McKinsey releases lighting market report

Aug. 2, 2011
Based on a worldwide survey of lighting professionals and consumers, as well as other input factors, McKinsey has developed a lighting market model that estimates the size of the global lighting market through to 2020, differentiated by application, geography, and light-source technology.
The lighting market has been receiving much attention lately due to its high potential for CO2 abatement and its many new entrants. However, no comprehensive report exists providing a holistic view across all the key sectors and applications, geographies, light-source technologies and different stages of the value chain.

To close this gap, McKinsey & Company was commissioned by Osram to draw up a market report with an independent perspective on the global lighting market and its likely evolution.

>>Download McKinsey’s lighting market report
(PDF, 1.2 MB)

The McKinsey report's authors will present their findings in a presentation entitled "Lighting the Way: Perspectives on LEDs and the Global Lighting Market" during the Keynote Session at this year's Strategies in Light Europe in Milan, Italy.

In order to develop a holistic overview of the global lighting market, including an estimate of LED market share going forward, McKinsey conducted a worldwide survey of lighting professionals as well as consumers from seven different countries (the US, Germany, Japan, China, Russia, Brazil, and India).

Based on this survey as well as other input factors, McKinsey developed a lighting market model estimating the size of the global lighting market through to 2020, differentiated by application, geography, and light-source technology.

Projections show that the global lighting market is expected to have revenues of approxi¬mately EUR 110 billion in 2020 – comparable to the global TV market. A number of megatrends underlie this expansion. Global population growth and urbanization are increasing the overall demand for lighting products. Resource scar¬city and climate change concerns are driving the industry trend towards more energy-effi¬cient lighting technologies. This is being accelerated by government regulation on energy efficiency around the globe.

The advent of LED technology – only the fourth lighting technology in the history of human mankind – is set to transform this industry. LED technology has not achieved a com¬petitive cost position in most applications up to now. But heavy investment from various companies is forecasted to cut costs at a rate of 30 percent per annum, and LED is becoming a broadly affordable technology.

Figures suggest that estimated global revenues from the LED lighting market will grow at 30% per annum, amounting to almost EUR 65 billion by 2020 – close to 60 percent of the overall lighting market.

The three most relevant sectors in lighting are general lighting, automotive light¬ing, and backlighting. This market report covers these 3 major sectors with a deep dive in general lighting: this is the largest sector, accounting for approximately 75 percent of the total lighting market.

Table of contents

Executive summary

Chapter 1: Overview of the global lighting market
1.1 A poorly understood market, despite its size
1.2 Growth driven by various megatrends – especially energy efficiency
1.3 High fragmentation: lighting used in many different ways

Chapter 2: The LED revolution
2.1 Prices falling: dramatic cost reduction trend
2.2 Penetration rising: growth of over 30 percent p.a.
2.3 Value chain transforming: disruption of industry structures
2.4 Technologies transitioning: energy efficiency rising throughout the lighting sector

Chapter 3: Deep dive on the general lighting market going forward
3.1 Applications: architectural is the early LED adopter, with residential moving slowly but significantly
3.2 Geographies: Asia leads the global LED general lighting market
3.3 Structural shift: new installation business overtaking replacement