By Alan McHale
The revenue from the global light-emitting diode (LED) lighting market for buildings will rise from $9.46 billion this year to $25.4 billion by 2017. This represents a compound annual growth rate (CAGR) of 22 percent over a 5-year period.
The global shape of the LED market will stay broadly the same over this period with the E.U., North America, Japan and China still making up the largest portion of revenues. Growth in India will be the highest, at around 31 percent CAGR, but from a very low base. Penetration rates are likely to remain low there. The rest of Asia, excluding Japan, will experience growth of around 24 percent CAGR thanks to supportive legislation, government incentives and new construction.
Many global lighting product sectors remain fragmented, and this is likely to change over the next few years. The continued drive for improved lighting performance and lower costs should drive continued vertical integration in the market — particularly downstream in the value chain. With more building controls companies eying the market and acquisitions of lighting controls companies by LED lamp and lighting fixture manufacturers likely to continue.
Over the course of the past 5 years, we have been closely monitoring developments in the LED market and have tracked 238 significant deals. Although we cannot claim that this list is exhaustive, it certainly paints a picture of the mood in the market and the strategies of its major players.
The total value of deals (where disclosure was made) during this period was nearly $8 billion, peaking at $4 billion in 2008. The number of deals completed over the 5-year period remained fairly consistent. The median value of deals also fell slightly over the period of analysis, ranging between a maximum of $18.3 million in 2008 to a minimum of $11 million for 2013 data to May.