The LED industry main logic is driven by general lighting. Compared to previous waves driven by LED backlight and commercial lighting, general lighting is a market with a real value of more than RMB 100 billion (US$ 16.81 billion). It is estimated by 2014 the global civilian lighting market will reach more than RMB 100 billion for the first time, and reach RMB 160 billion in 2015. Within the next two years, CAGR will reach 60 percent taking the LED industry to its new hot spot.

The LED lighting product prices have reached a sweet spot. Overseas incandescent bulb bans have been the major catalyst behind general LED lighting industry. China’s LED lighting product export soared, and in 2H13 had increased more than 40 percent compared to the same period in 2012. The two large North American markets Canada and U.S. began 60W incandescent bulb ban in Jan. 2014, and their lighting consumption accounts for about 25 percent globally. Due to earlier stock up by distribution channels, the North American export market has soared. These are the main reasons as to why the LED industry in 2H13 performed pretty well during conventionally low season. The Taiwanese market is also a budding market, with lighting company performances evidently better than backlight and upstream chip manufacturers.

In the Taiwanese market, lighting and major related company performances were much better than backlight and upstream chip manufacturers. Everlight 2H13 monthly revenue on average were maintained at more than 50 percent compared to the same period in 2012. Unity Opto 4Q13 LED bulb shipments reached 1H13 levels, and annual shipments surpassed 5 million bulbs. The company outlook in 2014 indicates the company’s 1Q13 LED bulb production capacity will be doubled, with 2015 shipment volume likely to reach 10 million bulbs. Unity Opto LED bulbs have entered Costco, Home Depot, Walmart, Target and other major distribution channels. The company’s 40W and 60W equiv. LED bulb prices have respectively lowered to US$ 4.5 and US$ 8, which is only 1.3 times the price for same type CFL products. In terms of market performance, Everlight has seen growth soar up by 100 percent. Para Light Electronics Co. and Tons Lighteology have also seen revenue double since November. Unity Opto growth has also been above 50 percent.

The current oversea market drives will help increase the industry’s concentration. In Aug. 2013, the EU released a new energy efficiency standard for LED lighting products, which has raised the entry bar significantly. Since the standard was published, in general small to mid-sized luminaire manufacturers based in the Zhongshan area in China have been struggling. The industry’s trend of increasing concentration has been well established. In the LED lighting era, domestic brands will have a chance to compete with international brands to establish its competitiveness.

The industry will continue to maintain high sales and production, since the Chinese Lunar New Year has occurred much earlier in 2014, and companies stock up before the holidays plus oversea clients concentrated orders. After Chinese Lunar New Year inventory consumption, a new wave of stock up will start in March.

Surrounding strong European and U.S. general lighting market demands, investors could closely observe industry leaders growth and flexibility. The first is focused on brands and manufacturers in the European and U.S. market that have met related standards and received certification, such as NVC Lighting and Yankon Lighting. The second is paying attention to companies with strong downstream applications and good vertical integration, such as Electech International (ETI). Third, is to focus on electronic manufacturers gradual transition into consumer products, such as Xiaomi’s searching entry into LED industry and Changfang Semiconductor Light.
 

Translator: Judy Lin, Editor, LEDinside