Post COVID Recovery – Indonesian LED market to reach $2.4 billion by 2026

The growing and high demands for LED lights, high investment from the government to promote LED lights, decreasing LED prices, and investments from multinational players are expected to fuel the market. Considering such factors, it is anticipated market will be valued at around $ 2.4 billion by 2026

Definition / Scope
Market Overview
Market Risks
Top Market Opportunities
Market Drivers
Market Restraints
Industry Challenges
Pricing Trends
Regulatory Trends
Other Key Market Trends
Market Size and Forecast
Market Outlook
Technology Roadmap
Distribution Chain Analysis
Competitive Landscape
Competitive Factors
Key Market Players
Strategic Conclusion
References
Further Reading
Appendix

Definition / Scope

LED is a short form for the light-emitting diode which is a semiconductor light source that emits light when current flows through it. A light-emitting diode (LED) module is a self-contained LED device designed either to function on its own or to plug into a compatible unit. LED modules are commonly used to create energy-efficient or portable lighting.

When powered on, these modules emit bright light from a small bulb. LED module devices include LED book lights, night lights, outdoor lighting, LED headlamps, and LED flashlights, as well as the multiple, LED bulb units used in LED lighting fixtures.

LEDs are incredibly useful, reliable, and provide a longer life span, which is expected to increase their indoor and outdoor applications. Compared to incandescent lights, these lights are cost-effective, containing about 50,000 hours of lighting with a tiny quantity of energy consumed.

It’s impossible to think of a sector that hasn’t been affected by the coronavirus outbreak in some way. Since the outbreak began late last year in China, severe disruptions have reverberated throughout the global economy. The COVID-19 Pandemic has also had a significant impact on the lighting industry, According to Electrical Lighting Industry Association (Aperlindo), a significant decline in the growth of the LED industry in Indonesia is expected to continue until 2022. This Report presents the inferences obtained from the analysis performed for the post COVID-19 state of the LED Market in Indonesia considering all the Risk Factors, Opportunities, Drivers, Restraints and Challenges caused by the sudden outbreak of the COVID-19 Pandemic across the world.

Market Overview

Indonesian market value is currently at US$ 660 Million and is expected to reach US$ 2.4 billion by 2026 registering a CAGR of 16% during the forecast period of 2020 to 2026. The increasing demand from residential sector, growing environmental concerns among consumers, growing popularity of smart led lighting solutions, and growing adoption of energy-efficient lighting solutions drive the market growth in Indonesia.

The growing and high demands for LED lights, high investment from the government to promote LED lights, low electricity consumption, and better output of LED lights are projected to offer lucrative growth opportunities for the market players. However, the high upfront cost of LEDs has always been the major problem.

LED manufacturing businesses looking to expand or strengthen their offerings in the country Indonesian consumers are youthful and digitally savvy given the relatively young and productive population age of 30.2 years old. They are also well connected to the internet, with slightly more than 50% of them using the Internet regularly. The distribution of goods via online retail platforms is anticipated to boost the growth of the LED market.

Growing trade relations between Indonesia and China in the LED market are expected to be helpful for domestic producers in LED procurement. Many multinational companies have invested in Indonesia and the government is expected to support domestic production during the forecast period.

Apart from promoting the usage of LED lights in public construction projects, they are also being applied in various commercial and transportation lighting applications. The LED lighting market is highly fragmented in nature, with the presence of numerous local and regional players, such as General Electric Company, Signify N.V., Hubbell Incorporated, OSRAM Licht AG, and Cree Inc. In recent years, players in the LED lighting industry have launched several new and advanced products to stay ahead of their competitors. Some of the prominent players in the Indonesian LED market are LeKise International, Mouser Electronics, Solarens Ledindo, PT Philips Indonesia, and PT OSRAM Indonesia.

With the energy Industry being the hardest hit by the COVID-19 pandemic and governments throughout the world imposing rigorous lockdowns and restrictions, the LED lighting market will be hammered hard. Factory closures in most countries are impacting utility output and cash flows, affecting all stakeholders in the energy value chain, including lighting component suppliers. The growth of the LED industry in Indonesia will be severely hampered because of muted growth of demand post-COVID-19.

Market Risks

Though the Indonesia LED market seems to be growing, there are several issues and risks a market player has to contend with. Some of these are:

Supply and Demand Risks

Due to a supply bottleneck of electronic components caused by the coronavirus outbreak, prices of LED bulbs and lights have increased by up to 10%. The LED business, like the mobile and electronics industries, is being impacted by the coronavirus outbreak, as supplies of electronic components are being disrupted owing to a shutdown in Indonesia during the Pandemic for which the aftermath is still being felt. Because connected lighting solutions and professional lighting use a higher percentage of imported components, this could have a greater impact on the segment.

According to AILKI (Association of Luminaires and Electrical. Equipments Indonesia), over 60% of the mechanical components used in LED bulb manufacturing in Indonesia are supplied locally, while the remaining 30%, known as electronic drivers and chips, are imported from Chinese vendors and are now in limited supply. This has increased the Risk of Price Rise in the LED Market in Indonesia.

Risks of LED lights to human health

Exposure to LED light with a blue peak in its emission spectrum may have a harmful effect on our health because the blue light suppresses the production of melatonin, a hormone the body starts to produce naturally in the afternoon, reaching maximum levels during the hours of darkness

High initial cost

Higher quality LED lights to have a higher cost than conventional lights as a result of the complicated assembly and high raw material cost. So most people would prefer to buy low cost non LED lights.

Top Market Opportunities

Opportunities for Local LED Components Manufacturers

The COVID-19 Pandemic has severely affected most of the industry segments of the Indonesian economy and the effect is also felt in the Lighting Industry particularly the LED segment, due to the tremors caused due to the Supply Chain Disruptions. and there is a critical shortage of electronic components, such as chips. The supply-demand equation is not working anymore.
More than 60% of the mechanical components used in the production of an LED bulb are sourced locally in Indonesia. Around 30% of electronic drivers, which include chips, are imported from Chinese suppliers and are currently in limited supply, resulting in an increase in the price of these products.
Because of the epidemic, localization has become extremely crucial in this industry. Now, the industry is attempting to not only find alternative destinations for sourcing components, but also to create things locally from the ground up. This will also lead to more investment in the R&D sector in the country.

Growing demands of LED lights

LED lights are far more luminous, long-lasting, and reliable than other lights so normal households and industries prefer LED lights to others.
LED lights consume less energy so the electricity bills are much more affordable
According to figures provided by The Indonesian Electrical Lighting Industry Association (Aperlindo), In 2020 LED luminaires account for barely 35% of lighting industry sales in the country, but they have significant future market potential with rising demands for LED luminaires thereby offering lucrative opportunities for local manufacturers.

Rising Infrastructure Development Rate

The focus of government on the development of new infrastructure, along with the modernization of existing structures, has increased in recent time, thereby leading to a rise in the demand for LED lighting solutions. The growing population, coupled with the increasing disposable income, is forcing government to invest heavily in infrastructure development.
Investments in smart city projects have also increased over time. This rise in infrastructure development projects has been a major driver for the growth of the LED lighting market.
The Indonesian government recently announced plans to achieve energy independence over the next five years. Despite power outages and blackouts in certain remote regions, 84 percent of the population today has reliable power. By 2025, the Indonesian government hopes to achieve a 100 percent energy self-sufficiency rate and provide solar-powered lighting equipment to rural areas. Other government incentives encourage investors to invest more in energy-related infrastructure projects.

Efforts from the Government itself in promotion of LED lights

The growing awareness regarding the importance of energy conservation and the numerous initiatives undertaken by the Government to promote the use of LED lights are anticipated to catalyse market growth.
There has been a significant increase in the usage of LEDs in public construction projects due to the sustainable and energy-efficient nature of these solutions.
The Indonesian government has included the lighting Industry as a method to move the country’s environmental energy saving goals on track as Indonesia’s NDC aims for a 29% (unconditional) reduction in greenhouse gas emissions by 2030, following increased investments in power systems and expanding global environmental consciousness. LED lights are used in commercial and transit lighting applications, in addition to encouraging their use in public construction projects.

Market Drivers

LEDs are considered the future because they are different from other types of lighting in that they last longer and save more energy and money. They also emit almost no heat. By comparison, inefficient incandescent lighting gives off 90% of its energy as heat.

Increasing Demand from Residential Sector

The growing demand for LED lighting from the residential sector is driving the market. The growth in construction and infrastructural development in the region is due to the booming population, which, in turn, is fuelling the demand for LED lighting solutions.
Though the Demand for LED Luminaires is fading in energy-intensive sectors such as Manufacturing, Construction and Hospitality sectors, as much of these sectors have faced a complete shutdown due to the lockdown restrictions imposed by the Indonesian Government throughout the country due to the outbreak of the COVID-19 Pandemic as Indonesia still implements a partial lockdown wherein public and commercial activities are restricted to certain hours of the day, but a boom is witnessed in the LED Market from the Residential sector as the COVID-19 pandemic has led to a paradigm shift in what is touted as the “Biggest Work From Home Experiment” and has led to increased power consumption across the Residential sector of Indonesia

According to statistics from Statista, It is projected that at the peak of the outbreak 63% of the Working Population in Indonesia were working from home, so the demand for lighting solutions have increased exponentially in the Residential segment. Due to the numerous advantages offered by smart LED lighting over traditional lighting solutions, has resulted growing popularity of smart LED lights. These systems’ high energy efficiency enables for energy savings, lowering costs for both business and residential customers.

The Demand for LED luminaires is expected to continue the boom from the Residential segment post COVID-19 as most of the companies in Indonesia is expected to continue the “Work from Home” Model, as according to Statista 75% of the companies across the world are expected to continue the “Remote” Working Programme for at least a part of the workforce post COVID-19 era due to the lucrative benefits offered by the model particularly benefits such as cost-savings, flexibility, and increased productivity.

Growing environmental concerns among consumers

The growing consumer awareness for energy-efficient lighting that produces less heat is propelling the industry. These energy-saving bulbs have a very long life, and they are able to remain consistent despite long-term use. The life of LED lights batteries can be increased up to 10 to 15%.
The rise in power tariff and environmental concerns among consumer is another factor driving the demand. According to Statista, there is a continual rise of about 4-5% annually in the average cost of electricity in Indonesia from 2014 to 2020, post COVID-19 this trend is only expected to increase further, thereby fuelling the concept of energy consumption among Indonesians, which ultimately leads to the adoption of energy saving LED bulbs.

Growing Popularity of Smart LED Lighting Solutions

A prominent trend being observed in the LED lighting market is the growing popularity of smart LED lights, due to the various advantages offered by smart LED lighting over traditional lighting solutions.
The high energy efficiency of these systems allows for energy savings, which reduces the cost burden on both commercial and residential users. Other features of smart LEDs include automatic off/on, motion activation technology, adaptive lighting, and the ability to change the color, to create an ambient indoor experience, as per people’s mood and preference.

The Demand for Smart LED Lighting solutions is expected to witness strong growth in the post COVID-19 period as there are multiple factors influencing the adoption of Smart LED lighting solutions as there is a considerable shift in the purchasing pattern, demographics and increasing price of power and resources. According to Statista, In 2020, the LED segment dominated the smart-lighting fixtures with a Market Share of 47% and this trend is poised to continue post COVID-19 period.

Growing Adoption of Energy-Efficient Lighting Solutions

The growing adoption of energy-efficient lighting solutions is driving the LED lighting industry. This can be attributed to the low maintenance costs and longer operational life of LED lights, compared to conventional lights.
LEDs are being widely deployed at parking lots, tunnels, stadiums, and streets. Moreover, the increasing government initiatives toward the usage of energy-efficient lighting sources and reduced energy consumption are augmenting the demand for LED lighting solutions. Local authorities are adopting these systems to completely replace their current lighting systems.
According to Statista, there is a continual rise of about 4-5% annually in the average cost of electricity in Indonesia from 2014 to 2020, post COVID-19 this trend is only expected to increase further, thereby fuelling the concept of energy consumption among Indonesians, which ultimately leads to the adoption of energy saving LED bulbs.

Market Restraints

High initial cost

Good quality LED lights to have a higher cost than conventional lights as a result of the complicated assembly and high raw material cost.
The Supply Chain Disruptions caused by the lockdown restrictions imposed by Governments across the world has resulted in Components sourcing bottlenecks for the LED Lights and Luminaires Manufacturers in Indonesia, which has led to steep rise in the price of LED Components and this has added to the cost of Manufacturing LED Lights and Luminaires as according to Industry sources the price of LED bulbs increased by 10% during the Pandemic period.
Manufacturers, however, are trying to lessen their production costs by employing new technologies and designs. Besides, LED lights are more energy-efficient and have a longer lifespan than their traditional counterparts. Therefore, in the long run, they prove to be lower in cost than other lighting systems.

Thermal design challenges

LED lights generate a cer5tain amount of heat which has to be distributed properly so that the LED chip does not get damaged. In order to tackle this issue, LED lights are fitted with aluminium heatsinks which require certain design innovations to work properly. This increases the manufacturing cost as well.
However, this heat generation is much less than the heat produced by incandescent lights and with a proper heat management system, the LED lights can last around 50,000 hours.

Lack of awareness on seeing long-term benefits among consumers

Many consumers do not consider the overall cost of ownership while buying lighting products. Nevertheless, the declining prices of LEDs along with the ease of use, energy efficiency, and longer life are prompting users to see the long-term benefits of switching to LED lights.
Government initiatives like bans on energy-consuming products and subsidies have also resulted in an increase in the sales of LED lights.

Industry Challenges

It’s impossible to think of a sector that hasn’t been affected by the coronavirus outbreak in some way. Since the outbreak began late last year in China, severe disruptions have reverberated throughout the global economy. The COVID-19 Pandemic has also had a significant impact on the lighting industry, According to Electrical Lighting Industry Association (Aperlindo), a significant decline in the growth of the LED industry in Indonesia is expected to continue until 2022, with a decline of about 12% expected due to the tremors caused by the COVID-19 Pandemic. But as they say Light is always there at the end of the tunnel and the LED Market in Indonesia is expected to witness a significant turnaround due to the unlocking of economic activities caused by the lockdown restrictions imposed by the Indonesian Government due to the outbreak of the COVID-19 Pandemic.

Supply Chain Concerns

Lighting Manufacturers, like the rest of the manufacturing industry, rely on China for a substantial portion of their components. China was the first country to be affected by COVID-19. As a result, it was the site of the first lockdowns, which were later adopted by several other countries to stem the spread of the disease. Workers at plants that make LEDs and other light fixture components have been told to stay at home in many situations.

As one might assume, this has had a significant impact on the lighting industry’s supply chain. In many locations, production has come to a halt due to a lack of required components. Of course, once the pandemic has passed and life has returned to normal, these facilities will not be able to immediately resume full production. Back orders will very certainly be filled in a big way. Workers who were furloughed or laid off in reaction to the crisis may not be able to return to their former occupations for a variety of reasons. Because untrained substitutes will need to be taught, efforts to bring production back up to speed will be hampered.

Rising Price of Components

The cost of raw products for industries to manufacture LEDs are far too higher than that of other types of light, also due to the supply chain disruptions caused by the lockdown restrictions the price of critical components used for manufacturing LEDs such as Chips has increased steeply, so the price of LEDs can’t be brought to the same level as others which is a major challenge for the adoption of LEDs.

Other Challenges

Major temperature changes in street lighting for example, which is switched on and must warm up on a cold winter day, can cause serious wear to components in many cases, not least when they are cast into potting material. In some cases, the soldering breaks as a result of such mechanical stress.

Due to lack of proper communication between LED manufacturers and customers often the manufacturers are not able to meet the needs and demands of the customers. The high upfront cost of LEDs has always been the major problem. Other types of lighting cost very little compared to LEDs so many might prefer the low costing lights.

Technology Trends

LED lamps are often made with arrays of surface mount LED modules (SMD modules) that replace incandescent or compact fluorescent lamps, mostly replacing incandescent lamps rated from 5 to 200 watts.

White light LEDs

General-purpose lighting requires a white light, emulating a black body at a specified temperature, from “warm white” (like an incandescent bulb) at 2700K, to “daylight” at around 6000K.
The first LEDs emitted light in a very narrow band of wavelengths, of a color characteristic of the energy bandgap of the semiconductor material used to make the LED.

Color changing LED lighting

Tunable lighting systems employ banks of colored LEDs that can be individually controlled, either using separate banks of each color or multi-chip LEDs with the colors combined and controlled at the chip level.
For example, white LEDs of different color temperatures can be combined to construct an LED bulb that decreases its color temperature when dimmed.

Thermal management

Compared to other lighting systems LEDs must be kept cool as high temperatures can cause premature failure and reduced light output. LED lamps tend to run cooler than their predecessors since there is no electric arc or tungsten filament, but they can still cause burns.
Thermal management of high-power LEDs is required to keep the junction temperature of the LED device close to ambient temperature since the increased temperature will cause increased current, more heating, more current, and so on until failure.

Efficiency droop

The term “efficiency droop” refers to the decrease in luminous efficacy of LEDs as the electric current increases above tens of milliamps (mA).
Instead of increasing current levels, luminance is usually increased by combining multiple LEDs in one lamp.
Solving the problem of efficiency droop would mean that household LED lamps would require fewer LEDs, which would significantly reduce costs.

Pricing Trends

The declining prices of LEDs have led to their deep penetration in various applications, including residential, commercial, and industrial. This significant drop in the LED prices can be attributed to the advancements in technology, which have led to a higher life expectancy and greater operational efficiency, in turn, driving the LED lighting market.

Moreover, with the adoption of energy-efficient lighting solutions, the energy consumption in lighting applications is expected to reduce. For instance, according to the projections of the U.S. Department of Energy, the energy consumed by lights in the country would drop by 40–60% by 2030, in a conservative forecast.

Regulatory Trends

All LED lamps at every point of sale in the market (e.g. supplier, wholesaler, retailer, contractor) need to be certified and marked. Products must have a valid electrical safety certificate issued by an Indonesian electrical safety regulator or third-party certifier showing compliance with the Indonesian Standard for mains voltage self-ballasted LED lamps.

The proposed MEPS and labeling requirements must be ensured so that package claims are accurate and poor quality LED lamps are removed from the market. They must apply a QR code on the label, which consumers can use to access the publicly available data. LED technologies and required luminaires are to be provided with a separate mandatory label on their packaging.

Other Key Market Trends

In the current market scenario, LED light bulbs are enduring the early adoption phase of the product life cycle. However, continued technological advancement in LED lighting has poised these product offerings to enter and advance through the growth phase.

Recent advancements in light-emitting diode technology have allowed LED lighting products to penetrate effectively, the commercial lighting market with enormous potential for growth.

Market Size and Forecast

The Indonesian LED market is currently growing at a robust rate. Indonesian market value is currently at US$ 660 million and is expected to reach US$ 2.4 billion by 2026 registering a CAGR of 16% during the forecast period of 2020 to 2026.

The Repercussions of the COVID-19 Pandemic on the LED Market in Indonesia is severe and this effect will also be felt post COVID-19 period as a Snowball effect. Suppliers, manufacturers, and customers may be impacted by longer lead times, decreased supplies, and premium pricing, to name a few instances. As a result of the quick loss of revenue, many smaller businesses in this field are probably destined to fail. Due to the supply demand interruptions induced by the COViD-19 Pandemic, local component manufacturers will have chances for expansion.

Market Size Based on Product

Based on product, the market has been segmented into lamps and luminaires.

Luminaire segment held Major Market Share

In 2020, the LED luminaires sector led the market, accounting for more than 55% of global revenue. In the commercial and industrial sectors, luminaires are frequently used. LED luminaire demand is mostly driven by new installations. For diverse purposes, the section includes lights used in streetlights, high bays, downlights, track lights, troffers, and suspended pendants. LED luminaires produce greater light per watt of power used.

In the LED lighting market outlook, the luminaire category generated higher revenue in 2020, which can be attributed to the high demand for LED luminaires, primarily from newly constructed residential and commercial buildings.

The COVID-19 Pandemic will have a severe impact on the LED luminaires segment as there will be a decline in demand from the dynamic sectors such as Commercial and Industrial segments the demand for LED Luminaires is expected to increase in the post COVID-19 era as the economy unlocks from the restrictions imposed by the Indonesian Government.

The Market Size of the LED Luminaire segment is valued at US$ 335.2 Million in 2020 and declined at a CAGR of 12% from the previous year (2019) from a Market Value of US$ 380.9 Million due to the slowdown in demand caused by the increasing lead time, depleted supplies and increasing component prices and is expected to witness a turnaround with a growth rate of 24% over the end of the forecast period to reach a Market Size of US$ 1.22 Billion in 2026 Furthermore, with the increasing government initiatives toward the adoption of LED lighting, the market for LED luminaires is projected to grow in the post COVID-19 period.

LED Lamps expected to grow at the Fastest Rate

Because of their rising acceptance in Indonesia, the LED lamps category is expected to grow at the fastest rate over the projected period. In comparison to incandescent lamps, these lamps have a number of advantages, including durability, energy efficiency, and proper temporal stability. T-lamps, reflectors, A-lamps, and MR-16 lamps, for example, are available in a variety of designs and uses. The increased regulatory timelines to phase out ineffective light bulbs are projected to boost demand for these lamps in both residential and business settings.

The LED Lamps segment is expected to witness a no-growth period in the next 2 years due to the decline in production of these lamps caused by the Supply-Demand bottleneck due to the COVID-19 outbreak, but an increased demand for this category is expected to be continuing, the LED lamps segment constitutes a Market Share of 45% generating revenues to the tune of US$ 684 Million in 2020 and is estimated to attain a growth of 25% to reach a Market Size of US$ 2.6 Billion in 2026.

Market Size Based on Installation Type

Based on Installation Type the LED Market in Indonesia is classified into New and Retrofit.

New Installation Type held Dominant Market Share

The New Installation Type held major Market Share due to the increasing popularity of LED lamps and Luminaires among the Y and Z Generation of the population in Indonesia and increasing penetration due to the rising awareness of the benefits of the LED lamps and Luminaires.

The New Installation Type attained a Market Share of 63% and generated revenues to the tune of US$ 384.5 Million in 2020 as it witnessed a fall in revenue of -10% from the market valuation of US$ 427.3 Million in 2019 due to the outbreak of the COVID-19 Pandemic. But post pandemic a turnaround is expected in the market due to the opening up of economy by the Indonesian Government and Governments across the world and is expected to witness a significant growth of 20% to reach a Market Size of US$ 1.15 Billion in 2026.

Retrofit is the Fastest Growing Segment

The retrofit category, based on installation type, is projected to experience faster growth in the LED lighting market during the forecast period but a dip in growth is expected to be witnessed in the short-term due to the supply constraints caused by the outbreak of the COVID-19 Pandemic. But post COVID-19 a significant growth is expected in the segment the growth is attributed to the increasing replacement of sodium-vapor and incandescent lamps with LED lights.
The strong demand for retrofit LED lamps, due to the phasing out of incandescent bulbs, is expected to further boost the LED lighting market in the forecast period. This category is further classified into A-lamp, reflector, T-lamp, and others.
The Retrofit Installation Type constitutes a Market Share of 37% and is valued at US$ 233.4 Million in 2020 and is projected to grow at a CAGR of 15% in the next 2 years due to the slowdown caused by increasing lead times and supply chain disruptions and is poised to pickup pace in demand over the next 4 years of the forecast period to reach a Market Size of US$ 848.5 Million in 2026.

Market Size Based on Application

Outdoor Category to Grow at Fastest Rate

Based on the application of LED lighting products, the outdoor category grew at faster pace till 2020. But the segment has witnessed a sudden depression due to the fall in the demand as these LED bulbs are mainly focused on segments such as Commercial, and Industrial segments due to the paradigm shift caused by the outbreak of the COVID-19 Pandemic causing complete closure of outdoor activities.
The category is further expected to witness significant growth in the LED lighting market in the post COVID-19 period once the lockdown restrictions are released. This can be ascribed to the growth in both private and government initiatives around the world for high-class infrastructure development, which are pushing the demand for LED lighting. For instance, in 2019, Integrated Device Technology Inc. (IDT), a subsidiary of Renesas Electronics Corporation, announced plans to start two intelligent street lighting projects in Malaysia, for the replacement of sodium-vapor bulbs with LED lights.
The Outdoor segment attained a Market Share of 35% and generated revenues to the tune of US$ 200 Million in 2018 and it witnessed a dip in demand to the tune of 12% during the COVID-19 period and reached a Market Size of US$ 211.2 Million in 2020.and is expected to witness a significant growth in the post COVID-19 period due to the unlocking of the economic activities which is expected to spur industrial and commercial activities boosting the demand for outdoor segment which is expected to boost the CAGR to 25% reaching a Market Size of US$ 809.5 Million in 2026.
This category is further divided into highways, streets, stadiums, parking lots, tunnels, and others. The highways division held the largest market share in 2020, and the situation is projected to remain the same in the future. This is mainly due to the development of smart cities around the world, which involves the installation of LEDs on highways and streets to save energy and reduce maintenance costs.

Indoor segment held the Major Market Share

The Indoor segment held major Market Share due to the increasing popularity of LED lamps and Luminaires among the Y and Z Generation of the population in Indonesia and increasing penetration due to the rising awareness of the benefits of the LED lamps and Luminaires.
The Indoor segment attained a Market Share of 65% and generated revenues to the tune of US$ 378.8 Million in 2020 as it witnessed a fall in revenue of -10% from the market valuation of US$ 420.9 Million in 2019 due to the outbreak of the COVID-19 Pandemic. But post pandemic a turnaround is expected in the market due to the opening up of economy by the Indonesian Government and Governments across the world and is expected to witness a significant growth of 22% to reach a Market Size of US$ 1.38 Billion in 2026.

Market Size Based on End-Use

Commercial Segment Led the Market in terms of Market Share

In 2020, the commercial segment led the market, accounting for almost 52% of the total revenue. The segment is being driven by the demand for LED troffers and downlights which are mainly used in the Commercial and Industrial segment which are witnessing a windfall in their growth due to the closure of the economy.

Galleries, museums, and other show lighting applications that predominantly use reflectors, projectors, and downlights fall under the category of high-end lighting for commercial end-use. The industrial lighting industry is expected to see a lot of demand for high-brightness LED lights. These lights must adhere to various countries’ industrial lighting standards and regulations.

The Commercial segment generated revenues to the tune of US$ 275.6 Million in 2018 and witnessed slowdown in 2020 due to the COVID-19 Pandemic, reaching a Market value of US$ 300.2 Million in 2020 from a valuation of US$ 333.5 Million in 2019, The Commercial segment is expected to witness significant growth once the economic activities take pace, so the post COVID-19 period is significant for the growth of the Commercial segment, it is expected to achieve a Market Size of US$ 989.9 Million in 2026.

Residential Segment to grow at the fastest Rate

Portable plug-in fixtures, such as table lamps, pendants, and floor lamps, as well as permanently fixed fixtures, such as under recessed sconces and cabinet lights, are included in the residential application. The home market has grown rapidly in recent years as the adoption of LED A-type bulbs has risen dramatically as a result of lower product pricing and expanded government and agency subsidy programmes. During the pandemic, however, demand in the residential sector was significantly impacted, as several vendors announced price increases due to increased product manufacturing costs.

The Residential segment attained a Market Share of 32% and generated revenue of US$ 169.6 Million in 2018 and it witnessed significant demand but due to supply bottlenecks, the segment witnessed mild growth of 12% in 2020 over the previous year to reach a Market Size of US$ 241.2 Million in 2020 from a valuation of US$ 215.4 Million in 2019, The Residential segment is expected to witness significant growth once the supply issues are overcome, this segment is expected to achieve a CAGR of 27% to reach a Market Valuation of US$ 1.01 Billion in 2026

Industrial segment to witness significant growth in the post COVID-19 era

The Industrial segment witnessed a downfall due to the closure of economic activities caused by the lockdown imposed from March 2020 in Indonesia which still continues with partial closure of major economic activities. Post COVID-19 once the Industrial activities take pace the segment is expected to grow at a rapid pace.

The Industrial segment attained a Market Share of 18% and generated revenue of US$ 95.4 Million in 2018 and it witnessed significant demand but due to supply bottlenecks, the segment witnessed decline of 16% in 2020 over the previous year to reach a Market Size of US$ 94.6 Million in 2020 from a valuation of US$ 112.6 Million in 2019, The Residential segment is expected to witness significant growth once the supply issues are overcome, this segment is expected to achieve a CAGR of 27% to reach a Market Valuation of US$ 1.01 Billion in 2026

Market Outlook

Indonesian market value is currently at US$ 820 Million and it witnessed significant decline in 2020 due to the outbreak of the COVID-19 Pandemic restrained by factors such as Longer lead times, depleted supplies, and premium pricing.

The post COVID-19 is expected to offer a plethora of opportunities for the players in the LED Market in Indonesia. The LED Market in Indonesia is expected to witness a significant growth to the tune of 26% to reach a Market Size of US$ 2.4 billion by 2026 registering a CAGR of 16% in the forecast period of 2020 to 2026.

The increasing demand for power-efficient lighting devices across residential, commercial, and industrial industries, and the growing concern regarding reducing non-renewable energy sources, and lowering prices of Light Emitting Diodes (LED) lights are expected to drive the industry growth.

The country currently has an electricity penetration rate of around 60-65%, resulting in a significant population living in darkness. Blackouts and power rationing takes place even in the country’s main capital Jakarta.

Indonesia plans to increase the penetration rate of its electrical power and the Indonesian government has acknowledged LED technology as a key driver in meeting its energy-saving targets. Apart from promoting the usage of LED lights in public construction projects, they are also being applied in various commercial and transportation lighting applications.

The bottom line is that the COVID-19 pandemic’s repercussions will be felt for a long time in the Indonesian LED Market. Longer lead times, depleted supplies, and premium pricing are just a few examples of how suppliers, manufacturers, and customers may be affected. Many smaller enterprises in this industry are almost certain to fail as a result of the rapid loss of revenue, leaving holes in the supply chain that may not be filled for some time. The longer the pandemic continues to spread over the world, the longer it will take to recover.

Technology Roadmap

The popularity of the online retail platform is rapidly increasing, due to its advantages such as the ability to read customer’s feedback and the ability to compare the price of goods, brand, increased comfort, and product variety. Indonesian consumers are youthful and digitally savvy given the relatively young and productive population age of 30.2 years old. They are also well connected to the internet, with slightly more than 50% of them using the Internet regularly. Thus, the distribution of goods via online retail platforms is anticipated to boost the growth of the LED market.

Apart from the online retail platform, increasing investments will go into systems that will fit LED lights with aluminium heatsinks which helps heat generated by LEDs to be distributed properly so that the LED chip does not get damaged.

There is a rising trend for purchasing consumer products online and this is mainly due to the increasing emphasis on e-commerce and e-commerce platforms. Indonesia is expected to have almost 190 million people using some kind of e-commerce by 2024 which in turn propels the growth of the LED market in Indonesia.

Distribution Chain Analysis

Fig. Indonesian LED market distribution chain

Competitive Landscape

The LED lighting market is highly fragmented in nature, with the presence of numerous local and regional players, such as General Electric Company, Signify N.V., Hubbell Incorporated, OSRAM Licht AG, and Cree Inc.

Mergers and acquisitions are a key sustainability strategy adopted by market players. In recent years, players in the LED lighting industry have launched several new and advanced products to stay ahead of their competitors. For instance:

In June 2020, Signify N.V. announced the launch of new and updated Philips Hue products to enhance its portfolio. The new range of products includes the Philips Hue White A21 bulb, LED spot-ceiling lights, Philips Hue Lightstrip Plus, Philips Hue Bloom table lamp, and Philips Hue White Ambiance indoor light fixture.

In May 2020, OSRAM Licht AG launched the Synios S 2222 family of lights, suitable for a wide range of applications, such as lighting for electronic devices, ambient lighting for aircraft and trains, and architectural lighting.

The graipensereg Indonesian market currently offers its as Sulwhasoo aneige hosted solo consumers on parashio with AP Amorepecine with a floating. Indonesian LED giants have linked a business deal with LeKise International, Mouser Electronics, Solarens Ledindo, PT Philips Indonesia, and PT OSRAM Indonesia

Competitive Factors

The Indonesian led industry is highly fragmented and fairly competitive. The business space is shared by the biggies as well as the new entrants. The price and quality of service provided by these players will be the major factor to sustain competition.

For the LED industry, Indonesia looks set to deliver world-leading growth rates during the course of the next five years. The expansion and investments gains for LEDs are likely to be high for most categories making it one of the fastest-growing markets in the world. Various companies are focusing on organic growth strategies such as product launches, product approvals and others such as patents and events.

There is a huge disconnect between LED makers and lighting companies. There are numerous aspects to this problem, for example, the lack of standards for LEDs, or the frustration experienced by lighting manufacturers in not being able to obtain a reliable and long-term supply of LEDs with consistent color properties. LED manufacturers are making significant improvements to the performance of their devices and may then phase out lower-performing and older devices.

Key Market Players

The key market players in the Indonesian LED market are LeKise International, Mouser Electronics, Solarens Ledindo, PT Philips Indonesia, and PT OSRAM Indonesia.

Company Profiles of Key Market Players:

LeKise Group

LeKise Group is an industry producing LED lights and solars as the best energy-saving solution
The company specializes in providing the best energy-saving solution through fluorescent, LED, and Solar lighting products to its valued clients across the globe.

Mouser Electronics

Mouser Electronics provides raw materials for the production of LED lights.
The company specializes in the global distribution of semiconductors and electronic components.

Solarens Ledindo

Solarens Ledindo is a large scale LED lights manufacturing companies.
They specialize in the system installation integrators of renewable energy.

PT Philips Indonesia

PT Philips is a diversified health and well-being company, focused on improving people’s lives through meaningful innovations.
The company’s Lighting sector focuses on innovative ways of using light to simply enhance people’s lives by mass production and supplies of LED light products

PT OSRAM Indonesia

PT OSRAM is a company focused on manufacturing innovative and futuristic LED lights.
The company is mainly focused on contributing to a more energy-efficient, sustainable, and green future from the manufacture of LED lights.

Strategic Conclusion

An aggressive decline in the prices of Light-Emitting Diode (LED), coupled with the transformation in energy policies across the world, has been driving the market growth. Growing stringency of regulations in terms of inefficient lighting technologies and rising government efforts toward sustainable development are the key growth drivers of the Indonesian LED market.

Covid-19 has made its impact on the led market but the market is not much affected by it, so business will not be slowed down by any big margin. The lighting segment is expected to contribute the largest growth towards the LED market and is expected to be driven by the government initiatives, decreasing LED prices, and investments from multinational players in the Indonesian market.

References

Appendix

List of abbreviations

LED: Light Emitting Diode
CAGR: Compound Annual Growth Rate