The global market for general lighting is closely related to the economics and population growth, higher urbanization and energy efficiency requirements. A strong economic growth and high levels of urbanization drive the demand for office buildings, manufacturing facilities, service industries and residential properties. Meanwhile, affluency boosts the demand for mobility at night and hence lighting.
However, global economic growth has been limited over recent years: market competition has been fierce and growth has slowed down. In 2020, the global economy was hit by the pandemic. Whilst some countries gradually lifted their lockdowns in the second quarter and witnessed a gradual recovery in the third quarter, the virus came back with a vengeance in the fourth quarter. Lockdowns were reimposed with a ban or severe restrictions on going out. Commercial activities, factory operations, transportation and public venues were all affected. As a result, the demand for lighting dropped. The global lighting market is forecast to decline by about 7% in 2020, to approx. US$131.1 billion.
Looking into 2021, the global lighting market is not yet out of woods due to COVID-19. The pandemic hit the global economy hard last year. Although vaccines have been introduced onto the market, vaccination coverage remains limited. The short-term prospect is not optimistic. If vaccines work their way through the population, the pandemic should be brought under control in the mid-to-long term. By then commercial activities, factory operations and transportation should slowly recover and bring the demand for lighting back to a normal pattern of growth.
Lighting products are an integral part of our life. Therefore, consumers are highly price sensitive. In the case of LED bulbs, the unit price in its early days was significantly higher than compact fluorescent lamps (CFL) and hence demand was limited. A few years on, LED bulbs are now more economical than CFL bulbs and have become the mainstream market for light sources. Although the pandemic may have slowed down the growth of LED lighting, the long-term trend remains beneficial to LED lighting given the increasingly stringent policies on energy efficient lighting around the world.
Post COVID-19, the increasingly rigorous development of energy saving lighting and environmental protection policies around the world will further drive the growth of LED lighting products (known for their better energy efficiency). It is forecast that by 2026, market share for LED lighting may exceed 80%.
The continued pursuit of lower prices and higher efficiency in recent years has brought the LED lighting industry to a technology barrier in the quest for higher efficiency. The emergence of OLED lighting and other new technologies will raise the technical threshold going forward. That said, price cuts are usually the main competitive tool in the LED lighting industry, and as the price for LED replacement bulbs has been on a gradual decline, so the growth momentum in the lighting market will gradually slower.
To mitigate the impact of low-price competition and respond to the emergence of smart cities and Internet-of-Things (IoT), integrated LED fixtures, IoT lighting, lighting management systems and lighting as a service (LaaS) are creating new value for lighting products and will play a pivotal role in the further development of the lighting market. As lighting becomes smarter, smart drivers, sensors, communications modules, interoperability/compatibility, safety technology and integration technology will be the important directions of technological development.
Smart lighting technology goes well beyond the manufacturing and sales of lighting products. In addition to lighting fixtures, smart lighting integrates computing, wireless communications, automatic control and databases. It is not a battle for lone fighters. Rather, the development of complete product portfolio requires strategic alliances or cooperation partners. This is evidenced by the continuous acquisitions and strategic alliances among leading lighting and lighting control companies.
With the development of IoT and smart cities, there will be a slew of innovative suppliers using lighting as the connectivity hub and the main vehicle for the development of smart cities/buildings. Therefore, it will be increasingly important to integrate smart technology into lighting products, so that lighting products can be truly ‘smart’. In order to meet customers’ requirements for lighting systems in residential, commercial, and industrial applications, manufacturers will need to be able to offer lighting control systems at high cost-to-performance ratios and with high reliability.