Second half of 2010 faces shortage conditions that should be resolved in 2011

LYON, FRANCE: Yole Développement updated its new markets and 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.

Sapphire material market will exceed $200 million in 2010 despite downturn
Sapphire product is serving mainly two applications in the electronics field: GaN‐based LED and RF devices, both for mobile phones (Silicon‐on‐Sapphire “SoS” technology). The sapphire substrate market for electronic applications has reached a market volume of approximately 9 million wafers (2” equivalent) for LED augmented by some 10’s of thousands 6” and 8” wafers for SoS RF applications in 2009.

Despite the 2009 economic situation and thanks mostly to the LCD LED backlight applications, the c‐plan sapphire wafer market grew +4 percent over 2009 compared to 2008 in the LED segment.

On the other hand, r‐plan sapphire business for SoS applications has been strongly affected by the recession as the main application markets are related to consumer appliances (mainly mobile phones). “As a result, a ‐55 percent revenue decline has been observed on the r‐plan side,” says Dr Roussel, Project Manager at Yole Développement.

2” sapphire price as low as ever but shortage risk could generate turbulence
The price pressure on 2” remains critical and Yole Développement’s models showed that most of the suppliers are having a very tiny margin on that material and some of them are even losing money in that business. The 2” price level, especially in Taiwan, was extremely low and the psychological $10 threshold has probably been reached.

“We are forecasting a ~ 5 percent price increase across the board. However, just like for cores, it will be unevenly distributed through the different diameters, with 2"
price to increase up to 40 percent in 2010 while, on the other hand, we expect 3" and 4" price to remain stable compared to their low of 2009 and actually decrease another 20 percent compared to their ASP through 2009,” explained Dr Roussel.

Indeed, Yole’s Demand‐Capacity analysis shows a “risk‐zone” that should occur during the second half of 2010, where all the planned capacity won’t be fully installed, facing a demand in LED that can create some turbulence. Now, Yole Développement feels comfortable saying that this stress period should end early in 2011 with the full ramp‐up of sapphire producers.Source: Yole Développement, France

Companies listed in this report: Acme Corp., Alpha Crystal, Amberwave, Apeks, Arc Energy, Aixtron, Astek, Atlas, Azzurro Semiconductors, Bluglass, Comadur, Ching Mei Crystals, CREE, Crystal Applied Technology, Crystal GmbH, Crystal On, Crystal Q, Crystal Systems, Crystal Wise, Cyberstar, Epistone, Exiton, Fujimi, Group IV Semiconductor, Gavish, Hrand Djevahirdjian, Hitachi ME, Honeywell, Iljin Display, International Rectifier, Impex, Insaco, Interoptec, Juropol, Kyocera, Lattice Semiconductor, etc.