LED Applications Spur Taiwan Sapphire Manufacturers Growing Investments

The sapphire industry has seen completely different outcomes among application markets this year, according to a recent United Daily News (UDN) report.

Taiwanese sapphire manufacturers specializing in LED lighting industry, such as Rigidtech Microelectronics (Rigidtech), Crystalwise Technology (Crystalwise), Aceplux Optotech (Aceplux) and Procrystal Technology (Procrystal) have all seen high growth. On the other hand, optical application sapphire manufacturers have shown weak performance, but are expected to see a rebound as the consumer electronic peak season arrives in second half of 2014. Companies including Crystal Applied Technology (Crystal Applied) and Tera Xtal Techonlogy (ACTC) revenues will likely see a turnaround during second half of the year.

According to Taiwan’s sapphire substrate manufacturers’ revenue performance in first half of 2014, Patterned Sapphire Substrate (PSS) suppliers for LED applications were the biggest winners. Rigidtech’s revenue growth during first half of this year reached 1.16 times, while Crystalwise also had 30 percent growth. Aceplux, which has a smaller revenue, also saw revenue up by 2.24 times. Procrystal, a manufacturer that grows sapphire crystals, substrates and PSS, also had 86 percent growth.

Large sized PSS Average Selling Price (ASP) climbed up, due to growing 4-inch and 6-inch PSS market penetration rates. The substrate prices is expected to continue the upward hike in 3Q14 with a 25 percent increase. As 4-inch PSS production capacity gap widens, Crystalwise, Rigidtech and Aceplux monthly revenues will set new historical records in second half of 2014.

During first half of 2014, sapphire material shipments were mostly for LED applications, said Crystal Applied General Manager Chen Yan-Ren. However, starting this month sapphire optical applications are growing, with PSS production capacity growing from 350,000 to 400,000. Chen estimated the company’s revenue will start climbing up in July 2014. Crystal Applied has focused on sapphire double-side polishing, and is one of the sapphire suppliers for iPhone 6. As the iPhone 6 launch date approaches, Taiwanese financial institutes estimate the company’s shipment volume in second half of 2014 will soar, resulting in 2014 revenue performance outperforming last year.

ACTC, a subsidiary of Foxconn Group, has seen a mediocre revenue increase of 2.77 percent during first half of 2014, a stark contrast with other manufacturers’ revenue performance. An ACTC director noted, sapphire substrate for LED applications delivered stellar performances in first half of 2014, but the company’s monthly PSS production is a mere 100,000 pieces (PCS), while substrate production is about 700,000 PCS. Therefore, the company’s revenue performance during first half fell below expectations. He also forecasted ACTC’s revenue performance will improve during second half of 2014.

Sapphire manufacturers are also optimistic about the material’s future applications in consumer electronic products. Moreover, as the LED lighting industry takes off, manufacturers are taking full advantage of market opportunities. Upstream sapphire manufacturers involved in crystal growth, double-sided polishing, and PSS have expanded production capacity, and are seeking market financing.

Most sapphire manufacturers are listed on the Taiwan bourse, the only exception being Crystalwise. Companies that completed financing before 2014 include Crystalwise, Rigidtech, Procrystal, and Crystal Applied. These companies have financed in total NT $2.0 billion (US $70 million). Other companies are also carrying out financing projects with ACTC applying issuance of 25 million stocks onto the market, Crystalwise and Procrystal are also financing through issuance of 62.50 million and 10 million stocks respectively. Aceplux is also plans to acquire financing capital of NT $297 million.

Those in the sapphire industry were most optimistic about business opportunities in the fingerprint recognition sector. Although, iPhone 5S is the only Apple product to use this particular feature at the moment, the iPhone 6 is likely to come equipped with this feature. A single sapphire substrate can be sliced into 18 fingerprint recognition buttons. Rough estimates place a single Apple product uses up to 5 million to 6 million double-sided polished sapphire PCS, which will exceed current sapphire volume usage in LEDs. Due to high smartphone volumes, a single sapphire component used in the phone could cause huge sapphire shortages.

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