UBS: Global LED Industry Growth Under Control in 2014

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UBS

Analysis of Global LED lighting manufacturers market penetration rate

Certain events beneficial to the LED industry have occurred in the past few weeks. UBS Analyst Fredric Stahl noted Philips LED lighting business 4Q13 revenue has soared 48 percent compared to the same period in 2012. Osram also reported the company’s LED lighting business had grown 28 percent in 4Q13 compared to 4Q12, and that revenue shares were up to 33 percent in 4Q13 compared to 26 percent a year earlier. Acuity Brands revealed LED sales revenue growth was 100% YoY compared to a year earlier, said UBS Analyst Winnie Clark. Cree LED lighting revenue soared 42 percent YoY, and LED bulb revenue QoQ growth doubled. Factors contributing to strong LED lighting demands in 2014 as following:

  1. Lower retail price.
  2. Consumers rising energy efficiency awareness.
  3. Government implementation of incandescent bulb phase out policies.

Production capacity growth under control in 2014

San’an Opto has privately raised RMB 3.3 billion (US$ 540 million) in capital to fund Wuhu Opto-electronics Base second phase expansion of adding 100 MOCVD equipments. The expansion project has been included in a 2014 LED chip supply model, which still indicated the LED chip supply will be under stress. Taking into consideration the time needed to install equipment and reach production capacity, new production capacity will be limited in 2014. 

UBS projected major LED chip manufacturers will keep production utilization rates at high levels in 1Q14 to prepare for client’s annual demands. Therefore, LED chip manufacturers can choose high profit orders to raise their profitability.  

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