LED bulbs

	Model DMR16E03 from Leedarson is designed with an MR16 base. The service life reaches 20,000 hours.

Companies will be scaling back quotes by 10 percent with the expiry of licenses on diode-based technologies.

The discontinuation of many foreign-held patents on diode-based technologies by 2010 is expected to cut prices of China-made LED bulbs and tubes further.

Among the multinational companies or MNCs with several licenses expiring in the next few months are Osram, Nichia and Cree. The last is one of the major providers of LED chips to the country’s lighting industry.

Thanks to lower outlay resulting from fast advancements in solid-state lighting, prices are already down 10 to 20 percent from 2008 levels. With the imminent lapsing of patents, quotes are forecast to decrease at least 10 percent.

LED bulb and tube suppliers said competitively priced products will help improve market uptake. This is crucial especially now that the US and the EU have started banning or limiting the use of light sources with high power consumption such as incandescent bulbs.

At present, designs are about 10 times more expensive than halogen versions, with wattage contributing heavily in determining prices. Most end-users therefore tend to choose the latter even though LED lamps are more energy efficient and have a longer service life.

Makers are hoping the cancellation of licensing duties in coming months and the subsequent reduction in prices will change this situation and hasten product acceptance.

A 3W LED bulb currently goes from $10 to $12. Versions rated at 5.5 to 7.5W are about $20, while T8-compatible 20W tubes are quoted at $20 to $45.

The number of manufacturers in the line has been rising in the past three years. About half of the more than 1,000 companies in the sector joined in 2006. And even with the tough economy, last year saw a slew of new entrants in this sunrise industry.

This development has become a major concern, as it will undoubtedly intensify price competition among makers. Interviewed manufacturers also fear that the proliferation of small operations would give rise to below-standard units and, consequently, taint the reputation of the industry.

Besides the expanding supplier base, growth is evident in exports, which jumped 25 percent annually from 2006 to 2008.

Output is still on the rise, driven by unflagging demand for the products even amid the current financial climate. Shenzhen Baisheng Semiconductor Lighting Co. Ltd said turnout between January and July 2009 is more than 20 percent higher compared with the same period last year.

Several companies plan to increase production capability in coming months. DEL Optoelectronics (Shenzhen) Co. Ltd, which already operates a 2,000sqm factory in Guangdong province, for example, will be establishing another plant in 2010.

Mainland China turns out roughly $3 billion worth of LED bulbs and tubes. When combined with other diode-based luminaires, annual production amounts to $6 billion, making up an estimated 30 percent of world supply.

Although there are no compulsory standards for the products, several makers offer TÜV-approved and CE-certified models. LED chips are sourced from Cree, Samsung, Taiwan or local suppliers.

While specialists dominate the manufacturing pool, some companies can offer various types of luminaires.

The selection at Leedarson Lighting, for example, consists of compact fluorescent lamps and LED units, with the latter accounting for 5 percent of output. The supplier spent several years focusing on CFLs before venturing into diode-based light sources.

In terms of capability, China makers can be classified into four types. The first consists of MNCs with strong design competency and numerous product patents.

Second-level suppliers have in-house R&D teams that, due to limited resources and technologies, veer from performance upgrades and focus instead on improving aesthetics and other physical aspects.

The third class consists of companies that outsource components and then conduct assembly in their factories. Such manufacturers comprise the majority of China’s supplier base.

Makers offering low-end LED bulbs and tubes represent the last type.

As regards revenue, large suppliers can generate more than $20 million yearly, while midsize enterprises usually earn from $1 million to $15 million. Annual sales at most small operations do not exceed $1 million.

China’s LED bulbs and tubes industry is export-oriented, with an estimated 80 percent of output shipped abroad. The EU and the US are the primary destinations, although some companies also cater to Japan and other emerging markets.

OEM models represent 70 percent of outbound shipments. Designs bearing in-house brands make up 20 percent, with the rest under ODM contracts.

The primary clients are distributors and manufacturers. Some makers also deal with construction firms. Guangzhou Riman Lighting Technology Co. Ltd, for instance, works with one of Japan’s major real estate developers.

Guangdong is the largest production center for the line, contributing 60 percent to the country’s annual turnout.