Low demand for LED TV backlight units (BLUs) has been causing LED firms to seek markets elsewhere. Some Taiwan-based LED firms have been trying to enter the agricultural sector by providing lighting sources.
The average selling price (ASP) of LED products dropped nearly 30-35 per cent in 2011, causing revenues and gross margins to decrease. According to Taiwan-based LED packaging house Ledtech, during the best of times, gross margin reached 30 per cent, but in 2011 when demand for LED TVs dwindled, LED firms were facing decreasing gross margin due to price competitions.
Industry sources indicated that LED firms have been searching for new markets. Firms such as Philips and Osram have been developing LED lights for agricultural products. Japan has been incepting LED lights into farms.
Taiwan’s Industrial Technology Research Institute (ITRI) has called for Taiwan-based firms such as Delta, Lite-On, Epistar, Formosa Epitaxy, Everlight, Ledtech, Para Light, and Harvatek plus various farms to cooperate in increasing the adoption of LED lightings in the agricultural and fishery sectors.
According to ITRI, LED lightings can help farms adjust temperatures and lightings more effectively to enhance growth of their crops. LED lightings can also help conserve energy.
Currently, the penetration rate is quite low with limited market size. According to market researchers, in 2011 there were about 2,200 LED light tubes used for plants in Japan. The figure is expected to grow to 4,000 in 2015. The relatively slow growth is due to high product prices. There are about 1,000 LED lighting fixtures used in the fishery industry in Japan, and the figure is expected to increase to 5,000 in 2015.