Prices of sapphire ingots have been increasing causing substrate makers to plan a price hike on patterned sapphire substrates (PSSs). Some firms have been adjusting prices since the end of the first quarter, causing other firms to follow suit. However, most LED chipmakers suffered from net losses in the first quarter despite rebounding demand, hence the success of the price hike is still questionable.
Sapphire substrate makers noted that demand for higher LED brightness has been strong, pushing up demand for PSSs. Currently, PSSs products account for more than 50% of shipments, said makers. Supply for sapphire ingots has been low, causing prices of 2-inch ingots to increase from US$3/mm to US$3.2-3.3/mm, a near 10% increase. But prices of 2-inch PSSs have been around US$12-13/unit while prices of 4-inch PSSs have been around US$50/unit. The rising prices of sapphire ingots have been contracting profit margins for substrate makers.
Market observers noted that some sapphire substrate makers hope to increase PSS prices by approximately 5% as shipments continue to increase in the second quarter.
Taiwan-based sapphire substrate maker Procrystal Technology plans to expand capacity as the firm is optimistic about demand growth of sapphire and PSSs. Currently, the firm has an annual substrate capacity of around 350,000 units, and PSS capacity of around 40,000 units. Due to increasing orders for PSSs, the firm plans to add one PSS production line with annual capacity of 20,000 units in the third quarter. Procrystal targets annual PSS capacity to reach 100,000 units.
Market observers believe Procrystal is likely to see second-quarter revenues reach NT$150 million (US$4.99 million) and 2013 revenues to reach NT$700 million.
