Global LED lighting market has witnessed a rapid growth over the recent past. Through technology development and energy efficiency policies such as ban of incandescent bulbs in major countries, the penetration of LED lighting has increased from 11 percent in 2014.
The growing concern among the population about the amount of heat emitted by traditional fluorescent lights has made people shift to more energy saving resources, thereby expanding the overall size of LED lighting market.
The market is currently at the growth stage and the growth is attributed to the high efficiency & longer life span of LEDs with rising government intervention & attractive incentives. The new changes in the governments regulations related to lighting standards in the country provide a positive outlook for the market in the long run. The new technological advancements and innovation in the product offerings are driving the market growth.
Global LED Lighting Market Segmentation
Type of LEDs
The market has presence of two type of LED lights Lamps and Luminaires. LED luminaires have been successful in driving the overall LED lighting market by increasing highest revenue share of 65.0 percent in 2020P. Major types of luminaires which are globally used are Troffers, Downlights and High Bay. Government programs aimed at retrofitting the public construction and commercial lightings has been a major contributor for the growth in the revenues from LED lamps. A-Lamps has contributed second largest share which has dominated the LED lamps segment in 2020P.
The increasing awareness about energy saving resources in the global world boosted the demand for indoor LED lights in the residential sector, making them contribute highest share to the global revenue in 2020P. However, the outdoor LED lighting segment is expected to grow at a high CAGR of 8.3 percent in the forecasted time period (2020P-2025F). Collaboration of prominent companies (The Capital Group & Philips) to replace all traditional lights with LED smart lightings by 2025 to drive growth for outdoor smart lighting.
Despite the higher initial cost of installation which is added to the expenses of the companies opting LED lights, this lighting technology is preferred by the commercial sector for its longer shelf life and energy saving benefits and have dominated the highest share during 2020P. Increased awareness among the customers regarding energy saving benefits of LED lights has been a major driver for the increased application of LED lighting system by the residential customers, thereby contributing highest share to the total revenue.
By Distribution Channels
Retail sales generally cater to the lighting requirements of the commercial, industrial and residential customers and dominate the market contributing highest revenue share during 2020P. However, they are now losing share to direct sales (project-based solutions) which have contributed remaining share in the same year. Upcoming events such as UAE Vision 2021, Qatar Fifa World Cup 2022 will be the major growth driver for project based sales.
Asia-Pacific dominated the market by contributing highest revenue share in 2020P. China plays a significant role in this region due to its large economic size & strong growth and contributed around highest share to the total revenues in 2020P. The Indian LED market has seen a tremendous growth @ CAGR 18.0 percent for the period 2014-2020 and is likely to become cost competitive vs. China on export of manufactured goods due to increasing and higher labor costs in China. Indonesia leads the LED lighting market share among Southeast Asian countries, while Vietnam witnesses the highest market growth. Heavy demand for new construction, rising usage in residential application along with declining LED prices will strengthen its position.
Encouraging government initiatives and rebate programs along with the emergence of smart light filling technology has increased the revenue share of North America to be the highest during 2020P. Rising trend of connected lighting controls for indoor and outdoor applications along with increasing consumer interest towards adopting highly efficient & environment friendly lighting solutions has been a major growth factor. Cost of lighting products is expected to transfer to consumers due to the impact of US-China Trade War and rising raw material price.
Europe contributed significant share of the revenue share with Germany capturing the highest market share in 2020P. Europe has been at the forefront of adopting new LED technologies and the region is expected to lead the intelligent lighting system and Li-Fi installations. Several manufacturers (OSRAM, Zumtobel) are setting up units in the Balkan countries, especially Serbia, to cater to the demand from Eastern European countries. Rising implementation of advanced lighting system across residential and commercial sector is expected to drive growth.
Latin America contributed smaller revenue share to the LED Lighting market in the global world. Growth in urban lighting along with residential, outdoor, and architectural applications in Brazil, Mexico and Argentina is expected to drive the market. Solid demand from housing and infrastructure developments in Chile, Peru, and Colombia is expected to lead to above-average growth.
Middle East and Africa (MEA) contributed remaining revenue share of LED Lighting market in the global world. Development of smart buildings and smart cities, especially in cities with higher index of connectivity, is fuelling LED growth. Huge investments (~$1,580 bn for the year 2019F-2023F) in public and private infrastructure are observed in UAE, Qatar and Saudi Arabia. Outdoor lighting systems are also used as a measure of attracting tourists towards popular sites in UAE such as Dubai Mall uses light and water show, Burj Khalfia organized light show. Moreover, global events scheduled in the GCC countries such as The 2020 Dubai World Expo and the 2022 Qatar World Cup along with rural electrification in Africa will drive the LED lighting market.
Competitive Landscape of Major Players Operating in Global LED Lighting Market
The LED Lighting market is highly fragmented and competitive market with leading 10 players capturing less than ~ percent of the market share in 2019. Major players present in the market are Signify, OSRAM, GE Lightings, Acuity Brands, Cooper Industries (Eaton), Zumtobel Group, Seoul Semiconductor, Everlight Electronics, Cree, Dialight PLC and others. New product developments, improvements in the existing product line, and mergers and acquisitions are some of the strategies adopted by the key players to maintain their market share. Frequent introduction of new LED products, rapid changes in technology, changing customer requirements, short product life cycles and prices of similar technology by various companies are common platforms on which the competition prevails in the overall lighting market.
Global LED Lighting Market Future Outlook & Projections
The global LED Lighting market is expected to experience medium level of growth owing to growth in construction industry, increase in urban population, financial support from regulatory authorities and rise in smart city projects and infrastructure development in major global economies (US & UK) developing economies (India & China).
Emerging economies in Asia Pacific and Africa are adopting solar LEDs to provide electricity in remote places, which is expected to pose lucrative growth opportunity for market players over the forecast period. However, unwillingness of small and mid-sized enterprises to replace existing lighting solutions with LED lamps is expected to restrain growth of the global LED Lighting market during the forecast period.