Overcapacity and low LED substrate prices constrain sapphire players; hope floats with emerging apps

USA: A shortage of sapphire material between 2010 and 2011 created a window of opportunity for new entrants. In just the last two years, more than 80 companies announced their intention to enter the industry.

This trend coupled with slow demand from LED makers in 2012, has manifested a challenging environment with cores and wafers often selling at prices at or below manufacturing cost. These difficult market conditions will trigger an industry rationalization through consolidation and attrition that should take place in 2013 and 2014. The industry is expected to shift toward a more vertically integrated model in order to limit margin stacking.

This report provides a detailed analysis of the sapphire industry, including revenue, volume and price trends for all major substrate applications. It also includes an extensive list of manufacturers with current and planned capacity, and an analysis of established and emerging manufacturing technologies. The drivers and dynamics of the LED and SoS markets are analyzed, and a preliminary view and plausible scenario are provided on emerging non-substrate applications in cell phones.

The report is comprised of three major sections: the first presents historical and future price trends for material and finished wafers, as well as a detailed supply/demand analysis. Volume forecasts are presented for material, standard and PSS wafers, along with a revenue forecast for finished wafers. Section two presents an in-depth analysis of the requisite conditions for the success of LED-on-Si, and reveals how GaN could capture some niche markets thanks to higher performance and competitive system-level cost of ownership.

A third section analyzes the most recent trends and potential SoS-related upsides, and provides a revenue forecast. Also, the pros and cons of using sapphire in cell phone cover applications are discussed, and various scenarios are presented to illustrate the potential impact in terms of global sapphire demand.