Higher Electricity Rates Heat up LED Lamp Sales in Taiwan

Makers of LED bulbs inundated with orders

Amid the buzz surrounding energy efficiency of LED bulbs recently, one wonders if many consumers in Taiwan have been paying attention. Amy Wu was overheard at a box-type mart in Taoyuan County, northern Taiwan, talking to a friend while picking up an NT$199 (US$6.8) LED light bulb, ready to test for herself the reported electrical savings relative to that of incandescent bulbs, which is especially significant with the recent hikes in power rates on the island.

A typical 8W LED bulb consumes 40% less electricity than fluorescent lamps and 90% less than incandescent bulbs, but lasts relatively longer, according to manufacturers.

With electricity rates in Taiwan to be raised by 20% this June, shoppers have been reportedly rushing to stock up on LED lamps, prompting local brand-name suppliers of LED light bulbs to replenish shelves at contracted retailers.

Everlight Electronics Co., Ltd., a world leading LED packager that has diversified into light fixture operation, reports having sold out 100,000 NT$299 (US$10.3) LED light bulbs in a month at 7-11 stores by the end of May, so has been restocking such stores with another 100,000 bulbs. With the privilege of supplying the President Enterprise-run 7-11 chain, Everlight commands over 50% of the local market for branded LED light bulbs.

Delta Electronics Inc. is urgently restocking LED bulbs at Costco's Taiwan stores after selling out, with Delta executives saying this time the volume discounter's inventory will be quintupled to prevent shortage.

Delta's weekly shipments of LED bulbs in April tripled from March and production lines will be inundated with orders throughout July; and to meet brisk demands at home and overseas, the maker is boosting LED lighting capacity by 150% by 2013, according to company executives.

Such incredible demand is motivating Everlight to mull adding Carrefour stores as contracted retailer in June, and Delta may sign up the 23 B&Q stores in Taiwan to meet the rising demand for LED light bulbs.

Tatung Joins the Game
Higher electricity rates is also drawing household-appliance maker like Tatung Corp. into the LED lighting game, with its advantage being not only its LED subsidiaries but also presence via its 240 wholly owned stores island-wide.

Tatung has recently launched 20-some types of LED lamps in cooperation with subsidiaries San Chih Semiconductor Co., Ltd., a sapphire-wafer maker, and Forward Electronics Co., Ltd., its LED packaging business. The lamps are sold at Tatung stores and sometimes given away as premiums with large household appliances like TVs. Tatung predicts LED lighting to generate approximately NT$1 billion (US$34 million) in revenue in the first year of operation.

Taiwan's industry executives say before the power rate hikes were announced, total sales of LED lamps in Taiwan had been lukewarm regardless of supposedly rising sensitivity to carbon reduction. But with wallets to be hit by higher electricity rates, Taiwanese consumers and enterprises are rushing to switch to LED lighting, straining local makers' capacities as they try to also fill orders from the U.S. and Japan.

Enterprises Hit Hardest
The power rates will hit industries on the island the hardest, rising on average 23-27% to drive them to increase installation of LED lamps. According to Taiwan's LED-lighting manufacturers including Delta, Everlight, Edison Opto Corp. and Lextar Electronics Corp., they have landed considerable orders from local enterprises, resulting in more orders to LED chipmakers.

Edison, Lextar and Unity Opto say they have received millions of NT-dollars of contracts for LED light tubes from enterprises. Unity Opto Chairman Alpha Wu said that orders have been swarming after the government announced power rate hikes, reporting the company even landed NT$30 million (US$1.03 million) of orders for 50,000 LED light tubes in a week in April, and that heavyweight buyers are lining up.

Unity's revenue for April rose 20% from March due to brisk demand for LED light bulbs, and second-quarter revenue by 50%.

An executive of an LED manufacturer says, after installing LED lamps, a community in northern Taiwan has reduced electricity bill of public facilities to only NT$50,000 (US$1,724) monthly from NT$130,000 (US$4,482).

Edison executives estimate that robust orders will considerably raise capacity utilization rate for the second quarter, adding that the company is shifting emphasis to indoor lighting from outdoor lighting, and will promote indoor lighting to account for 60% of total sales by the end of this year.

Tatung and President's 7-11s are also their own enterprise customers. Tatung has begun replacing traditional lights at its offices and factories throughout the island and overseas outlets with LED lamps; while the 7-11s are reported to replace all the lights in the 4,800 stores island-wide with LED lamps.

Governmental incentives will also fuel the current trend. The Ministry of Economic Affairs has announced appropriation of a budget of NT$100 billion (US$3.4 billion) to fund enterprises with plans to purchase energy-saving products, including LED lamps. Also, the government will spend NT$2.7 billion (US$95 million) in three years to replace the 326,000 traditional streetlights with LEDs to save 143 million kilowatt-hours of electricity yearly.

Industry executives predict the higher power rates will help boost LED-lighting penetration in Taiwan to 30% in one and a half years, building the presence significantly of such lighting in Taiwan by 2015.