Lit to Collapse: China’s LED Industry Shakeout and the Carbon Neutrality Breakthrough
Low-End Capacity Collapse: A Long-Overdue Industry Purge
By 2025, China’s LED lighting industry is undergoing an unprecedented wave of bankruptcies. Once-stable companies are now falling in rapid succession: Foshan Wei'ao Lighting shut down abruptly after a decade of operation; Jiangmen Shengliang Lighting vanished with funds; and even Zhongshun Semiconductor Lighting, a nationally recognize.
Root Cause: Ailing Low-End Manufacturing Model
OEM Dependency Dilemma: Chinese LED lighting manufacturers have long been entrenched at the bottom of the global value chain, relying heavily on OEM/ODM models for Western brands like Signify and OSRAM. Although China accounts for 75.4% of global LED lighting exports, the profit margins remain extremely slim. For instance, an LED downlight shipped to Europe is priced at only $2–3 FOB, while the same product retails for $20–30 in Western markets—a stark value disparity.
The Hollow Core Technology Dilemma: China’s low-end residential lighting sector is mired in a fierce price war, with severe product homogenization driving gross margins below 8%, leading to a profit-eroding cycle. In contrast, high-value segments such as industrial and automotive lighting are growing rapidly. However, due to high technical barriers—including thermal management, optical design, and driver integration—Chinese companies have captured less than 40% market share in these fields. This technological gap has become a major bottleneck hindering the industry's upward transformation.
Financial Fragility: A widening cash flow gap has emerged as overseas clients commonly demand 180-day payment terms, while domestic suppliers require payments within 30 days or less. This “scissors gap” severely strains cash flow. Coupled with delayed receivables and rising default risks, these financial pressures have become the final blow for many small and medium-sized lighting companies.
Dual Carbon Strategy: A Policy Spotlight on the High Ground
While low-end capacity is being phased out, China's “dual carbon” goals (carbon peaking and neutrality) are shedding new light on the LED industry. National policies are guiding the sector into three golden pathways:
Industrial Energy-Saving Upgrades: A Trillion-Yuan Rigid Demand Market
Policy-Driven Growth:
The Carbon Peaking Implementation Plan for Urban and Rural Construction mandates that by 2030, over 80% of lighting used must be high-efficiency LED. In industrial sectors, the phase-out of metal halide and high-pressure sodium lamps is accelerating. China’s industrial lighting currently consumes over 300 billion kWh annually. Full LED replacement could save power equivalent to 1.5 times the output of the Three Gorges Dam each year.
Technology Moat:
Industrial lighting must perform in harsh environments—requiring explosion-proof, waterproof, corrosion-resistant, and extreme-temperature (-40°C to 85°C) capabilities. This pushes enterprises to innovate in thermal management, secondary optics, and robust power systems, building strong technical barriers to entry.
Smart City Infrastructure: The Green Revolution Inside Lamp Poles
From June to July 2025, over ¥5 billion worth of urban lighting projects have been launched across China, with smart light poles emerging as a key infrastructure. For instance, Suzhou High-Tech Zone invested ¥500 million to install 3,240 smart poles integrating EV chargers, environmental sensors, and emergency call buttons. Neijiang City allocated ¥16 million to upgrade aging lighting facilities for carbon reduction. These efforts align with the 14th Five-Year National Urban Infrastructure Development Plan, which calls for “green lighting development and widespread adoption of smart lamp poles.” Through integrated solar systems, energy use is cut by 60%, with smart dimming achieving an additional 30% savings—making it a model for low-carbon urban upgrades.
Circular Economy: A Green Leap from Products to Materials
Material Revolution:
LEDVANCE, under MLS Co., uses post-consumer recycled (PCR) plastics in LED bulb production—cutting carbon footprint by 30%, improving luminous efficacy by 15%, and reducing plastic usage by 500 tons annually.
Model Innovation:
Signify has launched a “Lighting-as-a-Service” (LaaS) model, incorporating 3D-printed luminaires to reduce carbon emissions by 47% and slash maintenance costs by 60%, accelerating the shift to green lighting business solutions.
Portrait of the Game Changers: The Rise of Tech-Driven and Scenario-Oriented Players
Amid the industry's hot-cold transition phase, a new wave of companies is breaking through the cracks.
Technology-Driven Pioneers: Tackling the High Ground of Industrial and Automotive Standards
Industrial Lighting Breakthroughs:
Companies like Ledsun and Lianyuu are partnering with global brands to develop explosion-proof mining lamps, achieving breakthroughs such as 100,000-hour lifespans, and targeting the massive global market for industrial lighting replacements.
Automotive-Grade Positioning:
With new energy vehicle (NEV) penetration exceeding 30%, LED headlights have evolved from safety components to intelligent interactive systems. A Changzhou-based company developed DLP projection headlights for the NIO ET9, priced over 10,000 RMB per unit. By aligning closely with carmakers and sharing patent pools, they sidestep technology blockades.
Scenario-Based Innovators: Shifting from Selling Fixtures to Selling Light Environments
Empowering the Night Economy:
NVC Lighting transformed the lighting environment of Chongqing’s Jiefangbei commercial district with dynamic lighting, extending business hours until 2 a.m. and boosting per-square-meter consumption by 40%. Its “Cultural Narrative Lighting System” provides light-and-shadow operations for Xi’an’s Datang Everbright City, increasing per-customer spending by 50%.
Healthy Light Formulations:
Opple Lighting developed an “Emotional Lighting Formula” system, adjusting color temperature and light spectrum to extend customer dwell time by 15% and improve purchase conversion rates by 9%.
Policy Leverage: How to Break Through the Last Mile?
Despite a clear direction, the industry’s upgrade still faces three key obstacles:
Outdated Standards:
The current Urban Road Lighting Design Standard (CJJ 45—2015) sets energy efficiency limits at only 90% of the new national benchmark, leading to excessive design power and serious energy waste.
Financing Bottlenecks:
SMEs rely on green finance for R&D, but tools like carbon reduction revenue rights pledges are not yet widely adopted.
Lack of Recycling Systems:
LED product recycling rates remain below 20%, with mercury pollution risks still unresolved.
Breaking Through Requires a Three-Pronged Strategy:
Standards Upgrade:
Accelerate revision of the Technical Specifications for Energy Efficiency of Industrial LED Lighting, linking road lighting power density (LPD) to the latest efficiency ratings.
Tech Breakthrough Fund:
Establish dedicated funding to tackle key bottlenecks such as automotive-grade LED driver chips and high-CRI horticultural light sources.
Circular Economy Legislation:
Enforce Extended Producer Responsibility (EPR) and implement lifecycle carbon footprint management for LED products.
Conclusion: Between Lights Off and Lights On
As the tide of low-end manufacturing recedes, China’s lighting industry finds itself at a crossroads of value redefinition. The "Dual Carbon" strategy is no longer optional—it's a license to survive. With the EU’s Carbon Border Adjustment Mechanism (CBAM) bringing product carbon footprints into the realm of trade barriers, companies without optical design capabilities will be locked out of the billion-yuan industrial lighting market.
But some enterprises have already written their answers with action: MLS turns waste packaging into PCR plastic bulbs, boosting luminous efficacy by 15%. NVC Lighting’s healthy light recipes helped drive a 119% sales increase during the 618 shopping festival. In Suzhou, smart light poles have leveraged a single pole to unlock 500 million yuan in infrastructure investment.
This is not merely a switch between light and dark—it's a shift in the industry's core logic.
As substandard LEDs from bankrupt factories turn into e-waste, solar streetlights along zero-carbon roads are already lighting up the streets of Nanning. The endgame of this lighting war lies not in the $0.5 bulb left in ruins—but in the €3,000 automotive headlamp and the trillion-yuan night economy written in stars.
