LED lighting manufacturing in Türkiye

LightingTechnical ArticlesSouth-East European INDUSTRIAL Мarket - issue 1/2023 • 22.03.2023

The foundations of the modern lighting industry in Turkiye were laid in the 1960s, when significant investments were made in the production of incandescent and fluorescent lamps. In the next decade the sector began manufacturing decorative and other-purpose lighting fixtures, ballasts and various components. The branch started rapidly developing and by the beginning of the 90s it approached its current state of one of the leading sectors in the country. Since then, the industry has seen significant further growth in terms of product quality and design, production capacity and scope of applications.


LED manufacturing today is one of the most important segments of the Turkish lighting industry with numerous economic, social and technological factors contributing to its development. The production and market challenges due to the COVID pandemic have been slowly but steadily overcome, current market reports show.

According to official figures, published by the Ministry of Trade of the Republic of Turkiye, the Turkish lighting market is worth around USD 350 million, and about USD 130 million is the share of the lighting fixtures segment. The demand for lighting fixtures in Turkiye has been gradually increasing simultaneously with the country’s growing industrialization and urbanization process, as well as with the rising per capita income, the increasing architectural lighting segment and the changes in consumer lifestyles. The growth of the sector is further helped by the ever-increasing number of residential and industrial buildings, offices, stores, gyms, restaurants, cafes, hotels, etc., official reports inform.

“Тhe lighting industry has enjoyed a good recovery after the years of recession following the 2001 economic crisis. Construction, manufacturing and the booming tourism industries, and a shift towards energy efficient products are creating a bright future for the Turkish lighting industry. Given that the importance of the environmental technologies and the energy efficiency concept is increasing, new technologies have been developed in the lighting industry. The energy efficient lights and LED or O-LED lighting systems gain significance day by day”, the Turkish Ministry of Тrade points out.

The sector manufactures a broad spectrum of products, including indoor and outdoor lighting, specialized industrial lighting systems, and a variety of residential, emergency and safety, decorative and special-purpose lighting fixtures, lighting products for offices, sport halls, restaurants, cafes, etc. The industry comprises of around 50 large-scale manufactures and numerous medium- and small-scale enterprises, whose business activities include production.

“All the large companies and most of the medium-scale companies have international and national quality and safety standards such as ISO 9000 series, ENEC, VDE, etc. All companies have affixed the CE Mark on their products, which has been compulsory in Turkiye since 2003”, the Turkish Ministry of Economy reports.
To keep pace with increasing demand and ever-changing customer needs, large companies in the country have engaged in research and innovation activities in line with their production. Manufacturing technologies in the country have also been continuously improved in recent years.


Development of the Turkish lighting sector

The social and economic changes that occurred after the 2000s were determined by trade liberalization, competition for imported goods, particularly in China, and technological advancements in the lighting industry. The Turkish lighting equipment business suffered a transition in the 2000s and was forced to discontinue the production of transparent bulbs. Instead, a structure focused on fixture production and electronic applications in the sector was established.

The manufacture of high-added-value functional and decorative lighting equipment was prioritized while the production of lighting for motorized land vehicles expanded quickly.
In order to reduce energy consumption by as much as 75% and help the country balance its current budget deficit, Turkiye launched an ambitious project in 2013 to replace street lighting with LEDs. Since then, a significant transition from conventional light sources to non-conventional LED goods has occurred in Turkiye’s lighting industry. The market has been expanding rapidly ever since because of government support in the form of advantageous import policies for LED chips, although product manufacturing companies still have to rely substantially on imports for their LED supply.

Similar trends can be seen in other sectors for LED products, where LED displays are taking the place of conventional displays and LED signs are replacing traditional ones, altering how marketing is carried out. In order to fill the gap left by the European Union’s import ban on halogen lights, the Turkish LED market is not only concentrating on increasing domestic demand for LEDs but is also looking to cater to export markets in the European region. Turkiye’s ability to manufacture LED devices is constantly expanding.

To take advantage of expanding market opportunities, many foreign businesses have established their manufacturing facilities in Turkiye. Osram, Philips, General Electric, and Metsan Lighting are some of the major companies in the Turkish LED market.
Turkiye’s determination to build competence in LED products and switch to LED lighting in order to minimize energy consumption has given the country’s LED lighting sector a significant boost. The other LED markets in the country have also begun to expand rapidly as a result of improved government coordination and increased availability of LED chips. Government investments in upgrading outdoor lighting, even in rural regions, facilitates the exponential penetration of LED lighting, reports show. Moreover, the halogen lamps ban in Europe has given Turkish lighting manufacturers another chance to produce and export LED products to the European nations.


Sector overview

The number of enterprises in the Turkish lighting industry overall is above 4000 and more than 25 000 people are currently employed in the sector. Between 2010 and 2018, the overall number of employees rose almost twice. The production value in the manufacturing industry of electrical lighting nowadays is more than TRL 6,45 billion, according to official data. Total export’s worth in 2020 was above USD 466 million. Lighting devices, with exports of USD 230 million worth of electrical lighting equipment, is one of the two major sub-product groups in the sector. Electrical lighting equipment imports totaled USD 615,37 million during the same year.

According to a current technical report by the Joint Research Centre (JRC) of the European Commission, the number of enterprises related to lighting OEM in the country has grown from 1849 in 2010 to approximately 4375 in 2018. Most of the lighting companies in Turkiye are located in the megapolis of Istanbul, and a significant share of those reside in the capital Ankara and also in Izmir – the third largest city in the country and the second largest port after Istanbul. 61,5% of the companies in the electrical lighting manufacturing sector in general have gathered in Istanbul, statistics show. The share of Ankara is 10,6%, while Izmir ranks third with 6,7%. Istanbul hosts production activities in each field of general lighting. Decorative lighting production is common mostly in Ankara and Izmir. Automotive and industrial lighting production facilities are mainly spread across Bursa and Kocaeli.

In 2010, the value of production in the whole electrical lighting equipment manufacturing sector was TRL 1,46 billion. However, by 2018, it increased to above TRL 6 billion.
“Turkish domestic sales of lighting equipment reached USD 2,59 billion in 2015, up from USD 2,45 billion in 2013. Although the domestic market expanded in real terms in 2015 and 2016, it shrank in terms of dollar value. In spite of the Turkish lira’s depreciation, the domestic market grew quickly in real terms in 2017 and reached USD 2,31 billion. In actual terms, the domestic market substantially declined in 2018 and reached USD 1,94 billion, according to official figures. Today it is estimated at more than USD 2 billion”, official country reports state.

The smart housings and smart lighting products segments are considered to be lagging back compared to other countries. The penetration of residential smart technologies in the country was estimated at approximately 3,7% in 2020, but it is expected to hit 11,7% by 2025. Smart bulbs penetration was established at 2,6%-level in 2020. The national market revenue in the comfort lighting segment is projected to reach USD 116 million by 2025, forecasts say.


Strong export-oriented market before the pandemic

More than 150 countries all over the globe import Turkish lighting products. The country’s exports have climbed by around 3,5 percent annually since the global financial crisis in 2009, reaching USD 252 million in 2016. The main product category of the Turkish lighting industry at that time consisted of lamps, lighting fixtures, lighted signs, and nameplates, that are not defined in any other harmonized codes.

The value of Turkiye’s exports in 2017 was USD 232 million, a reduction of 9,3% year-by-year. Electric filament or discharge lamps ranked second in terms of export volume.
In 2017, the exports of this product group declined to USD 19,2 million, a decrease of 9,8%. Although the portable electric lamps designed to function by battery, magnet, etc. are relatively a small product group in terms of trade volume, Turkiye’s exports in this product group were approximately USD 1,4 million in 2017, according to official figures.
The EU nations are major export markets for the Turkish lighting industry. Exports from the country to the EU were worth USD 76,6 million in 2017, accounting for 30% of all exports worldwide. Export-oriented activities, however, have been steadily moving toward other nations since 2009, including the Turkic Republics, Arabic Countries, and North African Countries. The majority of export goods are items for decorative lighting.

Despite having a system that carries out contract manufacture and export for major brands, the industry has gradually begun to develop its own brands. The international business operations of the construction services contribute significantly to the export of lighting equipment. The markets in nearby and neighboring nations are currently among the top priorities, official reports state.

In Turkiye there are numerous branch organizations that represent the industry in the country and abroad, including in many international projects and initiatives. The Luminaries Manufacturers Association (AGID), established in 1997, represents 82 Turkish companies active in the lighting sector. The Turkish National Committee of Illumination (ATMK) supports scientific national and international research in the sector.

TULIPP – the Turkish Lighting Industry Platform is a cluster formed by the gathering of 22 sector representatives. The cluster was brought together within the scope of the “Supporting the development of international competitiveness project”, through the support of the Turkish Ministry of Trade. The project carries out its activities under the coordination of the Istanbul Chamber of Industry (ICI) and with the contribution of the Lighting Equipment Manufacturers Association (AGID). The cluster, which consists of the manufacturers of all sub-sectors of lighting such as indoor lighting, outdoor lighting, emergency lighting, also offer solutions in terms of lighting design and lighting application with the strong infrastructure of the country, the platform’s official website states.


Trends and future prospects

According to a current forecast by Industry Research Place, Turkiye’s LED market will continue to witness high growth in the future due to the decreasing LEDs price, high government support, and increasing corporate investments.
“From 2013, the government initiatives to reduce the power consumption and decrease the energy deficit have lured many domestic and multinational companies to the Turkish

LED lighting market. This initiative has not only been fruitful towards the reduction of domestic power consumption but has also been helping in gaining the foreign currency via exporting LED lighting products to European countries after the ban of halogen lamps by the European Union”, the report informs. Thus, LEDs market in Turkiye is expected to further grow in the upcoming years.

The Turkish government is concentrating on generating an energy surplus in the near future and has not only focused on building power plants but has also concentrated on lowering the demand for power by using cutting-edge technologies. Street lights in Turkiye are being replaced with LEDs. Even after the effects of recent turmoil, the country’s energy demand is anticipated to stabilize in the following five years if the current trend continues.

The cited report also highlights the impact of the pandemic on Turkiye’s LED market, which suffered slopes and declines throughout the early 2020, as the spread of COVID-19 intensified on different geographies. The pandemic had a great impact on the workforce and on the industry as a whole, and caused disruption in various regions. In the following years the sector began slowly but steadily to recover and the business landscape gradually shifted to a positive prospect, market analysts point out.

Turkiye’s LED sector has developed, as a result of recent developments and government initiatives, to the point where many domestic manufacturers are now exporting LED goods to a large number of countries across Europe. The majority of LED components (i. e. chips) used in Turkiye, however, are imported from China or other South Asian countries because of the large capital investment requirements and low labor costs in those regions. Market analysts anticipate substantial development of the domestic LED production capacities by 2027 to reduce dependency on imports and facilitate the export of LED products.