News: Markets
23 November 2020
Horticultural LED revenue to grow nearly 40% in 2020
Due to the gradual legalization of marijuana cultivation and the pandemic-induced surge of recreational and medical marijuana markets in North America, horticultural LED has become one of the fastest-growing lighting markets in 2020, according to market research firm TrendForce. Moreover, as the COVID-19 pandemic’s impact on the food supply chain starts to surface, capital expenditure (CapEx) for indoor agricultural infrastructure has once again shown upward momentum due to the rising demand for equipment replacement and procurement, resulting in rapid growth in enterprise orders for horticultural LEDs. Global horticultural LED revenue is expected to rise 39.7% year-on-year to $158m in 2020.
While cost and the useful life of equipment remain two major challenges for manufacturers, indoor agriculture will become the primary driver of horticultural LEDs in the future, forecasts TrendForce.
There are two pressing issues that need to be addressed in the indoor agricultural industry: increasing crop yield and decreasing lighting equipment cost. At the same time, partnership between companies in the LED supply chain is required in order to continually refresh horticultural LED solutions and subsequently satisfy market demand.
At the moment, major horticultural LED brands include Signify, Fluence by Osram, GE Current, Illumitex, Heliospectra and Sananbio, with equipment efficiency and reliability being the primary technological determinants of brand adoption. For non-traditional agriculture, the cost of repairing LED lighting equipment represents a relatively expensive part within the overall long-term operating cost. That is why lighting equipment manufacturers need to also take into account the useful life of lighting equipment. In addition, the optoelectronic conversion efficiency of LEDs, especially red-light LEDs, is yet another important key to reducing the manufacturing cost of lighting equipment. Existing mainstream solutions in the market consist of medium- and high-power LEDs, while better solutions for reducing manufacturing costs may emerge in the market going forward.
The photosynthetic photon efficiency (PPE, measured in µmol/J) of horticultural LED, in conjunction with the specific light spectrum required for plant growth, represents an important determinant of agricultural production capacity. Major suppliers of horticultural LED components include Osram, Samsung LED, Cree, Seoul Semiconductor, Lumileds, Nichia and Everlight, and each of these holds a differentiating competitive advantage in terms of product offerings. In particular, Osram and Samsung LED hold leadership positions over their competitors in this industry, it is reckoned.
Looking ahead, given the requirement of ensuring food safety, the rise of urban indoor agriculture and investments in plant factories will shorten the food supply chain, says TrendForce. Furthermore, the existing landscape of non-traditional agricultural projects shows that there is a significant year-on-year increase in CapEx for emerging agricultural technologies in Europe, the USA and Japan this year, meaning that the capital markets are highly interested in these technologies. As such, since lighting equipment is an indispensable part of plant factories, most LED suppliers are likely to see double-digit year-on-year growth in their horticultural LED revenue, in turn bringing about a second wave of growth in the market.
