LG Innotek, a local light emitting diode maker affiliated with LG Group, is expected to benefit from the growing LED lighting industry this year thanks to the global movement to phase out incandescent light bulbs, industry sources said.

Further, global sporting events such as the Olympic Winter Games and the World Cup are expected to create more room for growth, as the stagnant television market may receive a leg up as people flock to the sets to watch their favorite sports games.

LED, or light emitting diode, is about 30 percent more energy efficient than incandescent lighting and less straining on the human body. It’s a significant ingredient for TVs, car lights and lighting in general.

Last year, LG Innotek’s LED business was in the red due to oversupply combined with sluggish television markets worldwide.

However, as incandescent light bulbs begin to be prohibited by law in a growing number of countries, mainly in a bid to save energy and to reduce carbon emissions, many appeared to be drawing a rosy picture for LED lamp makers like LG Innotek.

NH Investment & Securities analyst Kim Chang-jin predicted that the LED segment for LG Innotek would turn around in the second half of next year.

“The demand for LED lighting is expected to grow higher than last year,” LG Innotek official Jung Jae-wook said. “Last year, our LED business including television stood at about 1 trillion won ($950 million), accounting for 30 percent of total sales.”

In Korea, the production and import of 25-watt and 70-watt incandescent light bulbs are prohibited starting from January. The Ministry of Trade, Industry and Energy said last month it would support a total of 42.7 billion won for the project to shift to LED lighting. 70-watt and 150-watt bulbs were already banned from last January.

This is not only limited to Korea.

“The United States, where incandescent light bulbs account for over 60 percent, will ban sales of 40-watt and 60-watt incandescent light bulbs this year,” said Kim Kap-ho, an analyst with Seoul-based Kyobo Securities.

China is also expected to expand its regulations on 60-watt incandescent light bulbs this year and 15-watt bulbs in 2016.

Kim estimated that “the LED lighting industry would increase from 14 trillion won in 2012 to 85 trillion won 2020. In line with this, the penetration rate will jump from 16 percent to 67 percent.”

However, there are sources who view the profitability of the business more conservatively. LIG Investment & Securities’ researcher Kim Ki-young said though the LED lighting industry has marketability in the long term, there would not be a surge this year.

“The prohibition of incandescent light bulbs will not all lead to LED lighting because of other alternatives like fluorescent light. It is still three times more expensive than incandescent light bulbs.”

By Shin Ji-hye
(shinjh@heraldcorp.com)