Due to increasing demand for LED lighting in Japan along with appreciation of Japanese yen, Taiwanese LED manufacturers are expected to receive purchase orders from Japan. For instance, OEM manufacturers, such as Delta and Cal-Comp Electronics can immediately benefit from these Japanese orders. Ledtech, China Electric, Unity Opto, and Lite-On Technology are also potential beneficiaries to receive orders. Additionally, the upstream LED manufacturers, including Epistar, Genesis Photonics, and Everlight can also benefit from current market development.
Well-known convenience stores, 7-Eleven and Lawson made an announcement that they will spend 17 billion Japanese yen to replace all lighting facility with LED light bulbs in all stores within service areas of Tokyo Electric Power Company. After Japanese earthquake, Japan’s METI (Ministry of Economy, Trade and Industry) has released 15% energy conservation target starting July 2011 in response to power shortage in summer. Besides, the Japanese government has not only launched the policy, but also offered complimentary products such as coupons for free LED light bulbs to promote energy-saving awareness in service areas of Tokyo Electric Power Company, covering about 19 million families.
According to LEDinside, the penetration rate of LED light bulbs in the Japanese market has sufficiently risen after the quake. However, manufacturers are still afraid that the demand will not sustain, and hold a conservative attitude toward the long term demand. Whereas, implementation of LED light bulb exchange coupon has shown the government’s support for energy-saving policy, and strengthened LED manufacturers’ confidence. LEDinside estimates that LED light bulb sales volume in 2011 will increase by 71% to 24 million units, compared with that of last year. In addition, the penetration rate is expected to reach 25%, and the market size is forecasted to reach USD 480 million. Moreover, LED package volume is expected to reach 120 million units.
Japan’s METI is aggressively seeking sponsorship from Keidanren’s, whose member companies extensively spread across different industries. For example, Panasonic, Mitsubishi, Hitachi, and Toshiba are all involved in the LED lighting industry. It is estimated that about 2 million LED light bulb exchange coupons will be released in July, and the total value is well over USD 40 million. At that time, more and more people will be aware of LED lighting. As a result, both the LED lighting popularity and sales volume will increase.
Japan’s major manufacturers, such as Panasonic, Toshiba, Sharp, and Mitsubishi are the key suppliers of LED lighting. Most Japanese manufacturers are not located in the quake area, so the impact to LED supply chain is limited. However, with increasing demand for LED lighting and appreciation of Japanese yen, Taiwanese LED manufacturers are expected to receive purchase orders from Japan. Delta and Cal-Comp Electronics can directly benefit from these orders. Currently, Delta has received OEM/ODM orders from GE, Osram, and Hitachi, while Cal-Comp Electronics has also received OEM/ODM orders from GE, WestingHouse, and Toshiba. It is believed that the company will be the major beneficiaries.
In addition, Taiwanese LED manufacturers, including Ledtech, China Electric, Unity Opto, Lite-On, who have established their market share in Japan will also be potential beneficiaries. Epistar, Everlight, and Genesis Photonics (GPI) also have a chance to get the OEM/ODM orders. Ledtech has successfully introduced their LED light bars targeting the convenience stores. Moreover, Genesis Photonics has alliance with JFE Engineering to sell GPI-made lighting fixtures to Japanese companies, local governments, and institutes.
Notably, Japan’s energy-saving policy also affects attitude of countries that have power shortage. For instances, China is rescheduling the “China’s Ten Thousand LED Lights in Ten Cities program” and is about to launch the policy again. Additionally, both the country’s 12th Five-Year Plan and “the roadmap to the phase-out of incandescent light bulbs” support the LED industry. Germany has announced that they will abolish nuclear energy generators by 2022, it is believed that not only solar energy and other renewable energy are benefited, but also LED lighting usage is promoted. As a result, LED lighting market is expected to boom further.
Japan’s energy-saving policy brings a positive influence to Taiwanese LED manufacturers. However, Taiwanese manufacturers should especially keep an eye on China’s long term policy for the domestic LED industry development. Moreover, Korean manufacturers are also extensively involved in the lighting market, which poses threats to Taiwanese manufacturers’ global market share. In other words, not only do Taiwanese manufacturers need to strive to improve their own competitiveness, Taiwanese government’s support is also necessary for them to continue to lead the industry globally.