Lighting industry life and death: OEM / ODM model of the crisis and breakout path

The collapse of low-end production capacity sound and the rise of intelligent lighting sound, is echoing in every corner of the lighting industry at the same time.

From January to May 2025, more than 60 lighting companies across the country entered into bankruptcy proceedings, a surge of 40% year-on-year. Foshan Wei Ao Lighting ten years of operation once stopped, Jiangmen Sheng bright lamps and lanterns rolled up the money to run away, even the national high-tech enterprises in the Shun semiconductor lighting is also caught in a full shutdown.

At the same time, industrial energy-saving replacement market potential up to 100 billion level, smart city infrastructure projects in the country to accelerate the landing. An industry reshuffle is accelerating, lighting companies stand at the crossroads of value reconstruction.

01 Industry Crisis: Total Collapse of the Low-End Manufacturing Model

Lighting industry is experiencing a late industry clearing. Behind the ever-lengthening list of bankruptcies, is the long-standing industry plagued by low-end manufacturing model has come to an end.

A set of LED downlight sold to Europe FOB price of only 2-3 U.S. dollars, while the equivalent products in Europe and the United States terminal retail price of 20-30 U.S. dollars. Chinese LED lighting enterprises have long been huddled at the bottom of the value chain, OEM/ODM mode for the European and American brands OEM, although exports accounted for 75.4% of the world, but the profit is very thin.

Low-end home lighting field has been deep in the price war, gross profit margin is compressed to less than 8%. And industrial lighting, automotive lighting and other high value-added areas, due to thermal design, optical light distribution and other technical thresholds, the penetration rate of domestic enterprises is less than 40%.

The vulnerability of the financial chain has become the last straw that crushes SMEs. The scissors difference between the 180-day billing period of overseas customers and the 30-day billing period of domestic suppliers, coupled with the overdue accounts receivable, makes the operation of enterprises difficult.

02 Technical hollowing out: the fatal weakness of OEM/ODM enterprises

Technology hollowing out has become the most serious lesion of the lighting industry. Long-term reliance on OEM mode leads to a lack of core technology accumulation in most enterprises, unable to adapt to the rapidly changing market demand.

Aluminum substrate heat dissipation defects is a typical embodiment of the industry’s technological shortcomings. experts in the field of LED lighting pointed out that, at present, the mainstream LED heat dissipation structure-aluminum substrate heat dissipation, although it is commonly used, but due to the thermal conductivity is limited by the insulating layer, its thermal conductivity is much lower than the pure aluminum itself.

Too thick insulation will hinder heat conduction, resulting in lamp life, brightness, reliability and other difficult breakthroughs, netizens jokingly referred to as ” three times a year to change the light “.

Traditional LED technology has obvious limitations. Straight down light-emitting technology, although the structure is simple, low cost, but the light directly into the eyes, glare is serious, is not conducive to long time study and office. And side light-emitting technology through the light guide plate diffusion of light, uniformity is better, but low light efficiency, brightness is not high, and heat dissipation problems are more prominent.

Parameter false labeling has become a common phenomenon in the industry. Part of the lamps in order to achieve the nominal brightness, the actual power consumption exceeds the labeled value of more than 20%, resulting in invisible consumption of electricity. There are also false labeling of the number of lamp beads, the use of low-cost, low-density lamp bead arrangement, resulting in uneven light diffusion, light dark area is obvious, the actual luminous efficacy is less than 60% of the nominal value.

03 Markets change dramatically: the double whammy of dual carbon targets and smart transitions

At the same time in the low-end production capacity woe, ” double carbon target ” is for the industry to open a new skylight. National policy has paved the way for the LED industry three gold track, promote the industry to high-quality development transformation.

Industrial energy-saving replacement market space is huge. The urban and rural construction field carbon peak implementation program “clearly requires that the end of 2030, LED energy efficient lamps and lanterns accounted for more than 80%. Industrial areas out of metal halide lamps, high pressure sodium lamps and other energy-consuming light sources to accelerate the process, only China’s annual power consumption of industrial lighting that is up to 300 billion degrees, if the full replacement of the LED, the annual power saving is equivalent to 1.5 three gorges power station.

Smart city infrastructure accelerated.2025 June-July, the country has focused on releasing more than 5 billion yuan of lighting projects, and smart light poles have become the core carrier. Cebu Hi-Tech Zone invested 500 million yuan to build 3,240 sets of new smart light poles, integrating charging piles, environmental monitoring and other functions; Neijiang City District invested 16 million yuan to promote energy-saving and carbon-reducing renewal of lighting facilities.

The global market access threshold has been raised. The EU carbon border adjustment mechanism (CBAM) has been the product carbon footprint into the trade barriers, there is no optical design capabilities of the enterprise, will eventually be blocked in the industrial lighting hundreds of billions of market door. This poses a serious challenge to Chinese lighting companies that have long relied on OEM exports.

04 Breakthrough path: from OEM dependence to value creation

In the face of the industry crisis, a group of enterprises are tearing open the rift through transformation and innovation. The successful experience of these enterprises provides OEM/ODM enterprises with a breakthrough path to learn from.

1. Technological attack and breakthroughs in high value-added areas

Technology leading enterprises began to die industrial and automotive grade high ground. A joint venture with an international brand to develop explosion-proof industrial and mining lamps, breakthrough 100,000 hours of life technology, to seize the global industrial lighting stock replacement market.

With the penetration rate of new energy vehicles exceeding 30%, LED lights are upgraded from safety parts to intelligent interactive parts. There are enterprises for new energy vehicle enterprises to develop DLP projection headlights, a single set of price of more than ten thousand yuan, by binding the vehicle enterprises to share the patent pool to circumvent the technology blockade.

2. Scenario innovation, from selling products to selling solutions

Leading companies are shifting from selling lamps to selling light environments. A company has created a dynamic light environment in the Jiefangbei business district in Chongqing, extending the consumption period to 2:00 a.m., which has led to a 40% increase in consumption per unit area; its “Cultural Narrative Lighting System” provides light and shadow operation services for Xi’an’s Datang Nocturnal City, which has led to a 50% increase in customer unit price.

Healthy light environment has become a new selling point. Some enterprises have developed the “emotional light formula” system, by adjusting the color temperature spectrum to extend the consumer’s residence time by 15%, the purchase conversion rate increased by 9%. This innovative service model has significantly increased the added value of products and the competitiveness of enterprises.

3. Reconfiguring the model to embrace flexible manufacturing and sustainable development

Flexible manufacturing mode is rewriting the traditional OEM/ODM rules. An enterprise launched a “1 piece order” OEM mode, with “zero threshold, full chain, fast response” three core advantages, breaking the traditional OEM production often thousands of pieces of order industry rules.

The model provides 20+ basic layout libraries, supports logo printing, packaging design and other lightweight modifications, breaks the limit of the starting order quantity, and realizes 72-hour fast delivery. This innovative model greatly reduces the branding threshold for small and medium-sized sellers and provides new market opportunities for foundries.

The circular economy model is emerging. One company uses post-consumer recycled plastic (PCR) to manufacture LED bulbs, reducing its carbon footprint by 30 per cent, improving luminous efficacy by 15 per cent and reducing plastic by 500 tons per year. Another company has launched “lighting as a service”, using 3D printed lamps to reduce carbon emissions by 47% and maintenance costs by 60%.

05 Future Outlook: A Five-Year Atlas of Change in the Lighting Industry

In the next five years, the lighting industry will undergo profound changes, OEM/ODM enterprises need to layout in advance to adapt to the rapidly changing market environment and technology trends.

Smart connectivity will become standard. Demand for IoT-enabled LEDs, motion sensors, and application-controlled lighting is high. Smart lighting is on a significant upward trend in the market in regions such as Sichuan, with a growth rate of about 20%.

Popularization of the concept of human factors lighting. The future lighting system will dynamically simulate the changing trajectory of natural light and adjust the light color according to the human physiological rhythm. Early in the morning, the light color is cold and bright to help people wake up physically and mentally; in the evening, the light color turns warm and dim to prepare for sleep. This trend will be fully penetrated in office, education, medical and other scenes.

Industry concentration accelerated. Data show that 87 listed companies, 64% of enterprises lighting-related business revenue decline, the average decline of 20%. Lack of technological advantages and brand premium OEM enterprises will face the fate of elimination, while companies with core technology and solution capabilities will gain a larger market share.

Globalization has become an inevitable choice. In the face of international trade barriers, leading enterprises are accelerating the reconstruction of the global supply chain layout, and seeking strategic breakthroughs through market diversification, technological breakthroughs and compliance upgrading. Regionalized production network and technology localization strategy will become the key to internationalization.

With the in-depth promotion of the “double carbon” strategy and the wide application of intelligent technology, the lighting industry has just begun to change. In the next five years, the lack of technology and brand advantages of the foundry enterprises will face the fate of elimination, and with the core technology and solution capabilities of the enterprise will get more space for development.

For lighting companies, the only way out is to shift from price competition to value creation, from OEM production to innovation-driven. Those who are able to take the lead in breaking through the technological bottlenecks, to seize the market trend and rapid transformation of the enterprise, will stand out in this industry reshuffle, to become the new industry leader.