower.“

Still the outlook for LEDs remains positive. Incandescent bulbs will be completely phased out by 2020 and replaced by CFL and LEDs in the residential market, which will each have a 50% market share, projected Schmitt. Compared to 2012, incandescent bulbs still had a 50% market share in the residential market, while CFLs consisted the remaining half, which indicates a major change in the lighting market, said Schmitt. 

(Author: Judy Lin, Chief Editor, LEDinside)

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