Sapphire Substrate Price Trend in 2014

Before 2012, the largest market for sapphire substrate applications was LED and the entry of many players led to an oversupply situation, with most manufacturers still suffering from losses, according to LEDinside analysts. Sapphire substrate prices remained low over the last two years due to this oversupply situation, according to a LEDinside report published in May 2013. Over the last few months, though, developments in the industry especially in the non-LED application field have shown a likely price rebound in 2014. Apple’s introduction of sapphire substrate material into the iPhone 5 and iPhone 5S has no doubt become music to manufacturers’ ears.

For instance, some manufacturers are already projecting increase in prices due to rising non-LED demands. In mid October this year, Mikhail Berest, Senior VP Global Sales Director at Monocrystal projected 2” sapphire substrate prices would increase in 2014, due to increased smartphone applications, during his presentation at LEDforum 2013. Chinese manufacturer Guizhou Haotian Optoelectronics even optimistically forecasted increased smartphone applications will lead to sapphire substrate shortages in a recent STCN.Com report.

Responding to sapphire substrate’s rising smartphone applications, LEDinside Research Director Roger Chu agreed that sapphire substrate for non-LED applications will continue to expand in 2014 to move beyond smartphones to tablet applications such as Apple’s iPad. However, Chu noted it was far too early to judge whether supply shortages will occur from increased smartphone applications and maintained a conservative outlook. "We still haven't seen the emergence of sapphire substrate smartphone cover glass, yet," explained Chu. Smartphone cover glass is potentially the largest field for growth in sapphire substrate smartphone applications. Chu’s observation was echoed by Yuanta financial analyst Andrew Chen, who noted fingerprint recognition might become standard tablet spec in the future. In other words, the volume of sapphire substrates used in fingerprint recognition buttons is likely to soar. As for sapphire substrate smartphone covers there has been a lot of market speculation, but these have mostly been people’s imagination, Chen wrote in a recent research report.

However, in a market mostly dominated by LED applications, sapphire substrate manufacturers face price negotiation challenges from LED chip manufacturers. Taiwanese sapphire substrate manufacturers plans of raising prices 5-10% was thwarted in July this year, as LED chip makers implemented stringent cost controls. In the cost-conscious LED market it is not uncommon for manufacturers to turn to other suppliers. As in the case in July, Taiwanese LED chip manufacturers turned to Chinese manufacturers instead. Taiwanese sapphire substrate manufacturers Crystalwise Technology (CWT), Tera XTAL Technology’s (Tera XTAL) and others 3Q13 performances were affected as a result. 

Overall, LEDinside analysts outlook for 2014 sapphire substrate prices remains positive. Analysts projected more manufacturers will be using sapphire substrate material in 2014, and prices are likely to rebound from rock bottom prices in 2013. Overall, sapphire substrate market still faces intense competition, and only manufacturers with technological advantages and lower costs will be able to emerge as winners. 

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