Sapphire Substrates Are Continuing to Increase in Price

Sapphire substrates are continuing to increase in price and some suppliers have raised their April quotes for 2-inch ones to more than US$9 per piece, according to industry sources. The sources said this is because LED applications are becoming more in demand, which is increasing the need for upstream sapphire substrates. Since LED chip makers still had losses in the first quarter and sapphire substrate capacity in China is rising, it is expected that substrate prices will continue to slowly hike in the second quarter. Although LED chip makers still have bargaining space, the price increase is estimated to help sapphire substrate plants return to a positive gross margin in April at the earliest, according to the sources. LED chip manufacturers saw a capacity utilization rate of 80-90% in March, which increased the demand for sapphire substrates. There are more orders for the substrates and manufacturers such as Taiwan-based Tera Xtal and Crystalwise are already proposing price hikes with customers. Despite the suppliers' quotes of over US$9, LED chip makers will likely to be able to bargain them down below US$9 for April due to their procurement scale. But if the LED industry continues to see demand picking up, actual 2-inch substrate prices may exceed US$9 in May followed by a monthly increase of US$0.30-0.50. Meanwhile, China-based sapphire substrate manufacturers' utilization rate is increasing and some Taiwan-based LED manufacturers, in order to ease pressure on production cost, have begun to purchase substrates from China-based suppliers, whose quotes are generally lower. But the sources said Taiwan-based substrate manufacturers still have advantage in terms of yield rates, after-sales services and stable supply. Source: www.digitimes.com