Osram to spin off most of its lighting businesses

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OSRAM will be focusing on automotive lighting, smart lighting and LED components, but not general LED lighting.

Osram announced the refocus as part of its corporate reorganisation. The company will be eliminating underperforming divisions of its lighting business, including the Classic Lamps & Ballast (CLB unit) and LED Lamps & Systems (LLS unit), which together currently account for 40 percent of the company’s total revenue.

Osram’s will retain its Opto Semiconductor (OS unit), Specialty Lighting (SP unit), and Luminaires & Solution (LS unit).

The new focus will target the business-to-business and semiconductor markets, which offers higher profit margins, and also helps protect Osram from low cost new market entrants.

In 2013, Siemens spun Osram off, deciding to focus on core business. Since then, Osram has been an independent company. However, the competitive market has forced Osram to spin off or sell part of its business.

According to TrendForce LEDinside, the LED lighting industry ’s market value reached US$21 billion in 2014 with LED light bulbs accounting for 37 percent. However, because of price wars, LED light bulbs have seen their prices falling by 30 percent annually since the beginning of 2011.

The profit and shipment growths of LED bulbs have failed to compensate for the market decline in traditional lighting products, leading to lighting manufacturers dumping underperforming units. Both Philips and Osram have made business moves that show a lack of confidence in the future markets for LED lighting.

The spun off divisions from Osram may now be taken over by other companies, including Chinese lighting companies looking to expand globally, or smart home technology players.