© baloncici dreamstime.com Analysis | July 10, 2013
Sapphire substrate industry heading for growth
Sapphire substrate manufacturers have been optimistic about the emerging demand on non-LED market applications in 2013 such as handset device applications, SOS, and window film.
With the unlimited imagination of the future, there are still numerous manufacturers fighting for this non-LED market application with production plans despite of low market prices. Under the impact of oversupply in sapphire substrate market, the quality requirements from LED epi wafer manufacturers on sapphire substrate have become higher and higher. Current LED manufacturers are more willing to use sapphire ingot grown by KY method such that it became even more difficult for most new comers to enter LED supply chain. Therefore, except for first-tier manufacturers, the utilization rates of the most sapphire ingot manufacturers have been below 50%. However, ever since the introduction of sapphire substrate for camera lens by Apple’s iPhone5, demands for sapphire substrates from non-LED applications have begun digesting part of excessive production thus bringing the sapphire substrate industry into a virtuous cycle. According to the estimation by LEDinside, the oversupply ratio of sapphire substrate in 2013 has been as high as 18% as compared to the demand from LED epi wafer manufacturers. However, it does show some sign of convergence as compared to the 24% oversupply ratio in 2012. Looking ahead to the next few years, the oversupply issue of sapphire substrate will not be solved anytime soon, yet sapphire substrate manufacturers remain optimistic about the non-LED market applications in 2013 (such as SOS, window film, and handset device applications) such that they have planned for production expansions with the hope that emerging non-LED applications can digest these production capacity. In addition to demand from camera lens, if in the future the cover glass of smart phones is replaced by sapphire substrates, it will create rather enormous market demand which may lead to supply shortage in sapphire substrate industry. Since LED Chip Manufacturers Raised Utilization Rate, Sapphire Substrate Price Slightly Decreased According to the latest “2013 Global Sapphire Substrate Market Report” published by the LEDinside research department of TrendForce global market research institute, the price declines of 2-inch and 4-inch sapphire substrate have slowed down in 1Q13, while there are even some signs on certain low market prices slightly rebound. Benefited from lighting and backlight market demand in 1H13, LED chip manufacturers raised their utilization rate, also encouraged sapphire substrate market demand. Besides, there are even some signs on certain low market prices slightly rebound. Take the price of 2-inch sapphire substrate (CSS) as an example, the price has come back to around US$6.8~7. In addition, the 4-inch sapphire substrate (CSS) price stayed at USD30~35. Although LED chip manufacturers consistently increased the 4-inch sapphire substrate production ratio, and raised the demand on 4-inch sapphire substrate, there is the room for sapphire substrate manufacturer to get the profit. Therefore, the recent 4-inch sapphire substrate price remained stable. LEDinside further indicated that the sapphire substrate industry has a great production expansion plan for two years, which caused the oversupply situation in the industry. However, it is still difficult to solve the oversupply problem in the short term, if the sapphire substrate capacity is only digested by LED market application. Therefore, non-LED market demand has been generally getting much attention. Observed from every sapphire substrate manufacturer’s expansion plan in 2013, most are increasing capacity for non-LED market application. Generally speaking, mergers and acquisitions still happen in the sapphire substrate industry. With increasing non-LED market demand, there might be chance to see a boom market trend in the sapphire substrate, which had happened in 2010.
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