Osram reports that it will shut down its production site in Tangerang, Indonesia, by the end of December 2013 at the latest. In Tangerang, Osram manufactures traditional products, mainly incandescent lamps, with some 1,100 employees. The move is part of the company’s reorganization program initiated in 2012 and targets cumulative gross savings of about 1 billion euros by 2015.

The products manufactured in Tangerang are sold both in Asia and worldwide. However regulations and technological change in the lighting industry are leading to the incandescent lamp disappearing from the market in more and more regions around the globe. Tangerang recently recorded declining production volumes, while costs were rising. A turnaround is not in sight as demand for traditional lighting products is expected to decrease further.

In contrast, demand for semiconductor-based lighting sources, especially for LED lighting, is rising. Osram estimates that LED penetration of the lighting market will accelerate in the coming years. In 2011 it accounted for 9 percent of the general lighting market, by far the biggest lighting segment globally. This share is expected to increase to nearly 70 percent by 2020 according to a study by McKinsey.

Osram reports that it is building up capacities for producing LED lighting including an investment over 100 million euros in a new LED assembly plant in the Chinese city of Wuxi. Osram says it sees Asia as the most important key market of the future, especially for LED development in the region.