The Lighting Market: Big Growth, Big Challenges

Kevin Parmenter, Director, Applications Engineering. TSC, America



Kevin Parmenter, Director, Applications Engineering. TSC, America

­Recently, I visited a big box store looking for a replacement incandescent bulb for a candlewax warmer, but it was almost impossible to find one. Basically, the lighting market is the LED market, and it’s growing fast. According to fortune business insights the global lighting market size was $118.33 billion in 2019 and is projected to reach $163.72 billion by 2027, exhibiting a CAGR of 4.3% during forecast period.

LED technologies offer significant benefits to lighting applications. The reduction in power consumption with the addition of power factor correction leads to rapid payback periods when replacing older lighting systems. And LEDs continue to climb in higher-power applications once dominated by other types of lighting systems. Their advantages over incandescent bulbs include control of color temperatures and, in many cases, choices of lighting colors overall and control synchronization with Google, Alexia and other home automation applications using intelligent control.

But although the benefits of lighting technologies are many and the market size is huge, it’s also extremely competitive. The lower end is an indigenous Chinese marketplace with a race to the bottom in ASPs with razor-thin margins. Customers expect lengthy product warranties that rapidly went from 2-3 year to 10-year lifetimes.

Additionally, volume demands can be detrimental to a company’s business. The penalties for missing the market on new features and functionality translate to a warehouse full of out-of-date products that no longer meet market needs.

It's not surprising, therefore, that some of the biggest brand names in lighting have sold off their lighting divisions because they no longer meet financial  margin goals and objectives. Likewise, companies well known in the power electronics industry have also had enough and spun out of the lighting business to holding companies or such.

The remaining lighting market segments range from LED flashlights and AC offline replacement bulbs and fixtures to automotive lighting electronics and high-bay and street lighting. All of these applications need to be hardened from transient and surges – which prior lighting technologies were immune to. When replacing incandescent with LED lighting, the requirements for EMI-RFI and EMC compliance are just as high. And since LED power systems switch at high frequencies and produce more EMI, they will be more susceptible to it as well.

Today’s lighting products, like dimmable fixtures and lighting controls, are being asked to do more, last longer, and cost less. Those in the lighting business, or supplying to it, must survive in a hyper-competitive market by differentiating themselves. To do well – or at least remain unscathed – you must find a competitive niche. If not, you might find yourself spun off or in a different business. Lighting is not for the weak or slow.