The Impact of Rising Material Costs on the LED Public Street Lighting Industry

As the chip shortage that primarily affected the automotive industry spreads to other sectors, the LED public street lighting industry is feeling its effects. Due to supply shortages, prices for raw materials, components, and semi-finished products are increasing at a rapid rate, creating a challenge for those working on projects that have already been awarded and contracted at fixed prices.

LED public street lights are made up of several components, including an LED light engine, aluminum housing, driver, surge protection device (SPD), NEMA socket (optional), and stainless steel screws. Unfortunately, the prices of crucial raw materials like copper and aluminum have risen sharply in the last few months, while the supply of these materials has tightened. In addition, the LED driver, which consists of chips and other sensitive components, is facing a severe supply bottleneck, which is causing prices to rise.

LED chips themselves are not immune to the current market pressures either, as they rely on precious metals like indium, gallium, and silicon-germanium, which have also seen price increases due to the ongoing semiconductor shortage.

While raising prices and passing the cost onto customers may be an option for some, it may not be feasible for those with already awarded and contracted projects. The only logical solution is to act more quickly in contract processing, accelerate manufacturing, and implement projects earlier. By doing so, the costs can be managed before they rise too high and become too difficult to handle. In these uncertain times, it's essential to prepare for the perfect storm, even if it seems unlikely to occur.