Led Lighting Market Analysis

Market Insight- Global LED Lighting Market

Market Overview

A light-emitting diode (LED) is a semiconductor device that emits light when an electric current is passed through it. Light is produced when the particles carrying current combine together within semiconductor material. The color of light is determined by the energy required for electron to cross the band gap of semiconductor. An LED can produce different range of colors including red, yellow, blue, green, white, purple, bi-color, tri-color and infrared. LEDs are typically used in indoor lighting, outdoor lighting, and as a backlight source in LCD display. Currently, LEDs are among the most efficient lighting sources available and is expected to become the first technology in the near future. Furthermore, LED offers long lifespan, durability, design flexibility, energy efficiency, economic efficiency, low-voltage operation, zero UV emissions, etc.

The global LED Lighting market was valued for US$ 47,781.0 Mn in 2019 and the market is expected to grow at a CAGR of 17.7% during the forecast period.

Market Driver

1. Increasing global population and lagging growth of electricity grid is expected to drive growth of the global LED Lighting market during the forecast period

Governments in African countries are focused on electrification of rural areas across the region. This is a major challenge due to political instability and growing unrest in some parts of the region. According to Lighting Africa, the population in Africa without electricity is expected to reach 700 million by 2030, which is around 140-150 million households with no electricity. Moreover, growing demand for lighting fuel and increasing awareness regarding negative impact of kerosene-base lighting products in health are expected to boost the demand for modern lighting solutions and thereby support the market growth in the near future. According to International Energy Agency (IEA), in 2013, around 17% of the global population, around 1.2 billion people, did not have electricity. According to the same source, 95% of these people were from sub-Saharan Africa and emerging economies from Asia.

2. Lucrative features such as eco-friendly, energy-efficient, and high durability are expected to propel the global LED Lighting market growth over the forecast period

LED Lighting offer various benefits such as flexible technology, low maintenance, different colors, long-lasting durability, and more. Such factors are increasing adoption of LED Lighting for various applications. For instance, average expected lifespan of an LED light bulb is 50,000 hours; whereas that for a fluorescent and incandescent light bulb is 10,000 hours and 1,200 hours respectively. Moreover, an average LED lamp consumes around 50% less power than a florescent lamp and 80% less than incandescent lamp. Improved performance of LED products is resulting in increasing adoption of LED lights in commercial and domestic applications. This is in turn fueling growth of the global LED Lighting market.

Asia Pacific region dominated the global LED Lighting market in 2019, accounting for 46.3% share in terms of value, followed by Europe, North America, Latin America and MEA respectively.

Source: Coherent Market Insights

Market Dynamics- Drivers

1. Low awareness related to modern lighting solutions such as LED is expected to hinder the global LED Lighting market growth over the forecast period

Although LED lamps offer numerous benefits, a large chunk of population still prefers fluorescent lamps. Overall revenue share of florescent lamps is relatively larger than architectural lighting products. This is owing to lack of awareness and understanding associated with advantages and benefits of modern lighting solutions. This, in turn, is expected to hinder the global LED Lighting market growth over forecast period. Furthermore, emergence of low-quality and low-cost lighting products with low lifespan and misperceptions about modern lighting solutions being expensive than incandescent lamps is expected to hinder adoption of LED Lighting in the near future, especially in emerging economies such as Latin America and Asia Pacific.

2. Unwillingness of small and mid-sized enterprises to replace existing lighting solutions with LED lamps is expected to restrain growth of the global LED Lighting market during the forecast period

Small and mid-sized enterprises, especially in emerging economies such as India are reluctant to replace their existing lighting infrastructure with modern lighting solutions. This is owing to high initial investment required for LED lighting infrastructure. This, in turn, is expected restrain growth of the global LED Lighting market over the forecast period.

Market Opportunities

1. Adoption of solar LED Lighting in remote areas are expected to present lucrative business opportunity for market players

Emerging economies in Asia Pacific and Africa are adopting solar LEDs to provide electricity in remote places, which is expected to pose lucrative growth opportunity for market players over the forecast period. For instance, in September 2015, the government of Kenya launched a US$ 1.2 Bn project to deploy LED street lights in Mombasa City, Kenya. However, some villages still lack proper electricity infrastructure and demand for LED Lighting is relatively high. Governments of these countries can focus on importing solar LED lighting systems at subsidized rates. In December 2015, Ministry of New and Renewable Energy stopped lending central financial assistance to CFL-based solar lighting system manufacturers, but this funding scheme is still available to LED-based solar lighting system manufacturers.

2. Financial support from regulatory authorities is expected to provide excellent business opportunity for market players

Regulatory authorities in various African countries focused on providing financial support to consumers to adopt LED Lighting. Some schemes such as Monetary Financial Institution (MFI) based micro-lending for Pico-powered lighting systems (PLS), engaging semi-formal and informal financing sector, mobile payment-enabled lending, and pay-as-you-go models and payroll financing are providing financial support, subsidies, and incentives to consumers for the adoption of modern lighting solutions. These financial services will ease and increase consumer access in emerging economies to electricity thereby providing significant growth opportunity for market players.

Source: Coherent Market Insights

Market Trends

1. Growing investments in research and development activities to innovate novel products is a major trend in the market

LED manufacturers in the market are focused on investing significantly in research and development activities to develop innovative architectural LED products, in order to enhance their product portfolio. For instance, In April 2015, Cree Inc. introduced LR22 LED Troffer, which is a highly diffused architectural fixture integrated with a recessed flat-panel design. In June 2014, OSRAM SYLVANIA Inc. launched OSRAM RLD6 – six-inch LED architectural downlight — at the LIGHTFAIR International 2014, which is an annual architectural and commercial lighting trade show and conference held in Las Vegas, U.S. Moreover, in January 2017, Philips Lumileds Lighting launched horticulture lighting calculator to accelerate grow light development. This product assists farmers to artificially nurture crops under a controlled climate.  

2. Strategic alliance with e-commerce platform providers is another major trend

Manufacturers are focused on digital marketing practices, in order to expand their consumer base and revenue generation. Key market players are focused on strategic partnerships and alliances with online retailers, in order provide architectural LED lighting products to consumers easily at affordable prices. For instance, in July 2014, Phillips Lighting Limited entered into a strategic alliance with Amazon.com, Inc. in order to enhance its presence in the global market.

Segment information:

In Global LED Lighting Market, by Service segment, the Installation Services sub-segment dominated the global market in 2019, accounting for 51.2% share in terms of value, followed by Maintenance & Support Services and Consulting Services, respectively.

Source: Coherent Market Insights

Value Chain Analysis

Competitive Section

Key companies operating in the global LED Lighting market are Daktronics Inc., OSRAM Licht AG, Hubbell Lighting, Inc., GE Lighting, LLC, Acuity Brands Lighting, Inc., Cree, Inc., Toshiba Lighting and Technology Corporation, Sharp Corporation, Philips Lumileds Lighting, Eaton Corporation (Cooper Industries PLC), and Samsung Electronics Co. Ltd.

Key Developments

1. Major market players are focused on capacity expansion, in January 2017, Hubbell Lighting, Inc. inaugurated Lighting Solution Lab at its headquarters. This lab was developed to facilitate proper training of employees and for development of better lighting solutions.
2. Key players in the market are involved in product launch, in order to expand their product portfolio. For instance, in January 2017, Lumileds Lighting launched an online horticulture calculator for regulating LEDs. This calculator facilitates user to input LED combinations to generate spectral power distribution.