Credit Suisse: LED General Lighting Market to Replace Backlight As Industry Growth Driver

Positive that the general lighting industry will become a major growth momentum for the LED industry, Credit Suisse projected the LED lighting market penetration rate will reach 56 percent by 2016, according to a China Times report.

LED demands have exceeded expectations since 4Q13, due to strong general lighting demands, said the financial institute. Credit Suisse adjusted general lighting market share forecast from 29 percent in 2014 and 47 percent in 2016 to 31 percent and 53 percent respectively. This indicates the overall general lighting market revenue will nearly double from US $27.8 billion in 2014 to US $53.0 billion in 2016, growing at a Compound Annual Growth Rate (CAGR) of 43 percent.

Flexible pricing in the industry contributed to the strong LED general lighting market growth including manufacturers slashing costs, and North American subsidizing state-owned businesses, analyzed Credit Suisse. The financial institute also held a positive outlook on the residential and commercial lighting market performance, noting the two markets will account for 75 percent of the general lighting market revenue.

In terms of total revenue in the LED industry, the financial institute noted general lighting will replace backlight as a main source of revenue. Credit Suisse forecasted general lighting revenue share will climb up from 32 percent in 2013 to 42 percent in 2014. By 2015, general lighting revenue will reach 51 percent, since backlight market penetration rate is close to full saturation, and high-priced TV products including 4K2K TV have shown weak growth.

In contrast to the TV backlight market, the general lighting market is more dispersed and has to take into consideration branded clients and other factors, the institute analyzed. However, once LED demands switch to general lighting, comprehensive solutions will become the best business operation model. Although many manufacturers are taking the opportunity to enter the downstream market, it will have limited impact on upstream LED manufacturers advantages.

Moreover, Credit Suisse noted small manufacturers will slowly exit the downstream market because of their limited capabilities, which is expected to spur the LED industry’s restructure and integration, and benefit the industry’s overall investment atmosphere.

The financial institute also highlighted downstream manufacturer Unity Opto can generate further growth by providing lighting clients OEM services.  

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