Rubicon Technology, Inc.yesterday reported financial results for its third quarter ended September 30, 2013.
“We are very pleased with the customer response thus far and believe that PSS will be a strong growth driver for our wafer business”
The Company reported third quarter revenue of $11.1 million as compared with $10.6 million in the prior quarter. Overall demand for sapphire was stronger in the third quarter driven by the growing momentum of the general lighting segment of the LED market and demand from non-LED applications for mobile devices, such as the sapphire home button on thea iPhone 5S, as well as the camera lens cover and dual flash now being adopted by more smartphone manufacturers. As a result, pricing increased for the third consecutive quarter on the Company’s two and four-inch sapphire cores. Capacity constraints for the fabrication of two and four-inch cores along with reduced orders for six-inch wafers limited further sequential growth in the quarter.
Raja Parvez, President and CEO of Rubicon Technology, commented, “With the rising demand for sapphire, pricing has been steadily rising and current market pricing, which will be reflected in our fourth quarter numbers, is now back to approximately break-even for our two and four inch core products. Given the momentum of the LED general lighting market and introduction of new applications for sapphire, we expect pricing to continue to strengthen going into next year.”
The Company announced the launch of its four and six-inch patterned wafer product (“PSS”) and reported that seven tier-one LED chip manufacturers have already requested samples. “We are very pleased with the customer response thus far and believe that PSS will be a strong growth driver for our wafer business,” Mr. Parvez said. “While we are a few quarters away from volume production orders, we believe that PSS wafer sales should generate at least $15 million in revenue for us in 2014.”
The Company also reported that orders from their major SoS customer are very limited due to excess wafer inventory at the customer. That customer is also introducing new RF chips that will be produced on SoI rather than SoS starting early next year. Therefore future sapphire purchases from that customer will likely be lower than they have been historically.
The Company reported a net loss of $0.26 per share in the third quarter as compared with a per share net loss of $0.26 in the prior quarter. Product mix, lower utilization and a slightly lower effective tax benefit rate offset the impact of higher pricing on two and four-inch cores. While plant utilization remains low, the Company reported that they are now beginning the process of re-starting all of their crystal growth furnaces now that boule inventory levels have been greatly reduced. They expect all furnaces to be operational by the end of the first quarter of 2014.
William Weissman, CFO of Rubicon Technology, said, “Idle plant costs in the second quarter totaled $3.9 million, which continued to be a significant portion of our gross loss. However, our crystal growth operations will be ramping back up which will begin to reduce that number. Utilization of our polishing operations will improve with the strengthening of six-inch wafer orders and the start of patterned substrate production.”
