The market of sapphire substrates, an upstream material for LEDs, has been in oversupply with prices falling. The prices are lower than the production costs of many firms. This has also caused many tier-two sapphire firms to purchase sapphire ingots from large-size sapphire makers to manufacture substrates. According to statistics, large-size sapphire makers have close to 80% of global market share.
As more tier-two sapphire firms have halted production of ingots, the sapphire ingot market has been more concentrated. According to market research institute, LEDinside, prices of sapphire ingots have been low, and hence only firms with strong distribution channels can afford to maintain production. Cost effective large-size firms such as Monocrystal, Rubicon, and STC have plans to expand capacity. Large-size sapphire makers also hope to expand into non-LED application markets.
Industry sources noted that there are many players in the sapphire substrate industry and while some focus on growing crystal ingots, some focus on manufacturing downstream patterned sapphire substrates (PSSs).
The sapphire industry began in Russia and the US. However, as demand for LED rose, firms from Japan, South Korea, Taiwan, and China began entering the market. Industry sources predict the oversupply condition is unlikely to be solved in a short period of time and only cost effective firms are likely to survive.
Demand for LED lighting is expected to grow continuously in China as the government has introduced a series of subsidies programs. LEDinside believes the China LED lighting market's output value will reach US$10 billion in 2015 and US$22 billion in 2020.
