Asian LED companies giving tough times to the giants in the industry
By BizLED Bureau
Frost & Sullivan has estimated that the global LED lighting market grew 35% to $32.3 billion in 2014, and it is forecast to more than double to $70 billion by 2019. LED as a proportion of the total lighting market is set to near 50% by the end of 2015 and reach 84% by 2020.
With advancement in LED lighting, it has started to become a part of the internet of things (IoT), where different devices are all connected on telecoms networks. Due to LEDs fast growth, new opportunities are also opening up in areas like intelligent street lighting.
The fast growth of the LED market has attracted new low-cost competitors, particularly from Asia, that are giving tough competition to the giants in the market like Philips, Osram, GE, Cree, etc.
The industry giants are responding to this challenge in different ways, by restructuring legacy, high-volume lighting units and regearing their business models towards “smart” and “connected lighting”.
Philips announced that it would split in two by creating a standalone lighting company that aims to respond more quickly to the “fundamental changes taking place in the lighting industry”. It plans to float the lighting solutions business during the first half of 2016.
Siemens had spun off its Osram lighting unit in 2013. In April Osram said it would carve out its light-bulb unit, which makes traditional and LED bulbs, into a separate entity by 2016.
Samsung Electronics had announced it would cease selling LED bulbs overseas.
Cree has cut manufacturing capacity due to falling prices and lower than expected sales. Cree’s stock has fallen almost 50% over the past year.
Osram is banking on its LED components and speciality lighting business, particularly for the automotive industry. On the other hand, Philips has agreed to sell a majority stake in its LED component and car lighting business to GO Scale Capital, an investment fund run by China-based private equity group GSR Ventures and Oak Investment Partners.