But it goes not necessarily mean that they are going to dominate the market for another 5 to 7 years. In 2011, the top ten manufacturers accounted for 68% of all LED component sales but 75% of total sales In 2010. A further decline can be foreseen and even a lost In the market leadership position In the coming years due to the environmental changes including government policy and subsidies for local companies in the emerging market and industry development changes. Considering all the factors, the role of multinationals and emerging players will change across time and thus the market share.
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First, government policy provides a strong support for the local-based companies to fast grow In the emerging market and create barrier for multinationals to enter and expand the local market. In the coming decade, Asia is projected to be one of the highest growth regions and account for over 35% of the global lighting market and expected to rise to 45% by 2020 with China being the largest and most fast -growing market . Thus Asia especially China is a determining market to claim market share leadership. So is multinationals doomed to dominate these emerging market?
The answer Is not necessary. Asia, In addition to becoming the major LED lighting consumer, Is expected to be the chief supplier of LED chips and packages with factories in China, Taiwan, Korea, and Japan, taking over multinationals to dominate local and regional markets. Take China as an example. China’s 12th FYI are projected to move China’s ICC manufacturing industry in two key directions: increasing and accelerating concentration within the sector and increasing the number of firms funded from security market listings.
So far, China has emerged as a significant source of new companies and more recently of financial funding for semiconductor tart-ups. During 2010, China overshadowed the US and the rest of the world with the most technology Ipso-?67 Chinese companies completed their Ipso in 2010 as compared to 19 US companies. At the same time, the 2010 list of Chinese semiconductor companies with largest revenues has increased to 43 from 380 on the 2009 list reporting an average 41% increase In dollar revenues.
Both Hairier (Beijing) ICC Design and Valhalla, which had emerged as two of China’s new leading 2010, China had 106 SPA;T facilities, representing 20% of the total number of worldwide SPA;T facilities and floor place. The government’s specific encouragement and incentive measures including tax incentive, investment funding and subsidies for China-based semi- conductor firms not only drive a strong growth for domestic companies but also create barrier for multinationals to continue over take China’ market.
Though Chinese players have not yet entered the top 10 rankings, however, this is likely to steadily change over time. Having said that, though the big companies like Niche, SRAM, Cree and Illumined are foreseen to continue wielding considerable market power and influence to control nearly a third of the global arrest share in the short term, it is definitely not a dominating 50% market share by 2020. On top of this, the rapid change in the LED lighting industry and keen competition from local and regional companies are going to further change the role of multinationals and emerging local or regional companies.
Currently, LED lighting multinationals is facing continued pricing pressure and intense competition. With the low manufacturing cost, Asia companies especially Seems with low operation cost, efficient decision making enjoys a good cost advantages over multinationals. You ay question that the established multinationals is beneficial at the first mover advantage and rich resource. But Koreans younger players’ success in taking most market share from established suppliers in Japan and west proves that the above- mentioned advantages cannot guarantee the established multinationals a permanent leadership.
According to Strategies Unlimited, the Korean manufacturers like Samsung LED, Seoul Semiconductor, and LOG Nineteen have successfully rode the boom in the LCD TV and monitor backcloth market and dominate in this area. The upcoming market with huge market potential goes to commercial and industrial LED sighting with a market size of $12. B in 2011 and projected growth of 40% per year through 2016. In this case, SEEM or local and regional based companies will be one of the key players, if not the dominant one, due to the specialization in relevant technology and fast response to the market needs.
For example, China’s street lighting project, one of the important driving forces in the industrial market, has been got by China based companies instead of the multinationals in the public bidding due to the government’s favoritism on the local companies and the great improvement in the product quality and advancement in the technology for the local companies. On the other hands, multinational starts to shift its focus to the LED technology due to the even huger profitability. So changing market and development situation allows emerging regional and local based companies to take over the market share.