LED Component Market Saw Sluggish Growth in 2015

What happened to the LED component market in 2015? 2015 was supposed to be the year when LED lighting would really start to take off. Prices for lamps were already under $10, with some even under $5 and we still stand by our growth estimate of around 85% unit growth for LED lamps with 45% revenue growth. LED luminaires also had healthy growth at 28% unit growth and 21% revenue growth. So my prediction of strong packaged LED growth for 2015, especially in lighting, seemed justified. So what happened? Because nearly everyone in the top 15 LED manufacturers declined in revenues.

Feb 23rd, 2016
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What happened to the LED component market in 2015?

2015 was supposed to be the year when LED lighting would really start to take off. Prices for lamps were already under $10, with some even under $5 and we still stand by our growth estimate of around 85% unit growth for LED lamps with 45% revenue growth. LED luminaires also had healthy growth at 28% unit growth and 21% revenue growth. So my prediction of strong packaged LED growth for 2015, especially in lighting, seemed justified.

So what happened? Because nearly everyone in the top 15 LED manufacturers declined in revenues.

Firstly, price declines were massive – way bigger than anyone anticipated. With the crash of the China market in the second half of 2015, we saw a lot of companies exit the LED market - it’s thought some 4000 LED companies in China exited in 2015 and had a “going out of business” closing type sale that forced other manufacturers to also lower their prices. In lighting, mid power LEDs saw price declines of 30-40% and high power LEDs saw price declines of 20-30% in the second half of 2015. Some companies reported having to decline business simply because they could not compete on price.

Secondly, the smartphone market saw an unexpected slowdown as did the tablet market. This negatively affected players who normally saw healthy or at least stable growth in these areas. If Apple decides to use OLED displays in their smartphone or tablets, this could really have a big impact on the mobile market.

And thirdly, exchange rates had a big impact on foreign companies’ revenues in US dollars. A good example of this is Nichia – the number one packaged LED manufacturer by a long shot – saw some healthy growth (comparatively) in 2015 at around 7% if I state its revenues in Japanese yen. However, because the yen did so poorly against the dollar (at about 120 JPY: 1 USD), Nichia declined 6% in USD.

So what’s expected for 2016 and beyond? Come to Strategies in Light and find out! I will be presenting all of this as well as sharing my preliminary packaged LED market estimates and forecasts from our upcoming Worldwide LEDs and LEDs in Lighting reports at the Strategies in Light conference being held next week March 1-3 at the Santa Clara Convention Center. Check out the website for more details and to see what other great speakers and sessions we have lined up. If you’d like more information on the reports, feel free to email me at stephaniep@pennwell.com for sample pages.

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