Prices of LED lighting products are estimated to drop by 15-20% each year amid increasing competition in the market as vendors reduce prices to gain market share. Prices of LED lighting products are expected to fall to one-third of current prices by 2015.
A price war has been initiated in Japan since 2009. LED lighting sales accounted for more than 20% of Japan's lighting market by volume and 50-60% by sales value in 2010, and average price declined from 5,500 yen (US$67) to under 2,000 yen. LED light bulbs' market penetration is projected to reach 30-40% in 2011.
Sources from LED companies indicated that the price competition has extended to China, Europe and the US. Average price of LED light bulbs has dropped substantially to the current US$20-23, but still high compared with the US$4-5 of conventional energy-saving light bulbs.
Some light bulb makers reportedly will introduce LED lighting products at end-use price of US$10 in 2011. Combined with distributors and retailers well-known for competitive pricing scheduled to enter the LED sector, the price battle will only intensify in the future.
Conventional lighting giants Osram and Philips already have aggressive plans to heighten efforts in LED light bulbs to break into the end-use market. In 2010, Philips used Asia markets such as South Korea, India and Singapore to test market reception and reportedly will officially enter Taiwan's light bulb market in the first half of 2011.
Philips Taiwan pointed out that LED lighting will revolutionize the lighting industry, which should attract many more new comers. At the current phase of market development, elimination and price competition will be fierce, particularly in the low-barrier retrofit segment.
The longer product lifetime of LED lighting will contract the lighting source market, but the luminaire segment will create production value five times that of conventional lighting applications, the company said, adding that in the future, luminaire applications will represent 80% of the overall LED lighting market.
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