An outlook about the line of LED lights in the first half of 201630-07-2016
Half of the year 2016 has gone quickly, with the LED lights industry entering a mature stage and stable growth rates, it is gradually slowing its fast pace.
In the previous 2 quarters of the year 2016, new terms came out among the tide of acquisitions and fierce price wars. The keywords cover five large niche lighting markets, four key markets, three competitive technologies, changes in two major products market positions, and one new technology term.
Five niche lighting markets
Automotive LED lights
Price wars in recent years caused profits to decline to much, and forced factories to look for more profitable markets. Influenced by auto makers carbon reduction policies, many producers were attracted to automotive LED lights sector, but its high technology entry requirement limited the number of successful auto LED light makers. It is projected that maturing technology would attract growing volume of manufacturers.
According to our latest research report, the global automotive market growth stopped in the second quarter of the year 2016, but the trend of replacing halogen bulbs with LED lights continued strongly. More mature and developed markets requested large volumes of LED lights, while emerging markets gradually became abundant. It is estimated in 2016, exterior automotive LED lights market value reached US $1.57 billion, and its Compound Annual Growth Rate (CAGR) reached 6% from 2016 to 2020.
Undoubtedly, UV LEDs made the highest profit during first half of 2016, and with a high gross margin it attracted a lot of international companies including Nichia, Seoul Semiconductor, Nikkiso and others to make their market strategies. Chinese domestic factories including EpiTop, Qingdao Jason, Lattice Power, and Honglitronic which recently changed its name to Honglizhihui, have also joined the industry of UV LED lights.
It is estimated the UV LED market value will reach US $356 million by 2020. UVA LED lights will mostly be used in curing market, including food packaging, adhesive curing, medical curing, and many other curing markets.
The year 2016 sees Chinese thirteenth 5-year plan, smart city was frequently mentioned in multiple municipal and province government proposals and reports. Several committee members also recommended the development of smart cities, placing it under the limelight. Smart lighting is one of building blocks of a smart city, and under the support of new policies, it will start a new round of developments. In 2014, global smart lighting market size reached about US $1.54 billion and is expected to grow exponentially to US $14.35 billion by the year 2019.
Especially during first half of 2016, Chinese telecommunication giant Huawei and ZTE also joined in smart lighting, which created new opportunities in the sector. Smart lighting, an entrance interface for smart homes, smart cities and IoT, also attracted investments from many large IT enterprises, which acceralted smart lighting volume on the market.
LED grow lights
Grow lights are not new in the industry, but it is an emerging niche market. Following entrance of big international enterprises Sharp and Osram into the field, Chinese factories are also following up. LED grow lights have created a new vogue in the year 2016, and even was approved by Chinese leader Xi Jinping.
Global LED grow light market value has grown exponentially since 2013 to reach US $100 million by 2014, and will reach US $500 million by 2017 based on market statistics.
As human-controlled lighting in plant growth factories matures, along with traditional agricultural technology advantages in the future, semiconductor lighting and automatic technology and network messaging technologies will all become important in global semiconductor industry developments.
Since 2016, VR, drones, and robot technology have developed rapidly. Changes in IR LED growth nowadays can be marked by smartphones IR LED demands for retina recognition and CCTV or surveillance systems, while VR, robots and drones see a very large market of future applications, and are regarded as the future growth market for IR LEDs.
A survey during first half of 2016 showed IR LED market penetration rose in VR, robots, and drones, moreover IR LED market demands rose to much in 2016. These new applications added on top of automotive, security, surveillance and consumer electronic applications.
Growing demands in these sectors led to increased IR LED market penetration in other markets, where Asia Pacific has become largest IR LED market around the world. It is projected the global IR LED market CAGR will reach 9% from 2015 to 2020.
Four market keywords
The list of companies on chinese over-the-counter market list has grown significantly, acquisitions no longer limited to the LED sector, but increasingly involves newcomers from different sectors. Examples include Ledman Optoelectronics acquisition of several sports enterprises, Changelight selling its LED business to focus on education industry, Changfang Lighting establishing an education fund, and Honglitronic rebranding as Honglizhihui to enter connected car sector.
Niche lighting market
The LED lights industry suffered with price wars, which made it difficult to make sure of reasonable profits. LED niche markets have become the new generation of less explored blue sea markets, such as auto led lights, UV LED, IR LED, smart lighting and grow lights.
The post LED lighting era is still mostly stuck in the idea of replacing traditional light sources, where the market outlook is dim. The post LED lighting era has presented possibilities for LED+ concept, such as combining the light source with VR, robots, design, connected cars, and even education.
Some of Nichia YAG patents will expire by 2017. Chinese factories that are in great need to export products have witnessed major global players up their game in patent disputes. For instance, Nichia and Everlight long patent disputes are going to end, Harvatek and Cree arrived to a settlement, and Enplas and Seoul Semiconductor patent lawsuits concluded.
Chinese LED lights factories need to solve patent issues if they want to export more of their products overseas. In the last two years, Chinese companies started acquisition campaigns to bridge the technological gap with international companies.
Three competing lighting technologies
Market rumors that iPhone will be fully changing to OLED displays by 2018 encouraged the OLED industry during first half of 2016. OLED has been treated as the next generation display technology, and its market share has rose among smartphone displays. According to market research organizations estimations, Chinese smartphone AMOLED panel market penetration rates will reach 30% by fourth quarter of 2016, much higher than the global average of 20%.
Yet, OLED have short lifetimes, and there are still many troubles formass production. However, injection of capital and more advanced technologies will allow it to replace certain LED applications.
Micro-LEDs are currently the most attacted LED technology for 2016, especially after price wars hit LED industry supplies. Once OLED panels are fully introduced into monitors, micro-LEDs will become an innovative technology. The emergence of micro-LED is regarded by the LED light industry as a chance to overturn LCD market conditions.
The types of lasers we talk about here are GaN based laser diodes combined with advanced phosphor powder technology to emit white light. Lasers are focused onto a tiny spot on the phosphor, which is turned into white light. The laser is able to emit a direct white light that is safe, accurate, and directional. Additionally, micro optical lenses and reflectors can optimize light control to achieve better lighting effects.
Compared to blue LEDs, lasers do not have lumen depreciation issue. Lasers are highly efficient light sources. Nobel Prize Laureate Shuji Nakamura projected lasers would eventually replace LED lights, and mentioned many times during talks in 2016 that lasers would be the future for lighting. He even claimed lasers would replace LED lights within 10 years.
One new LED chip term
FEMC is a new term presented by Refond Opto in 2016, when it was showing its new product category. It is a brand new terminology in the LED light industry, and comes from flip-chip +EMC concept, which means placing a flip chip LED package onto an EMC. The EMC is a type of flip chip product.
The technology of FEMC has also brought many flip-chip concepts, where there are many different types of flip chip models, which is not limited to Chip Scale Package (CSP) models. There are many different types of FEMC including FC and PCT package structures, although flip chip lead frames are not a revolutionary technology, whether it will spread in the industry requires longer test period.
Despite all the challenges in the LED light industry, the LED light industry made good performance during the first half of 2016, and it will keep strong growth in the second half of the year.