LED revenue will peak this decade
IMS Research (acquired by IHS Inc.) is forecasting world packaged LED revenue to decline in the second half of the decade according to the latest Packaged LED – World – 2012 Report. With many LED end markets already saturated, the lighting sector is the main driver of growth this decade. The 2012 market size is projected to be about $10.9 billion, with $2.9 billion in lighting and $8.0 billion in all other applications. By 2015 the market is forecast to reach $13.5 billion in 2015, with $5.8 billion in lighting (doubling in three years) and $7.7 billion in other areas (almost unchanged, and actually slightly less).
But there has been a much more important development within the lighting market itself, in that IMS Research expects shipments of LED lamps to remain relatively flat from 2015 onwards. IMS Research Analyst Stewart Shinkwin explained, “This is mainly due to fewer replacements being required each year due to the longer-lifetime of CFL and LED lamps reducing the overall market.” With price erosion set to remain in double digit figures, the LED lighting sector, as component packaged LED revenue, is forecast to contract towards the end of the decade. With no other markets expected to grow significantly, IMS Research expects the total packaged LED market to fall towards the end of the decade (as revenue) once the general lighting market has peaked.
There are, however, a number of factors that could change the outlook, notably if adoption is slower than predicted over the next three or four years. In this alternative scenario, growth would be slower initially but could be maintained for a longer period throughout the decade. Other important issues IMS Research considered in the long-term forecast are how low can the price of an LED really fall, and exactly how much the rate of lumens/watt improvements will slow in the second half of the decade as fundamental limits are reached.
The TV sector is the second largest market for packaged LEDs. This market is forecast to grow slightly from 2012 ($2.0 billion) to 2016 ($2.4 billion), as LED adoption rates increase throughout the time period just enough to overcome price erosion and the reduction of LEDs required for a given area. LCD panel shipments are also forecast to increase slightly, while there is also the trend towards larger screens, one which has been ongoing for a number of years. However the number of LEDs required for a given sized screen has also been decreasing faster than had been previously expected; for example in the first quarter of 2012 the low cost TVs which were introduced used half the number of LEDs for a given area, and although overall LED TV penetration increased as a result, average LEDs per LCD TV actually fell from 175 in the fourth quarter of 2011 to 137 in the first quarter of 2012. This trend cannot continue at the same rate forever and innovations may cause more LEDs to be used in some cases. However the overall trend is for a slow decline.