LED sales fall, prices drop

Weakness in the backlit TV market stymies revenue among Taiwanese manufacturers. S. Koreans clear inventory, slash prices. Will LED light bulbs now become affordable?

Sales of LED chips and packaged products from Taiwanese manufacturers declined sharply last month, as the industry wrestles with oversupply that has caused S. Korean makers to drop prices.

June revenue from Taiwanese packaged LED products dropped by 14.8% to NTD 4.89 billion ($170 million), compared to the same month a year earlier, research firm LEDinside reports. Monthly chip revenue fell 6.1%, to NTD 4.34 billion ($151 million).

LEDinside blames the fall on softness in the LED-backlit TV market, where 2011 sales will fall below the earlier target of 220 million units, settling at only 203 million.

The market weakness caused S. Korean LED manufacturers to delay expansion plans, notes LEDinside, division of Taiwanese market intelligence firm TrendForce Corp.,

As reported last week, the LED industry has overproduced and faces a glut into next year .

LED lighting is expected to help reduce the world’s carbon footprint, as LED bulbs use only 10-to-20% of the electricity consumed by incandescent bulbs.

But high prices are undermining sales, as consumers balk at spending $40 on LED bulbs, even though the bulbs help slash energy bills and supposedly last for 25 years.

The good news for consumers is that the ongoing oversupply could help drive down prices.

“Rising inventory level led to severe price cuts,” states LEDinside. “Manufacturers even sold their LED inventories at low price to the lighting market, which in turn raised competitive pressure of the lighting market.”

Likewise, new government incentives announced by the S. Korean government in June should cause LED penetration to rise 60%, LEDinside says.

Although bulbs are supposed to last for 25 years- or 15 according to some manufacturers- consumers have reported disappointing bulb failure rates. LED experts note that bulbs can fail prematurely if they have substandard parts or workmanship in the components other than the light source -the light emitting diode - itself.

Bulbs include components that knock down voltage, that convert electricity from AC to DC, and that absorb heat.

LEDinside believes that intensified competition triggered by the oversupply will help weed out junk.

“Only companies that attain superior product quality, cost management, and have a stable customer base and channel management can stand out in the market,” it states.

Photo: Gizmodo via CNET

This post was originally published on Smartplanet.com