Epistar Reserves Crystalwise and Rigidtech Patterned Sapphire Substrate Production Capacity

LED die manufacturers are stabilizing raw material sources in the wake of rising LED lighting demands, and competition from other sapphire substrate applications. Epistar has reached a Patterned Sapphire Substrate (PSS) production capacity agreement with Crystalwise and Rigidtech Microelectronics (Rigidtech), in which two PSS production lines from each company will be fully supporting Epistar. Due to PSS higher prices, it is estimated substrate manufacturers’ 3Q13 revenue will hit double digit growths.

Epistar spokesman Rider Chang confirmed the company had reserved suppliers’ production capacity. In the past, PSS was supplied to individual clients, but as LED lighting demands exceeded expectations plus sapphire substrate shortages, Epistar decided to reserve supplier production capacity to meet client needs.

Positive Outlook of Sapphire Substrate 3Q13 Revenue 

According to sources, Epistar’s reservation of production capacity has resulted in more flexible pricing that is expected to directly contribute to Crystalwise and Rigidtech profits. Among Taiwanese sapphire substrate manufacturers, Crystalwise is Epistar’s largest supplier.

Compared to backlight, LED lighting has higher requirements for LED die brightness. In general, LED dies produced with PSS are about 30% brighter than those manufactured from common sapphire substrates. Previously, Epistar developed its own process to increase LED die brightness, and used fewer PSS. PSS accounted for only 30% sapphire substrates, about 80-90% lower than other manufacturers. Currently, Epistar’s PSS ratio has surpassed 50%.

Although backlight demands are at a low point this year, there is still support for die prices in 3Q, said Epistar. Backlight prices remained flat in July compared to the previous month, showing price decline pressures caused by supply shortages. 

Rise of Chinese LED Package Manufacturers

Although the scale of Chinese LED package manufacturers product capacity and revenue still lag behind Taiwanese manufacturers; as China becomes the largest LCD TV market, Chinese package manufacturers including Refond, Shenzhen Jufei Optoelectronics, Shenzhen MTC and Suzhou Dongshan Precision Manufacturing are emerging in the market, said LEDinside Research Director Roger Chu. 

China’s LED package manufacturers are focused on small-sized backlight products in LED package backlight applications. China’s secondary manufacturers are especially concentrating on smart phone applications because of its high price/performance ratio, and has even attracted attention from primary phone manufacturers. In 2Q13, six major Chinese TV brands started using local packaging manufacturer products. However, the level of usage remains low, and Hisense Group products have not been introduced yet.

However, Chinese LED manufacturers are still mainly centered in the lighting market, due to lack of LED lighting standards and most lighting product features of low volumes with high diversity. In contrast, the backlight market’s long-established standards and high client specifications will make it difficult for Chinese competitors to catch up with less short term impact.

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