Rubicon Technology, a leading provider of sapphire substrates and products to the LED, RFIC, semiconductor, and optical industries, has reported financial results for its fourth quarter ended December 31, 2012.
The firm reported fourth quarter revenues of US$20.0 million as compared with US$19.9 million in the third quarter. Revenues from six-inch wafer sales showed another sequential increase to US$17.5 million from US$16.4 million in the third quarter, a 7% increase. Due to low industry pricing for two through four inch core products, Rubicon decided to sell a limited quantity of those products in the quarter. Raja Parvez, president and CEO of Rubicon Technology, commented, "The firm saw strong demand for our 6-inch polished wafers in the quarter, particularly from the LED market. Rubicon has now shipped over 400,000 polished 6-inch wafers to date into the LED and SoS markets."
While the pricing environment has not improved for two through four inch core products, the firm has started taking orders for those products for delivery in the first and second quarters in order to begin reducing inventory levels and maintain customer relationships. With Rubicon's resumption of sales into this market, pricing has decreased further. William Weissman, CFO of Rubicon Technology, said, "Current pricing of two through four inch core products is now below our carrying cost in finished goods and WIP inventory for those products. As a result, the firm recorded a US$1.6 million adjustment in the period to reflect the value of those products in inventory at the current market price. The firm believes that the competitors are now selling smaller diameter cores at cash cost in order to reduce inventory or to keep utilization rates high. However, excess capacity in the market is gradually being absorbed and Rubicon believes the pricing environment should eventually improve. Exactly when and how quickly pricing will improve is difficult to predict."
The firm reported a sequential reduction in margins due primarily to the lower smaller diameter product pricing and resulting inventory adjustment. The loss per share in the fourth quarter was negative US$0.05.
First-Quarter 2013 Guidance
The firm expects first quarter revenue to be approximately US$8 million, down sequentially due to lower six-inch wafer sales. With the reduced sales volumes, utilization rates will be low in both crystal growth and polishing, putting pressure on the firm's margins in the quarter. Consequently, Rubicon expects a loss per share between negative US$0.10-0.14 in the first quarter based on 22.5 million shares outstanding and a 50% tax benefit.
