Growth is being driven by the rapid transition from alternative technologies to LED lighting across many applications. The primary driver of LED adoption is its greater efficiency, which translates into energy cost savings.
Orders for LED lighting are dominated by low-power applications, with the residential sector accounting for approximately 46 percent of all LED power supplies in 2014. In higher-power applications, such as factories and warehouses, the adoption of LED lighting is much lower; however, LED adoption in higher-power applications is growing rapidly, due to continuous innovations in LED technology.
LED power supplies typically have different voltage and current ratings than power supplies used in other applications; therefore, there are many opportunities for emerging power supply manufacturers to carve out their own niche in the LED lighting market. Doing so allows them to successfully compete with large power supply manufacturers in other areas where they cannot offer many of their existing products.
There are still some challenges for LED power supply manufacturers.
As with any new technology, there are some challenges for LED power supply manufacturers to overcome, despite a wealth of opportunities. For example, the LED lighting market is still highly fragmented: the leading supplier, Philips, accounted for almost 9 percent of the total market in 2013. Philips, which is also the leading supplier of LED lamps, held a 27 percent market share in 2013.
Given the large number of LED lighting suppliers, there is significant fragmentation among the different products. Each supplier typically requires its own unique set of current and voltage profiles, making it more difficult for LED power supply manufacturers to provide a standard product for a large number of companies or applications. In turn, this makes it more difficult for LED power supply manufacturers to reduce manufacturing costs through process standardization and component sourcing in similar products.
Aside from market fragmentation, feed prices are also falling rapidly due to increased product orders and heightened price competition. Many suppliers, particularly from China, are willing to lower prices and sacrifice margins to capture a larger share of the global market. Suppliers who can adapt quickly to the market will be the winners, positioned to capitalize on a market that is expected to triple between 2014 and 2019.
