27 May 2016

LED market to grow at CAGR of nearly 17% until 2020

The global LED market is expected to rise at a compound annual growth rate (CAGR) of nearly 17% until 2020, according to the report 'Global LED Market 2016-2020' from Technavio. The report covers four application segments - general lighting, backlighting, automotive lighting, and others – which in 2015 comprised 40.25%, 29.01%, 12.99%, and 17.75% of total revenue, respectively.

"China supports the largest LED industry in the world and accounts for close to 30% of the world production, thanks to tax benefits and subsidies provided by the government to its manufacturers," says Asif Gani, one of Technavio's lead analyst for semiconductor equipment research. "The government of India has launched similar projects for promoting energy conservation, and it is likely to draw massive investments into the sector during the forecast period," he adds.

LEDs in general lighting: largest market

The LED market in the general lighting segment amounted to $5.76bn in 2015. The residential market is the largest contributor to revenue. Applications of LED lights for residential purposes include lighting in bathrooms, dining rooms, hallways, and kitchens. LED lights have emerged as the best replacement option for fluorescent lights, and are available in different styles, helping to reduce energy usage.

In the USA, domestic users enjoy federal tax credits (residential energy-efficiency tax credits) for improving the energy efficiency of their homes. Similar incentives formulated by governments across the world will likely boost market growth until 2020.

LEDs in backlighting: second-largest market

The LED market in the backlighting segment amounted to $4.15bn in 2015. The market is witnessing the growing adoption of organic light-emitting diode (OLED) technology in applications such as smartphones and televisions. OLEDs provide high-quality picture content as well as an overall thin frame. Most LED companies are facing challenges in the market due to price wars and the oversupply of LED chips from the Chinese market, which has made companies shift from traditional LEDs to OLEDs.

For example, prominent vendors like Samsung have drawn their focus away from the LED TV market. Similarly, Osram and Lite-On have found growth opportunities in the infrared (IR) LED market. Osram's third major business segment is IR components, and this is helping the firm to develop comprehensive in-house products such as IR LED and IR laser technology.

LEDs in automotive lighting

The LED market in the automotive lighting segment amounted to $1.86bn in 2015. Although LED certification for automotive use takes a long time and the entry barrier for the supply chain is high, the profits are attractive, notes Technavio. This will likely draw many companies into this segment. Daytime running lights (DRLs) and high/low-beam headlights are the two major applications in automotive lighting, which are expected to yield high growth during the forecast period. As consumers prefer automotive headlights for their aesthetic appeal and small size, the demand for LEDs is expected to surge. As the prices of LED lights see a further decline, the adoption of automotive LED lighting systems will gradually shift from premium- to medium-priced car models in the future, concludes Technavio.

Tags: LEDs Lighting market

Visit: www.technavio.com/report/global-semiconductor-equipment-led-market