LED Chips Market Assessment, By Type [Chip-on-Board, Dual In-Line Package, Surface Mounted Device, MicroLED, Others], By End-use Industry [Residential, Industrial, Commercial, By Region, Opportunities and Forecast, 2017-2031F

LED Chips Market Assessment, By Type [Chip-on-Board, Dual In-Line Package, Surface Mounted Device, MicroLED, Others], By End-use Industry [Residential, Industrial, Commercial, By Region, Opportunities and Forecast, 2017-2031F

Global LED chips market is projected to witness a CAGR of 10.1% during the forecast period 2024-2031, growing from USD 20.2 billion in 2023 to USD 43.62 billion in 2031. The LED chip market is a niche segment of the entire global lighting industry that drives advancements in energy-efficient lighting solutions. LED chips serve as the main light source in general lighting, automotive lighting, and displays. They stand out for their energy efficiency, longer life, and environmental sustainability compared to other conventional lighting technologies. The segment has witnessed remarkable growth due to the emergence of demand for energy-efficient lighting solutions.

Continuous innovation for efficiency, brightness, and color rendering of the leading players in the LED chip market is meeting diversified industrial demand. The automotive sector, in particular, is a major influencer of demand, targeting the high-performance LED chips used in headlamps and interior lighting. The increasing adoption of LEDs in smart lighting systems and in displays used in smartphones and televisions further lead to the market expansion. The LED chip market holds great power in shaping future light technologies with respect to the sustainability of the globe, efficiency, and energy conservation.

In July 2023, ROHM announced the introduction of SMLVN6RGBFU, a chip LED that features a color RGB designed particularly for interior use in the automobile industry. Other features include status indication in instruments, CID, center information displays, and accent lighting in footwells or door handles. To address the problem with color variation, ROHM implemented very precise control of the luminous characteristics and enhanced color mixing, attained by in-house device technology. To produce the right color emission from an RGB chip, LEDs are increasing the wavelength and brightness of the embedded red, green, and blue (RGB) elements. ROHM distinguishes itself by minimizing color discrepancies of elements through a vertically integrated production system, which is the company's principal strength.

Energy Efficiency Concerns Create Significant Demand for LED Chip Market

Energy efficiency is the driving force in the adoption of LED chips worldwide. These LEDs use very low power, which means there is a huge saving of energy, therefore, a lesser impact on the environment. In addition, microLEDs comply with stringent regulations on energy efficiency and, therefore, present a responsible environmentally friendly alternative for businesses and consumers. As energy-saving lighting solutions get more demand, the LED chips market is at the threshold of huge growth. Its influence is growing further with the development of smart lighting technologies and connected systems, wherein LEDs chips become a cornerstone for modern lighting solutions worldwide.

For instance, lighting consumes almost 5% of the world's CO2 emissions. If the world switches to energy-efficient LED technology, it can avoid more than 1,400 million tons of CO2 emissions and not build 1,250 power stations. LED lighting with its tremendous savings from 50-70% is recognized as one of the most practical and easily deployable technologies for cities to transition to a low-carbon economy. The shift towards LEDs will help to peak reduction in emissions and achieve a sustainable environment in the next decade and beyond will influence the adoption of Chip-on board LED and MicroLEDs, which in turn, is driving the growth of global LED chips market.

Technological Innovations Influencing LED Chips Market

OEMs are more focused on enhancing the quality of products and brightness of light by integrating new technologies to make innovative LED lighting solutions, which include tunable light features. Tunable lighting provides the facility to modify color temperature on LED lights and facilitates adjustments between warm and cool light. Auto adjustment features are becoming prominent in the commercial and residential sectors, with building spaces such as retail stores, hotels, office buildings, hospitals, homes, apartments, and others. Many distributors are offering LEDs fitted with tunable lighting capabilities, responding to the increasing demand in the market.

In April 2023, Sharp NEC Display Solutions in Europe unveiled the NEC LED FC Series. It features the latest chip-on-board (COB) technology, renowned for its superior contrast, high reliability for public spaces, and top energy efficiency. The FC Series is built around the proven F style cabinets for ease of installation and flexibility, with front serviceability and easy access to all components for its maintenance. With a contrast ratio of up to 20,000:1 and deep blacks, the display renders content with vivid clarity that guarantees a remarkable imaging performance and an ideal viewing experience under all possible ambient light conditions. COB technology by Sharp NEC is energy-efficient and enhances brightness output while consuming around 40% less power than standard SMD LED technology. It is a new combination of innovative features positioning the NEC LED FC Series as the best solution for those desiring first-class visual performance, reliability, and energy efficiency in public display applications.

Also, in February 2022, Crestron Electronics announced its huge step into the lighting space with tunable LED light fixtures focused on human-centric lighting. Therefore, the latest technological advancements are affecting the growth of the LED chips market.

Asia-Pacific to Hold the Largest LED Chips Market Share

Global LED chips market share is dominated by Asia-Pacific. The region has been considered as the largest hub for numerous technologically advanced semiconductor firms and manufacturing hubs, driving the demand for top-quality lighting solutions such as COB LEDs. Energy efficiency regulations in countries such as India and China are very stringent, and therefore, the adoption of energy-efficient lighting technologies has increased. It is boosting the market for COB LEDs and microLEDs in the region.

Moreover, investments in energy-efficient lighting solutions have increased as the region’s focus is on sustainable and eco-friendly measures. Other major factors are the availability of key market players and innovative research and development activities for the LED chip industry in the Asia-Pacific region, which contribute to the market's growth.

Prices of LED lighting chip products in China have increased by 10-20% since November 2022. Some Chinese LED chip manufacturers' strategic exit from the mid- and low-end market segments is reducing the supply of specific LED lighting chip products. Therefore, inventory is on a downturn, and the international market demand further contributes to it. So, the demand for LED chips increases in other countries such as India, South Korea, Taiwan, and others.

Although, pandemic caused some companies to exit from LED chips market, wafer production capacity of China had grown by more than 20% in 2020. As a result, monthly production of 4-inch wafer reached almost 3.5 million. Zhaochi's Nanchang plant had increased production since Q4 in 2019, reaching 500,000 pieces monthly, which made Zhaochi the third-largest LED chip manufacturer in China followed by Sanan Optoelectronics and HC Semitek. Besides, San'an Optoelectronics' Quanzhou and Zhaoyuan Fuzhou plants have expanded production capacity in 2022. The increasing capacity is predominantly concentrated in the lighting sector. Q1 of 2023 witnessed oversupply of lighting chips because of the increased capacity, which further witnessed declining price in such a way that the prices of 2-inch chip dropped to USD 6.90 (RMB 50) per chip. Furthermore, original equipment manufacturers (OEMs) are focusing more on low-end LED chips due to higher operational efficiency.

Government Initiatives Fostering Revenue Growth

Government policies, such as subsidies, incentive schemes, and others, implemented by various governments at global level are boosting the adoption of global LED chips market. For instance, the Indian government approved a production linked incentive scheme for white goods, including Air conditioners and LED lights in 2021 with a budget allocation of USD 7.5 billion (INR 62.38 billion) Estimates show that over next five years, it will attract additional investment of USD 9.51 billion (Rs 79.20 billion), leading to a production value of USD 201.8 billion (INR 1680 billion). Further, it is likely to contribute exports worth USD 77.3 billion (INR 644 billion) to the exchequer and direct and indirect revenues worth USD 59.22 billion (INR 49.3 billion). The scheme is likely to generate about four lakh new employment, both direct and indirect.

Future Market Scenario (2024 – 2031F)

Utilized in automotive lighting scenarios such as headlamps, tail lamps, and interior lighting, DC LED chips contribute to enhanced visibility, safety, and aesthetics in vehicles. These chips offer the added advantages of reducing the weight and size of lighting systems, thereby improving overall durability and performance.

The integration of LED chips into smart city frameworks is expected to play a pivotal role in creating comprehensive urban smart lighting solutions.

Energy efficiency will be a major concern in upcoming LED chips. The factor may pose a major challenge for the growth of the global LED chips market in the forecast years.

Key Players Landscape and Outlook

The LED chips market is very dynamic with prominent players such as SMART Global Holdings, Inc., Wolfspeed, Inc., Koninklijke Philips N.V., Samsung Electronics Co., Ltd., Seoul Semiconductor Co., Ltd, ams-OSRAM AG, Everlight Electronics Co., Ltd., CITIZEN ELECTRONICS CO., LTD., Nichia Corporation, GE Lighting. In February 2022, Luminus Inc. expanded its product range of chip-on-board (COB) arrays by introducing 95CRI-minimum Smooth White COB series. These COB arrays are specifically crafted for spotlights, downlights, as well as lighting applications in museums, hospitality, and architecture. The newly launched LED arrays are used for their excellent uniformity, consistent color over various angles, and remarkable long-term color stability.