Yole Développement updated its new markets & technological study dedicated to sapphire industry. Yole’s report details major market metrics of the current and projected sapphire device and substrate business, describing the targeted applications, the key players, the supply‐chain, the volumes and related market size of each segment.
Yole Développement’s analysis gives an estimation of the total market size from 2005 to 2013, highlighting the strengths and weaknesses of sapphire materials industry. It also describes the current challenges of this market including the shortage risk at wafer level.
Unprecedented volume growth triggers material shortage and price pressure
The LED market experienced an unprecedented growth in 2010, generating a strong demand for Sapphire substrates used for the manufacturing of blue and white GaN based LEDs. Monthly demand for finished substrates jumped from 1 million two inch equivalent (TIE) in December 2009 to close to 2 million TIE in Q4 2010. At the beginning of the year, most material makers were still cash strapped following the 2009 financial crisis and the strong price pressure experienced in the previous years. As it typically takes 6-12 months to install and ramp up additional capacity, material supply was not able to follow demand. This triggered an acute shortage and a dramatic price increase. From commodity, sapphire material turned into a strategic material which gave manufacturers the pricing power they’ve been lacking in the recent years. ASP for 2” wafers increased to $30, above our January forecast and some customers are now paying cash in advance to avoid idle production lines.
Reshaping of the industry
· Sapphire Technologies in Korea now claims a capacity of 760,000 TIE per month, larger than Monocrystal or Rubicon. Historical leaders Kyocera and Namiki seem slow to invest in additional capacity. Access to capital is critical. Tera Xtal went public on the Taiwan Stock Exchange in September and Monocrystal expect to raise about $250m on the Moscow Interbank Currency Exchange in October. Sapphire Technologies should follow suit and US based Crystal System was acquired by publically traded company GT solar.
· Newcomers are lining up with aggressive and often unrealistic plans. We now count more than 40 companies active in the sapphire substrate business. Many more are in stealth mode, trying to secure funding and procure equipments. However, we believe that many are underestimating the technical challenge of growing large and high quality sapphire crystals
· Rubicon and Monocrystal both announced plans for downstream integration and are increasing in house finishing capacities. This is enticing many finishing companies to develop in house crystal growth or secure alternative material sources through investments and partnerships with emerging material companies.
Sapphire crystal shortage ripples through raw materials and create opportunities for crystal equipment manufacturers
· Increased wafer demand is creating tensions on the raw material market. The alumina specific density, form factors (pellets, microbeads or crackles) and high purity required for sapphire crystal growth is only available through a handful of companies. Raw material prices are therefore increasing and some sapphire manufacturers paying cash in advance to secure raw material capacity through 2011.
· Crystal growth equipment manufacturers also benefit from the urgent need for material capacity. More than 10 sapphire crystal growth manufacturers have been identified. Most of them located in Ukraine and Russia offer designs similar to the original “Omega” machine developed in USSR in the 80’s. Most offer turnkey solutions, allowing newcomers to quickly install and ramp up capacity. However litigations have been reported between equipment and sapphire manufacturers blaming each others for lower than expected yields or throughputs. Equipment manufacturers also face the risk of seeing their machine reversed engineered and orders dry up quickly as customers start manufacturing equipment themselves.
Switch to larger diameter adds pressure on material supply
· More than 65% of the MOCVD reactors shipping in the 2nd half of 2010 are set up in 4” or larger configuration. Rubicon recently signed a $71m supply agreement with a Korean LED manufacturer for 6” wafers. We expect that for the first time in 2011, 2” wafers will represent less than 50% of the total shipped substrate surface. This will create additional pressure on material supply as for an equivalent surface; larger wafers are thicker than their 2” counterpart and command lower yields.
· This report provides a complete analysis of the sapphire substrates industry along with key market metrics. It provides updated volume and $ forecast for finished wafers and volume forecast for material through 2015 along with capacity analysis, price trends and new company profiles. In addition, an extensive review of the raw material and crystal growth equipment suppliers is provided, offering the most complete view of the Sapphire wafer industry available to date.
About Sapphire Market 2010, Q4 Update, Report.
· Author & Contributor
Philippe Roussel holds a Ph‐D in Integrated Electronics Systems from the National Institute of Applied Sciences (INSA) in LYON. He joined Yole Développement in 1998 and is leading the Compound Semiconductors and Power Electronics techno‐economical market analysis department.
Eric Virey holds a Ph‐D in Optoelectronics from the National Polytechnic Institute of Grenoble. In the last 12 years, he’s held various R&D, engineering, manufacturing and marketing position with Saint‐ Gobain. Most recently, he was Market Manager at Saint‐Gobain Crystals, in charge of Sapphire substrates and materials for optical telecoms.
· Catalogue price: Euros 3,990.00 (single user license) – Publication date: November 2010
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· Companies cited in the report
Acme Corporation, Alpha Crystal, Amberwave, Apeks, Arc Energy, Aixtron, Astek, Atlas, Azzurro Semiconductors, Baikowski, BIEMT, Bluglass, Ceralox, Comadur, Ching Mei Crystals, CREE, Crystal Applied Technology, Crystal GmbH, Crystal On, Crystal Q, Crystal Systems/GT Solar, Crystal Wise, Cyberstar, Emerging Material Technologie, Epistone, Exiton, Fujimi, Group IV semiconductor, Gavish, Hansol LCD, Harbin Gonda (Aurora Sapphire), Hrand Djevahirdjian, Hitachi ME, Honeywell, Iljin Display, International Rectifier, Impex, Insaco, Interoptec, Juropol, Kyocera, Lattice Semiconductor, Lugaplast, Lumileds, Lumilog, MagnaChip, Matsushita, MJ Corporation, Monocrystal PLC, Monocrystalex, Murata, Namiki, Neomax/Hitachi, N-Crystals, Neomax, Neosemitech, Nichia, OKI, OSRAM, Pryroda Engineering, Pryroda, LTD, Philips Lumileds, Picogiga, Peregrine Semiconductor, Procrystal, Pryroda, Renesas, Rotem Industry, Rostox, RSA Le Rubis, Rubicon Technology, Rybinsk Crystals, Saifei, Saint-Gobain Crystals, Saito, Samsung, San Chi Semiconductor, Sapphicon Semiconductor, Sapphire Technology, S&D Materials, Semileds, Shinkosha, Showa Denko, SilianTech, Siltron / LG, Sino American Silicon, SKC, Spolchemie, Sumitomo Chemical TPS, Sumitomo Fine Metal, Sumitomo Metal Mining, Stettler, Sunyin Crystals, Thermal Technology, Teckore, Tera Xtal Technology, Toyoda Gosei, Valley Design, Veeco, Vniisims, Wafer Works, Yunnan Yuxi, Lanjing Science and Technology