Making sense of SSL markets in nonsensible conditions (MAGAZINE)

Nov. 5, 2021
MAURY WRIGHT muses on the status of the LED and solid-state lighting supply chain and the potential for growth markets in the coming year.

As 2021 draws to a close, I did a mental review of the stability and status of the LED and solid-state lighting (SSL) sectors, and I suppose economies and society in general. The year 2021 was easily better than 2020 on most all fronts. But we are still faced with a pandemic capable of ravaging society and business operations. Vaccines and therapeutic advancements are helping the situation and economies remain relatively strong despite signs of inflation — a market condition that seemingly had vanished. So how do we make sense of the situation, and what do we expect from 2022?

Now I asked the question, but I don’t have an answer — just some observations. The supply chain is the major direct problem impacting most everything including autos, computers, furniture, and much more. Shortage of computer chips underlies much of the problem but clearly not furniture. One day I read something that lays the conundrum at the feet of port workers and truck drivers, and the inability to offload container ships. The next day I’m convinced that the pandemic actually did shift consumer spending habits, and the real issue is the shift of money and demand away from service industries to consumer goods. That shift has led to more orders than the system can handle expediently.

What I’m seeing is a perfect storm of intertwined forces that were unleashed by the COVID-19 pandemic. My guess is that the supply chain can recover more quickly than many expect. I took our car in for service at a dealership recently, and that dealership had exactly one vehicle for sale. For the life of me I could not figure out why three sales representatives were lurking. Hopefully we see an improvement soon.

As for the LED and SSL sectors, the package LED components have not been impacted the way the digital ICs that lie at the heart of complex electronics have been impacted. Moreover, the lighting sector has made real progress in diversifying supply chains. Did you see the Acuity financial results for Q4 and fiscal 2021 released in October? Net sales were up 11.4% in Q4 compared to the prior year and profit margin was up 10 basis points.

Furthermore, some applications are going gangbusters. Horticultural lighting is featured on our cover and is one such example. Lighting systems for produce and for cannabis are all doing well. Recent research in cannabis lighting by Readex showed the use of LED lighting in cannabis grows was up 45% since 2016 because growers have learned to leverage LED spectrum, and that knowledge combined with techniques such as vertical farming can maximize yield.

General lighting should also be a growth (pun intended) market. There are still plenty of legacy luminaires to retrofit. Moreover, as our coverage on Strategies in Light suggested, there is a lot of poor-quality installed LED lighting that will need to be replaced. The problem in lighting is price erosion, but the Strategies keynoter had thoughts on that as well.

Even the street light market, which is perhaps the application most deeply penetrated by SSL, offers reasons for optimism. There are a lot of installed street lights that are ten years old now and even more that have not delivered on the quality of light potential. We should soon see the start of a replacement cycle of the retrofitted inventory.

The commercial office space does remain a concern. A lot of workers will not be returning to offices. But I see most of our sectors moving forward in 2022. Here’s to hoping I am right and I didn’t even discuss promising markets in places such as ultraviolet and automotive lighting.

Maury Wright


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