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LEDs Taking Big Share of Lighting Market

By Jack Keough

Sales of LEDs are now making up a larger percentage of many electrical manufacturers’ total lighting sales and a new Department of Energy report says that adoption of LED lighting is happening far faster than many had expected.

Significant progress has been made in SSL and it is now apparent that LED technology has merely begun to achieve its full market and energy savings potential. The study titled: Solid State Lighting: Early Lessons Learned on the Way to Market, noted replacement of lamps are just one important segment for LEDs.

“Larger potential market impacts are evident, for example, in outdoor area and roadway lighting where LED replaces high-intensity discharge sources and commercial interior and where LED replaces a number of sources including pin-based CFLs and, increasingly, linear fluorescent sources,” the report said.

The growth of LEDs is truly remarkable, especially in such a short time relative to its introduction.

In a newly-released study, Strategies Unlimited,  (www.strategies-u.com) a market intelligence/research firm says that LED revenues hit $14.4 billion in 2013 with the projection for growth to $25.9B in 2018. Ten companies were responsible for 68 percent of those sales. In addition, the company says there was moderate growth in the 7% range from 2012 to 2013 but the forward projection calls for double-digit growth over the next five years driven by LED-based general lighting. The results of the research study were reported in LEDs magazine.

Packaged LED revenue hit $13.7 billion in 2012, while solid-state lighting (SSL) revenue for lamps and luminaires combined reach $11.8 B. Both markets will continue to grow through 2017 although LED revenue growth will be moderated by falling component prices even as more LEDs are manufactured.

Electrical manufacturers agree on the projections for LED sales.

Philips, for example, in releasing its latest earnings statement, says LEDs showed a year on year quarterly growth of 48 percent.

LED sales now represent 34 percent of the company’s total lighting sales compared to 25 percent in the comparable quarter in 2012. The company noted China, Brazil, Taiwan and Indonesia showed double digit increases while sales in Western Europe were up 5 percent but were basically flat in the U.S. Company officials point out that that energy efficiency is high on the agenda in Europe while U.S. sales were impacted by slowness in the construction markets. However, Philips has been helped by growth on the retail side of the lighting business.

Philips recently won a ten-year performance contract to deliver monitoring service and an integrated lighting system with 13,000 connected LED fixtures and adoptive management controls for parking garages in Washington, D.C.

Eaton is also reporting lighting growth due in part to LEDs.

Alexander M. “Sandy” Cutler, Eaton’s CEO, recently told financial analysts in an earnings conference call, that his company is investing heavily in LEDs.

“That segment of our business now contributes 37 percent of our total lighting revenue,” he said.

Cree, one of the larger manufacturers of LED products, is putting a number of innovative lighting solutions into the marketplace.

Sales of Cree’s lighting products, which include LED bulbs and LED fixtures, were up 42% year over year and 17% quarter over quarter due to increased use of LEDs.

Sales of Cree’s LED bulbs to consumers doubled in the second quarter compared to the first quarter. In its latest fiscal quarter, the company further expanded its LED lighting product offerings with introduction of the new 75W Replacement LED bulb, which looks and lights like a traditional incandescent bulb but uses 82% less energy and is designed to last 25 times longer. Since breaking the $10 price barrier for LED bulbs in March last year, the company has been busy expanding its product portfolio.

Although light bulbs are important to LED expansion, LED lighting for garages, driveways, school and colleges have become strong growth areas.

Hubbell Lighting for example, has just introduced an LED lighting system for sports arenas called Sportsliter Solutions ArenaLED.

Designed specifically for interior sports and civic arenas, the ArenaLED produces optimal television and live audience viewing, as well as low-glare light for player comfort. The individually engineered LED optics of the ArenaLED provide the highest level of uniformity and distribution to playing surfaces and minimizes wasted angles of light typically emitted by traditional sources.

Some industry observers are predicting that there could be a shakeout among LED manufacturers or possibly new partnerships.

As just one example, Bloomberg News (www.bloomberg.com) is reporting that Toshiba Corp. plans to sign at least three partnerships in the next 12 months to manufacture lighting fixtures in Europe as it seeks to become the region’s third-biggest supplier of light-emitting diodes.

The fixtures are keys for expansion as clients increasingly demand complete systems to integrate LEDs into homes, offices and factories, according to Francis Seguineau, head of Toshiba’s European lighting operations.

“It’s not with LED lamps that we will continue to grow, it’s by moving to the fixtures business,” he said. “In 2013, 20 percent of our revenue came from the fixtures business and for 2014, we target 40 percent,” he said, according to the Bloomberg report.

Meanwhile, 3M recently invested in MSi Lighting of Boca Raton, Florida, a company that 3M has been working with for the past year on a line of LED lights for multiple applications. Terms of the transaction were not disclosed.

“3M’s Light Management platform enables the company to manipulate light in different ways, and we are committed to developing high-quality LED lights,” said Gabi Sabongi, Vice President, 3M Corporate Ventures.

And in the past five months, Revolution Lighting Technologies has made three strategic acquisitions expanding its LED reach. A few weeks ago, Revolution purchased Value Lighting, which serves the multi-family marketplace, as well as hotels, assisted living facilities, student housing, military barracks and commercial facilities.

That acquisition complements its November purchase of Tri-State LED of Greenwich, Conn., a distributor of LED lighting solutions with a significant client base that includes municipalities, major school systems, hospitals, convention centers and real estate developers.

A month earlier, Revolution Lighting acquired a portfolio of general illumination LED lighting products, including several product lines from CMG Energy Solutions (CMG). The company says the acquisition will increase its market penetration as well as strengthen its distribution network.

Jack Keough was the editor of Industrial Distribution magazine for more than 26 years. He often speaks at many industry events and seminars. He can be reached at john.keough@comcast.net or keoughbiz@gmail.com

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