LED Bulb Prices Dragged Down by Indian Government Procurement Prices

Large players oversupply situation in the LED industry led to LED bulbs continual downward price trend, according to a report by Chinese-language Commercial Times.

The Chinese lighting market is entering a low season, and with Indian LED lighting procurement prices reaching rock bottom, it has further dragged down LED prices this quarter.

LED package manufacturers project, LED chip prices will continue to decline in the second half of 2015. Samsung and San’an Opto’s LED chip price wars have intensified in China, said industry insiders. In addition to oversupply of LED chips on the market, India’s LED streetlight bids low bulb prices has been the main culprit behind the global plunging LED bulb prices. The Indian government has been directing the retrofit of 200 million LED bulbs lighting project within two years, and selling bulbs at ultra-low prices. According to latest reports by The Hindu, the Indian government is procuring LED bulbs at INR 72 (US $1.13). Top four bidders of Indian government lighting projects include Philips and Everlight. Impact from Indian government’s low-priced bulbs has far exceeded the influence from San’an Opto’s large production capacity.

Since the Indian government is directing developments in the sales channels, LED bulb prices have hit an all-time low. Although, manufacturers in the Indian LED supply chain have been granted government bids, it has also impacted bulb prices in other international markets. Additionally, China’s lighting market has entered a low season since July, which has caused the falling LED chip prices. LED prices have started to wane in June.

The Chinese lighting market growth usually slows down from June to July, and orders usually does not rebound till October to November. Plunging real estate and stock prices in China have made local consumers less interested in purchasing LED bulbs, and heightened effects from the low season, while further impacting LED prices.

Price falls are unavoidable in the industry, since LED bulbs are consumer products, said Chinese LED manufacturers. Philips launch of two-packed LED bulbs for less than US $4.99 in May 2015 indicates the company has responded very quickly. There is no end point to the price wars, and the supply chain has been changing its procurement strategy and lowering costs in response. Even though prices are very low, not all manufacturers are out of business. Manufacturers pricing is targeting consumers and not manufacturers. Price wars will only end when consumers are willing to purchase products at a particular price. Consumer product prices tend to fall easily, but it is difficult for prices to rebound. These indicate low LED lighting prices will become the long term trend.

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