The Lighting Industry: Version 3.0

Just when you think the lighting industry has settled down after a decade of mergers and acquisitions, another round of developments comes along. In the past 10 months, companies known for their lighting divisions, such as Philips and GE, have explored and—in the case of Philips—divested themselves of these businesses, similar to when Siemens spun off Osram in 2013. Coupled with this, Samsung and Toshiba—two global electronics companies, who, over the past five years, seemed poised to make a major push into lighting—have pulled out and pulled back, respectively.

What’s going on? October reports from Thomson Reuters suggest that while demand for LED lighting remains strong, increased competition from Chinese manufacturers has drastically reduced profit levels, making the LED sector less attractive as a long-term investment.

What does this mean for the U.S. lighting market? Thus far, the players have been slow to comment, when they have commented at all. But here’s what we do know:

Philips: A Sept. 23 story from Fortune indicated that Royal Philips was “spinning off its lighting unit to concentrate on its healthcare and consumer goods business. … The healthcare and consumer goods business will become HealthTech with about $19 billion in sales, while its lighting unit will operate as a standalone company with about $9 billion annual revenue.” Philips, like many global conglomerates, has been the victim of its own bureaucracy, suffering from lack of information between its European home and North American division. In the U.S., there has been no press statement regarding the spin-off of the lighting business. The only news that signaled any change was the January announcement that Amy Huntington had been named president of Philips Lighting Americas.

GE Lighting: Also in September, Bloomberg reported that GE, which sold its home appliance division to Swedish company Electrolux for $3.3 billion, might do the same with its lighting division. But a company spokesperson, who spoke to Bloomberg on the grounds of anonymity, said, “GE Lighting is not part of the sale of the GE Appliances business to Electrolux and will continue to be a part of GE.” The same month, Fortune reported that Beth Comstock was assuming leadership of GE Lighting, in addition to her existing responsibilities as chief marketing officer of General Electric. This means that GE Lighting CEO Maryrose Sylvester will retain her title but report directly to Comstock rather than GE CEO Jeffrey Immelt.

Samsung: This past fall, Samsung CEO Oh-Hyun Kwon denied rumors that the company would be suspending its LED lighting business. At the same time, there were reports that the company had exited the global LED lamps business to focus on LED components. In December, electronics industry blogs reported that the company’s two main U.S. operations—Samsung Electronics America (of which Samsung LED was part) and Samsung Telecommunications America—would merge and operate under the name Samsung Electronics America. Further proof of the company’s lighting exit was a Jan. 21 release from LED lighting manufacturer MaxLite indicating that Jim Hunter, formerly with Samsung LED Lighting, had been appointed senior vice president of sales and marketing.

Toshiba: In a March 5, 2014, press release, Toshiba International Corp. (TIC) announced that its lighting business was undergoing reorganization. The LED Lighting Systems Division within TIC discontinued operations at the end of March and responsibility for Toshiba Lighting in the Americas was transferred to San Antonio, Texas–based Greenstar Lighting Products. The change represents a de-emphasis on lamps and an increased focus on street and outdoor lighting. No further information has been provided by Greenstar.

So what will the lighting company of the next decade look like? And can we even look that far ahead? Today, time frames seem to have been dramatically shortened, and it’s probably more realistic to ask what the lighting company of the next three to five years will look like. But one thing is for sure, the lighting industry version 3.0 will be unlike anything we’ve seen before. •