According to the latest LEDinside Gold Member Report from TrendForce, the global lighting LED package market value is expected to continue to decline due to the global economic recession and the decrease in the unit price of the lighting LED package products. The market value will reach US$6.3 billion in 2023. The CAGR stands at -3% throughout the forecast period, 2018-2023.
“Due to the large-scale popularization of MOCVD equipment made in China and the subsidies from local governments in China, the new capacity continues to be invested in LED chips in China, turning the prices of LED chips into a vicious competition. The LED lighting chip market, in particular, is almost impossible to make a profit for the manufacturers.” says Terri Wang, TrendForce Analyst.
Additionally, regarding the macro-economic environment, the negotiations of the US-China trade war is not going as smoothly as expected, with the 25% tariff becoming a fait accompli. LED bulbs are also on the tariff list, which may cause a decline in the volume of Chinese lighting products exported to the US. The most affected parties are lighting exporters and OEMs of some multinational lighting companies that rely on the US market. Although some orders have been shifted to Southeast Asia such as Vietnam and Thailand, their industry chain is not complete, and the overall production costs are higher than in China. Hence, it is difficult for them to integrate the production capacity from China into its local industrial chain in the short-term. Thus, the increase of luminaire and lighting product importing costs in the US market has led to a decline in market demand growth. Because the US market is the world’s biggest demand market for lighting products, the overall strength for lighting industry growth has been affected directly.
Packaging manufacturers strive to reduce costs as high-voltage LED solutions is popularized
The average price of lighting LED package products keeps on falling in the Q3 of 2019 while suffering the onslaught of the stagnation of the upstream market and a lackluster demand of the end products. The extent of the decline is about 1%-6%. The mid-power 2835 product prices dropped by 6% and 5% for 0.2W and 0.5W products, respectively, which shows a more visible decline.
TrendForce has also observed that the manufacturer brands of lighting products continue to streamline costs, which makes the package manufacturers’ need to reduce the cost of the materials even more pressing. As a result, high-voltage LED solutions that reduce drive power costs are increasingly accessible. Their applications are also expanding. Nowadays the high-voltage LED solution mainly adopts 9V (100mA) ~ 18V (50mA) to reduce the cost of the capacitor components in the power supply by reducing the current. Meanwhile, the rise of this technical solution has replaced the market position of the original medium and low power LEDs. It is expected that the LED usage volume in lighting products will be reduced.