A common set of standards for LED lighting firms in Greater China was announced recently and as the China government plans to expand the LED lighting market, this common set of standards can help Taiwan-based firms enter the China market.
The common standards will be expanded to emerging markets such as India, Russia, Southeast Asia, and South Africa in the future. Competition over standards is about to begin.
Taiwan-based LED firms have been aggressive in obtaining business in China in recent years, and with a common set of standards, the firms have an opportunity to expand market share.
The LED lighting market is expected to boom and major markets around the world have been introducing standards and verification systems. Despite the booming market, products have been lacking consistent quality and this has become a barrier for commercialization. Lead by international brands such as Philips and Osram, the LED industry formed the Zhaga Consortium, aiming to standardize the interface of LED lighting. The consortium has been setting standards for the lighting engine interface for LED street lamps, spotlights, and indoor lighting. However, the standards are not mandatory.
Some governments have been using standards as a way of nurturing the domestic LED lighting industry. For example, the US has Energy Star, an energy standard for consumer products introduced by the US Department of Energy. To enter the US market, LED components need to pass a testing process that lasts 6,000 hours to obtain Energy Star certification. Some firms obtained information on the verification process before the announcement, hence while other firms try to obtain verification, some firms have already completed self-verification. This has been seen as an entry barrier to the US market.
Recently, the US Department of Energy selected five solid state lighting firms to allocate a total subsidy of US$10.10 million over two years. The five firms are Cree, which obtained US$2.3 million, Eaton, which obtained US$2.4 million, OLEDWorks, Philips Lumileds and PPG Industries all obtained subsidies of US$1-2.3 million. Most of these firms are based in the US. The verification and subsidy advantage could allow US-based firms to stay ahead of the game for 3-5 years.