Many LED industry experts have been worried that LEDs long lifetimes of more than two decades would result in longer replacement cycles that could become obstacles to company business models. Pessimistic manufacturers even forecast LED orders could eventually ease as time moves on. Ellis Yan, the CEO of U.S. manufacturer TCP Lighting (TCP), however, shared a very different outlook during a recent interview with LEDinside in Taipei, Taiwan.

“Some people in the LED industry are really over worrying,” said Yan. “The lighting market will continue to expand as traditional light sources are being replaced with LEDs…It will take at least another 10 years before LED market penetration reaches 50%.”

LEDs are basically replacement light sources, and at current stage LEDs have only tapped into the tip of the lighting market iceberg, explained Yan. He estimated LED market penetration rate in the U.S. is 5% to 8% for the residential lighting sector at the moment, indicating there is still a massively untapped market potential for LEDs as replacement light sources. Based on Yan’s estimations, it will take at least 20 years for LED market penetration to reach 100%, and by then most of the LEDs installed now would have reached the end of their product lifetimes, thus creating another replacement tide.

In addition, demands for existing lighting products or light sources will continue to grow during this time period. Hence, lighting market demands will continue to increase throughout the years. TCP for instance has seen LED demands skyrocket from 2013 to 2014. According to Yan, the company’s LED revenue growth was up 80% in 2014 compared to 2013. In its latest financial report, the company reported LED net sales for 3Q14 reached US $122.9 million, up 107% from 3Q13. Yan forecasted the company’s LED revenue growth to continue throughout 2015, but declined to give exact figures.
 

TCP Lighting CEO Ellis Yan. (LEDinside)

TCP retail and product strategies

Part of TCP’s success in the retail market last year can be attributed to its successful partnerships with Walmart in China, said Yan. In terms of its commercial distribution strategies in U.S., TCP has been on par with big lighting players including Cree and Philips. The company has been competing with international players by utilizing a vertical integration manufacturing strategy, and using in-house design and assembly to control costs. It has a large manufacturing base in Guangdong, China. “We buy LED chips, drivers, and resistors, but assemble the products in-house,” said Yan. The company even has plans of setting up a manufacturing plant in U.S. by March this year.

The company has been focused on the general lighting market, and has a comprehensive product portfolio of nearly 1,000 LED luminaire products, and most number of ENERGY STAR certified products. TCP Lighting’s next step is to launch LED products that are capable of color shifting similar to traditional incandescent and luminaires. The new lights will have a human centric touch, as it will be able to emit cool white colors during the day, and warm white light during the night. The LED luminaire in development will have a warm white color temperature of 2,000K to 3,000K, while 3,000K to 5,000K for cool white.

TCP also manufacturers customized UV LEDs, but only in small volumes. Some of the company’s 150nm UV LEDs have been applied in Japan’s grow light market. “This will remain a niche market, though,” said Yan.

Smart lighting has another mile to go before consumers pick up

TCP Lighting has a very comprehensive product portfolio in the U.S. having signed several partnership agreements with Belkin, WeMo and other smart home or lighting providers. The company has sealed a strategic partnership on Nov. 5, 2015 with Belkin and incorporating Wink technology in its LED bulbs. “We are in a leading position in the smart lighting sector, and have the most comprehensive product portfolio in the U.S., which is why many companies are seeking partnerships with us,” said Yan. The company positions itself as a smart LED luminaire provider, and not as a smart lighting system supplier.

The smart lighting sector is still one with many challenges. “Globally, consumers have not really entered the smart lighting industry, they still do not really understand how smart lighting can improve their lives,” observed Yan. In short, further education on the benefits of smart lighting products will be required to bridge the gap between products and consumers.

Lack of standard communication protocols and compatibility between wireless smart lights also continues to be an issue for manufacturers. On the one hand there is Zigbee, which is supported by large lighting manufacturers such as Philips, but new smart home and Internet of Things (IOT) players such as Google are promoting 6LoWPAN technology that will be compatible with Android operated smartphone systems. It will really depend on how Google, Apple and other smart home or IOT players plan to develop smart lighting communication protocols, said Yan. Either way, this will have little impact on TCP Lighting, since the company customizes the smart lighting operation platform and protocol in accordance to client demands.

LED industry doomsayers might be concerned that the LED market will shrivel up due to products long life times, or forecast smart lighting will never see the light of the day. Yet, there will always be upbeat LED manufacturers that are vying for every possible business opportunity in the replacement lighting or smart lighting industry. These manufacturers will continue to give their best shot at adjusting to the changing tides.

(Author: Judy Lin, Chief Editor, LEDinside)