LED lighting market penetration rate continues to rise, or ignite a new wave of price wars


LED lighting market penetration rate continues to rise, or ignite a new wave of price wars

2016-03-07 09:56

   The penetration rate of the LED lighting market continues to rise, and price competition is becoming more intense. The LED industry revealed that Philips, the leading international lighting manufacturer, has set an ultra-low target of reducing the ex-factory price of LED bulbs to 0.8 US dollars in 2016, a drop of over 20%. The pressure on the upstream supply chain industry has increased greatly. However, the recent strengthening of the US dollar exchange rate will help ease the pressure of upstream manufacturers to reduce prices. Recently, it has been reported that there have been mainland LED bulb assembly plants calling for the first quarter to achieve the LED bulb ex-factory price target of 0.8 US dollars ahead of schedule. It may ignite a new wave of price wars in the LED lighting terminal market.

   On the other hand, due to the continuous sharp decline in the price of LED bulbs, the quotations of upstream LED components are close to the cost line, and the top 15 LED manufacturers have seen their revenue decline. It is reported that in the second half of 2015, the price of medium-power LEDs in the lighting field fell by 30-40%, and the price of high-power LEDs fell by 20-30%. In view of the lack of price competition for LED components, many LED manufacturers have shown a decline in their business.

   The sharp drop in the price of LED components in the Chinese market has caused many companies to withdraw from the LED market. It is reported that 4,000 Chinese LED manufacturers withdrew from the LED market in 2015. This kind of "going global enterprise" closed sales forced other manufacturers to lower the price of LED products. Manufacturers' profits have been severely tested. Although the overall increase in LED bulb shipments does not help manufacturers to improve their operating conditions, some competitors have been forced to withdraw from the market. Some LED industry players pointed out that there is almost no gap between the price of LED bulbs and energy-saving bulbs, and there is still pressure to reduce prices of LED bulbs in 2016, but the decline is expected to slow down throughout the year.

   Even though market competition continues to intensify, for the LED industry, the future development potential is still huge. Zion Research recently released a report on the global LED lighting market, predicting that the global LED lighting market will reach US$42.5 billion in 2020, with a compound annual growth rate (CAGR) of 13% during 2015-2020. Among them, the architectural application LED lighting market will usher in rapid growth.


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