Supply chain
Commentary: High-end LED lighting in demand
Siu Han, Taipei; Jackie Chang, DIGITIMES

Apart from gradually replacing traditional lighting, LED lighting is targeting the high-end market with more value-added products. In addition, commercialization of OLED lighting has also started.

LED lighting prices were four times as expensive as energy-saving light bulbs in 2011 but by the end of 2012, the difference had narrowed to 30%. Therefore, in order to avoid price competition, international firms have been introducing LED lighting products with features such as adjustable brightness and omni-directional.

According to Philips, the lighting revolution involves three stages. The first sees traditional lights replaced by ones with longer lifespan and energy-saving features. The second stage is to introduce integrated LED lighting fixtures instead of adapting LEDs to traditional fixtures. The third stage is to develop new applications, such as ones incroporated into architectural and city designs. Philips believes the current market is at the beginning of the third stage. The aim is to develop new functions to drive growth for the lighting market.

Smart lighting

Philips has received the L-Prize award from the US Department of Energy (DOE) for its Queen Star series of LED light bulbs with brightness angle reaching 300 degrees. The product has been introduced to the Taiwan market with retail prices above NT$1,000/unit (US$33.51/unit), which is a few times higher than prices of other LED light bulbs in the market. The firm is also eyeing the smart home market, and has introduced Hue series LED light bulbs that can be operated through mobile devices. A package of bulbs carries a retail price of US$199. Users can download to their mobile devices the specific app for controling the bulbs' brightness and colors. Users can also pre-set lighting schedules. Despite the relatively high price, demand has been strong.

Philips predicts in the next eight years, prices of LED lighting will fall more than 80% and penetration rate will increase to 64%. With the market expanding, Philips believes LED lighting with digitalized control will stimulate another wave of demand growth.

Japan goes high-end

Japan has been the fastest growing LED lighting market. It accounted for 40% of the global market in 2012, and the proportion is expected to remain the same in 2013. But starting from 2014, LED lighting growth in Japan will slow down with penetration rate reaching 59%. Although the importance of Japan in the global LED lighting market may be diminishing, Japan-based firms have been eager to achieve product differentiation by adding values.

Toshiba's business strategy centers on combining LED lighting with smart features, while Panasonic focuses on value-added LED lighting. Panasonic has been working to minimize the size and weight of lighting products while aiming for high-power and omni-directional angles. Emphasis has also been given to color-temperature adjustments that allow users to change the lighting according to the different times of the day.

Both firms plan to introduce specific products for certain areas in a residential home.

OLED lighting on the rise

The OLED technology has been gaining popularity due to the rise of smartphone displays. In addition, commercial OLED lighting has begun to enter volume production. In some recent lighting shows, many firms showcased OLED lighting applications that emphasized featurs such as lightweight, high color-rendering, and design flexibility. The OLED lighting market is expected to take off in 2015.

Panasonic Idemitsu OLED Lighting (PIOL), a joint venture of Panasonic and Idemitsu, began volume production of OLED lighting panels in October 2012. According to PIOL, the special feature of OLED lighting is that the color-rendering index (CRI) is higher than 90 with thickness of 2.11mm and weight of 38 grams. The brightness efficiency of the product is only 30lm/W and the lifespan is 10,000 hours. However, PIOL plans to introduce improved products in 2015 and 2018 with brightness reaching 130lm/W and lifespan of 40,000 hours.

Lumiotec, a joint venture of Mitsuibishi, Rohm, Toppan Printing and Mitsui, has been expanding capacity. In July 2010, the annual production volume of OLED lighting panels was 40,000 units. The firm currently has a capacity to produce 200,000 units (145mmx145mm) a year. Prices range from JPY13,000-30,000/unit depending on sizes and color temperatures. The firm predicts by 2017, prices may fall to JPY3,000-5,000/unit.

According to studies done by Konica Minolta, by 2015, the global LED lighting output value will reach JPY1.4 trillion and OLED lighting output value will reach JPY100 billion. After 2015, OLED lighting will take off and by 2020 when the global LED lighting market output value reaches JPY1.9 trillion, OLED lighting will reach JPY900 billion.

In 2012, the brightness efficiency of OLED lighting was less than 50lm/W but by 2015 it is expected to reach 120lm/W, close to the brightness efficiency of 140lm/W of LED lighting. The brightness efficiency of the two products is expected to be the same by 2020. Konica Minolta estimates that by 2015, the price-performance ratio of OLED lighting may reach US$30/1,000 lumens, comparable to the price-performance ratio of US$20/1,000 lumens for LED lighting. By 2020, according to the same study, the price-performance ratio of the two products will both be US$15/1,000 lumens.

While Taiwan-based firms emphasize on expanding capacity and improving technologies, Europe-, US-, and Japan-based firms have been shifting focus to added-values and product differentiation for LED lighting products.

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