The market for light-emitting diode (LED) luminaires, or optimized permanent
light fixtures, will grow more than 12-fold over the next decade, according to
Lux Research. It will grow from $2 billion today to $25 billion in 2023, a
compound annual growth rate (CAGR) of 25%. The growth will be driven by
superior features and falling costs. Lux Research used historical trends as
well as projected average price reductions to build a model that calculates the
adoption rate of LEDs within each end market application — office, industrial
and street lighting. They found that recessed modular will emerge the largest
LED luminaire market, growing from $1.5 billion in 2013 to $14.5 billion in
2023 by replacing incumbents such as fluorescent.
“As LED packages rapidly fall in cost and improve in efficiency, the
cost structure of LED luminaires will shift, and present opportunities in other
components such as secondary optics and drivers,” said Christopher Hwang,
Lux Research associate. “This trend, in turn, influences the rate of
adoption of emerging technologies, such as alternating current (AC) LEDs and
high-CRI LEDs in recessed modular, high-bay and roadway luminaires,” he
Lux Research analysts examined the LED industry to identify the largest
opportunities within the luminaire market for investors, technology developers
and component suppliers. Among their findings: Lux Research predicts that LED
package costs will fall over 80% to less than $4/klm on improved efficiency,
increased manufacturing yields and utilization. As a result, the bill of
materials (BOM) of a standard 3,500 lumen recessed modular luminaire will fall
35%, from $85 in 2013 to $55 in 2023.
The company predicts that AC LED-based luminaires will become cost
competitive by 2018, but will provide a technology advantage only in low-power
applications, such as recessed modular luminaires. However, high-CRI luminaires
will remain a niche product, with a 9% cost premium by 2023, finding adoption
in high-occupancy applications.
Lux Research also forecasts that the LED package market will be dwarfed by
opportunities in optics and drivers. The secondary optics market will be the
single biggest growth opportunity in components, growing to $6.9 billion in
2023, while the drivers market will reach $4.9 billion.