General lighting market profit decline + trade war, how do global manufacturers respond?

LED lighting manufacturers in recent years, in addition to facing the situation of profit decline in the lighting market, this year's Sino US trade war has also led to a sharp increase in the operating pressure of lighting manufacturers. Continuation of LEDinside's last article: "the general lighting market has been depressed by interest rates and the three major international factories are retreating". This article analyzes the situation of lighting business of global manufacturers and the dynamics of Sino US trade war.

The price of lighting products has been declining, and global manufacturers are planning to reduce the proportion of related businesses.

In the previous article, it has been mentioned that the three big companies, including GE, OSRAM and CREE, are facing a profit decline in general lighting business, and there are plans to sell their related businesses. First of all, from the dynamics of Taiwan's factory, it includes Longda, Yi Guang and Dongbei.

Since the fourth quarter of last year, Longda has begun to reduce the proportion of its lamps and lanterns in the overall operation. In the first quarter of this year, it has completed the annual shipment of lamps and lanterns, with the goal of reducing the proportion of lighting revenue to 20% by the end of this year, and will only maintain the delivery of niche based lighting in the future.

For LED packaging plant, the general lighting is also not a profitable business. In the 2015 and 2016 earnings reports, the general lighting business is also in deficit, and billion light also plans to reduce the proportion of capacity used for lighting to less than 10%.

Dongbei, like the LED packaging plant, is also facing the headwinds of general LED lighting business. Dongbei is also adjusting its product mix and development strategy to reduce the shipment of LED bulbs and develop more niche products.

The land factory is relatively competitive in the LED general lighting market, but is hit by the Sino US trade war.

In contrast, LED manufacturers in mainland China have better competitiveness in the general lighting market. However, this year, the United States has announced a two tariff list. The Sino US trade war continues to burn, causing mainland manufacturers to simultaneously face the negative impact of tariffs on lighting products and tariffs imposed by the US government.

He has seen strong performance in the past few years, and completed the acquisition of LEDVANCE in 2017. However, the growth rate of revenue after the acquisition of LEDVANCE is not as expected, and it may also delay the expansion of the lighting business. In addition, there were rumors in the previous market that he wanted to buy GE's lighting business. But before the Sino US trade war was over, the chances for mainland manufacturers to buy American manufacturers would be limited.

In the face of the Sino US trade war, the LED lighting products produced in China are almost entirely subject to tariffs. However, China's lighting products still maintain their price competitiveness, and the possibility that manufacturers choose to move the LED lighting production line out of China is relatively low. Relatively high.

In addition, the Sino US trade war has also led to drastic changes in the exchange rate of emerging markets such as Russia, Turkey and central and South America. Manufacturers are also facing pressure from rising exchange rates and tariffs, resulting in rising costs.

Including GE's Current and LEDVANCE have announced the increase in product prices. Among them, Current said that due to the severe inflation pressure from electronic components, standard products, transportation and metal parts, Current increased its LED price by 6%, LEDVANCE also due to inflation pressure and the first stage of Sino US trade war. The tariff list has been affected, and the price of Gao Qi has been announced.

LEDinside believes that after LED lighting manufacturers have announced that the price adjustment will impact consumer demand, the follow-up impact will be more extensive, still need to continue to observe.

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