Sapphire substrate makers have noted that order visibility is clear to May due to expected demand growth in the LED backlighting and lighting markets. Market observers believe prices of sapphire substrates are likely to increase slightly in the second quarter. Current prices of 2-inch sapphire substrates are around US$7.50-8/unit.
China-based firms have been increasing prices for 2-inch sapphire ingots since April from US$2.80-2.90/mm to US$3.10-3.20/mm, said market observers. Industry sources noted that prices of sapphire ingots have been low and because the sector is upstream, prices have yet to reflect end-market demand. However, ingot makers have been lowering capacity and gaining room for price negotiations.
Despite the possibility of a price increase for sapphire substrates, market observers believe the sapphire substrate market will continue to be in oversupply in 2013.
The sapphire substrate market has been seeing consolidation in recent years and many China-based makers have exited the market. According to studies, many China-based sapphire substrate makers halted production starting at the end of 2012 due to low product prices and a shortage of funds.
According to studies in China, the number of MOCVD equipment sets increased to 917 in 2012 from 803 in 2011. However, capacity utilization rates at downstream LED firms were only around 30% in 2012.
Taiwan- and China-based firms have mixed views on the sapphire substrate market in China. Taiwan-based sapphire substrate firms such as Crystalwise and Tera Xtal both plan to expand capacity in China. However, China-based firms believe more than 50% of sapphire substrate investment plans will be abandoned in 2013.
