Samsung to Exit the Competitive LED Lamp Business

Samsung has decided to discontinue its LED lamp business in all countries outside of its home operations and headquarters in South Korea. In recent weeks, news had been circulating that Samsung was planning to announce it would leave the LED lighting business altogether. While the new development stopped short of a complete divestment with Samsung continuing to keep its LED luminaire business, the news is proof that increasing competition from lower-priced Chinese competitors is making the overall LED market less profitable for most manufacturers.

The LED luminaire (fixture) market has not seen the same price competition that has plagued the LED lamp market. LED luminaire manufacturers have managed to maintain higher margins as products are more differentiated. For all its heft, however, Samsung has not also been able to benefit from its vertically integrated supply chain, in which the company provides components for its own internal divisions to market to external markets.

Lower-priced Chinese competitors have been giving Samsung’s LED lamp business increasing competition. A few years ago, the low-priced products from the Chinese were generally of inferior quality in terms of lifetime, efficiency and color rendering. But the LED lamps from China today are comparable in performance while remaining significantly cheaper, forcing many high-end LED lamp manufacturers such as Samsung to drop prices significantly and to accept lower margins. The margins, in turn, have now become unsustainable for a number of suppliers.

Samsung’s pull out is not the first such move by a company in the LED market. In the last 12 months Toshiba shelved its LED lamp market in the US and now supplies to just Europe and Asia. Toshiba’s move stemmed from its inability to obtain the market share it had initially hoped for, in the wake of stiff competition from rival such as Cree, Feit Electric, Osram Sylvania, Philips and TCP.

For its part, Samsung had previously tried to gain traction in the North American lamp market, with a strong presence at leading trade shows and via online channels. Samsung will still look to maintain and develop its LED lamp business in its native South Korea, but pulling out of the global LED lamp market could have repercussions on its total LED component business supplying the LED packages and modules for its lamps.

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