Osram lights growth path with LED products

German lighting company Osram GmBH is banking on China's growing demand for energy-efficient light-emitting diode products to provide the much-needed impetus for its growth in the country, a top company official said.

"China's lighting market is expected to maintain an annual growth rate of 10 percent, faster than any other country in the world," said Wolfgang Dehen, CEO of Osram GmbH. "It is not only the biggest single market for us today but also the world's largest lighting market with a significant growth potential in LED products."

Dehen, who is also the chairman of the managing board at the German company, said the general lighting market in China could have an estimated value of around 23 billion euros ($31.8 billion) by 2019, compared with 15 billion euros in 2013.

The clear driver for the market in China will be semiconductor-based products, such as LED lamps and fixtures, that will ultimately replace halogen lamps in China, Dehen said.

China plans to have 80 percent of LED products produced locally by 2015, according to the country's first Five-Year Plan for the semiconductor lighting industry (2011-15) released by the Ministry of Science and Technology.

But the actual market share of semiconductor-based products such as LEDs was only 29 percent last year, leaving much room for further development.

Due to advantages like energy efficiency, longer life span and environmental safety, LED products are set to transform the lighting industry by reducing energy consumption and electricity charges.

Dehen says that lighting companies have been forced to cut costs further to stay afloat due to the intense competition in China. Osram will continue to adopt the "in China, for China" strategy, which seeks to increase the localization efforts and drive sustained growth.

The company has already made ther first step in its localization drive by making LED products from its new 100,000 square meter facility in Wuxi, Jiangsu province. It is Osram's fourth production base in China and the company's third LED production base worldwide, including plants in Germany and Malaysia.

Aldo Kamper, CEO of the Osram Opto Semiconductors business unit, said the new facility in Wuxi would augment the Penang plant in Malaysia by manufacturing general, automotive and industrial lighting products for key segments of the Chinese market.

"Billions of LED chips will be packaged here each year," he said, adding that the company will invest a "low three-digit million euro figure" over the next five years. When complete, the new assembly plant will be able to accommodate up to 2,100 employees.