LED Lighting Markets

Kevin Parmenter, Director, Applications Engineering. TSC, America



Lighting has been a commodity market since incandescent light was invented. The Phoebus cartel, formed in 1925 by Osram, GE, Associated Electrical, Philips, and others, controlled the worldwide sale and manufacturing of lamps until it disbanded in 1939 when WWII started. The cartel also set the lifespan of incandescent bulbs at 1,000 hours – and fined manufacturers who made longer-life products.

For over a century, the largest segment of the lighting market has been consumer electronics. So, when the LED lighting came along, many in the electronics industry thought consumers would pay more for the better performance, efficiency, and features that LEDs offered. However, today most lighting manufacturers with products in big box stores have to continuously lower their prices to compete. Product makers have moved from component suppliers with familiar names to indigenous China suppliers and manufacturing. The need for competitive pricing, and longer warranties, have caused large-brand, household-name lighting companies to tap out and spin off, or to sell their lighting divisions to holding companies or other organizations.

That being said, not all lighting markets are a race to the bottom. The attention on hygiene caused by the pandemic, for instance, has created an interested high-brightness UV sanitizing technology. Higher power is also valued in streetlights, high bay lighting and parking lot lighting where LEDs are replacing 10K lumen fixtures and older technologies like mercury vapor, high-pressure sodium, and so forth. In these outdoor high-brightness applications the benefits are manifold: better power factor, higher efficiency, less heat, and better light and color. 

Actually, The LED lighting benefits in a wide range of applications are astounding. Consumer products with innovative control features, such as Wi-Fi, Bluetooth and IR links, are driving demand for controlled timing, color dimming and color temperature. Additionally, the automotive market is growing, and there is almost no other lighting, for new designs in transportation other than LED lighting. The requirements are such that the parts used will have to meet AEC-Q and be able to be PPAP capable.

Still, even LED technologies that take PhDs years to create are sold like commodities and are obsoleted quickly. This market can be brutal and fast moving. Margins are razor-thin, and the obstacles are many, not only from price pressures, but also from downward pricing curves, reliability information, design support, and aggressive new product roadmaps and execution.

One of my sayings is the way to wind up with a small fortune in the LED lighting business is to start with a large fortune – and to leave early. You have to approach the market properly to succeed. As an end-user it is almost like Moore’s Law. But in this analogy, the exponential growth is performance vs. time at lower prices. If you have what it takes the LED market is massive and opportunities abound. It can be a high-growth market. But if you are not prepared you could be the next spin-off business unit consolidation.