9 August 2012

Focus of LED lighting market shifting to Asia during European debt crisis

Major lighting markets around the world have been affected by the European debt crisis to varying degrees, according to LEDinside (the LED research division of TrendForce). Certain Chinese LED firms whose business relies heavily on overseas markets have seen a decline in orders, which is particularly pronounced in the European lighting market. As a result, many LED firms are starting to shift their focus to the Chinese LED bidding market, says the market research firm. In fact, in July China restarted the bidding process for LED subsidies, providing hope for many LED firms.

Regarding the outlook for second-half 2012, with the stagnant global economy dampening the end market and many large-scale lighting projects coming to a halt, most export companies have turned to on-going mid-scale and small-scale lighting projects and the commercial lighting market. On the other hand, large-scale LED lighting market demand will depend on the bidding project market in China in second-half 2012, says the report.

According to LEDinside, orders for LED lighting firms with primarily European clients fell by more than 20% sequentially in third-quarter 2012. European orders saw the most prominent downturn during May-July. Given the murky outlook for second-half 2012, European distributors have reduced their orders placed in the Asian market. Moreover, due to the payment delay, large-scale lighting projects in Europe have come to a halt. Looking towards second-half 2012, the mid-scale and small-scale lighting projects are expected to continue as scheduled, but pricing competition is going to be fierce.

Aside from the European LED market, LED lighting demand in the US market (especially for LED light bulbs and light tubes) has been picking up on a monthly basis in 2012 due to the increase in new housing projects, according to LEDinside’s report. The second half of the year is usually the peak season for the residential lighting market, and so far the US market has been performing better than the European market, despite the still uncertain global market outlook.

Due to the slump in the European and US markets, global lighting giants such as Philips and Osram have started to place more emphasis on the Asian market. For example, benefiting from the summer energy-saving policy, people in Japan are more willing to buy LED light bulbs, contributing to a strong surge in LED demand in the Japanese market for Q3/2012.

Furthermore, the LED lighting project market in China will be the target of most LED companies. In early 2012, due to drastic differences in product quality between the winning bidders, the bidding process for the 2012 Solid-State Lighting Product Subsidy was restarted in July for the 2012/2013 period, with outdoor lighting products such as LED street lamps, LED tunnel lights and indoor lighting products such as LED down-lights, and self-ballasted LED reflector lamps included in the subsidy scheme. The Chinese government has established new standards for the bidding process in order to increase the product quality of the winning bidders.

Although China’s LED subsidy bidding process in first-half 2012 did not go as smoothly as planned, causing many projects to be placed on hold, the new standards added to the new bidding process will help to raise product quality and establish the threshold for companies planning to bid, says the report. Even though the amount of subsidy has not yet been announced, support from the government will undoubtedly aid the development of the LED industry, reckons the report. Commercial, industrial and household lighting markets will gradually take off as the governments start to increase related subsidies and as market acceptance begin to grow, it concludes.

Tags: LED market

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