LED Lights Manufacturers rush to Benefit from Market Surge

 Looking forwarding and facing the surging demand, LED lights manufacturers will see a change in revenue and profit ratio. Mass production of public and commercial lighting as well as increased penetration rate for residential lighting has pushed the LED industry forward. The industry will continue to thrive throughout 2014 and anticipated to continue for the next two to three years.

The LED replacement age is dawning as people environmental awareness heightens and recognize the need to conserve energy and protect the environment, which drove LED product price drops and technology innovations.

Rapid revenue growth like this has only happended once before in the LED lights industry, which was in 2010. The difference however, is that growth in 2010 arose from the financial crisis of the time while it now comes from industry demand.

Osram’s LED business also grew in 2013. The companys LED business revenue reached EUR 1.53 billion (US $1.1 billion), MoM growth of 11.4 percent, making up for 29 percent of the company’s total revenue. Osram’s lighting business revenue was EUR 3.76 billion for 2013, MoM slid 6.7 percent. The companys target is to increase revenue proportion of their LED lights business up to 50 percent or more of total revenue before 2017.

Global LED stock prices have already seen an increase this year. Several companies listed in the A-stock had slow performance, due to underestimations of the impact of the soaring residential lighting market as LED lights industry recovered. Short-term recovery in the LED lights industry will provide a golden opportunity for manufacturers to reset their business strategies.

Midstream package manufacturers are able to directly benefit from industry growth. Starting this year till 2015 will be the LED package industry restructuring phase. During this period, many small to mid-sized companies will exit the market, stabilizing the industry. Many package manufactures showed good performance in the fourth quarter of 2013 that is anticipated to continue into 2014.

For downstream manufacturers, the LED ligthing field is most likely to become the largest field in the future. Globally, lighting manufacturers generally  control the right to speak in the LED lighting industry. A strong Chinese LED lights brand is yet to emerge. Most Chinese manufacturers who have traditional distribution channels are on the same starting point, but in the future companies that obtain strength in technology, product control, and management will gradually have advantage. Traditional distribution channels still have the greatest advantages, however, internet channels are playing an increasingly important role. This year downstream manufacturers are keen on whether LED lights manufactures will make large investments to their brands and put more investments into e-commerce. Traditional lamp manufacturers with brand and channel control in the energy efficient lights field  are likely to emerge as early victors in future competition.