Currently 80 percent of sapphire applications are used in sapphire substrate while the other 20 percent is for non-substrate materials, according to Chinese-language online media Finance.com.cn estimations. Sapphire that is used in substrate is mainly applied in LED lighting and Si On Sapphire (SOS) related products, with LED lighting accounting for over 90 percent. Therefore demands from LED lighting directly affect sapphire substrate and is the market’s main focus.
LED demand has picked up, driving up sapphire substrate demand . With the sluggish economy in 2012, LED lighting demands fell below expectations leading to a decrease in upstream MOCVD equipment usage. Global MOCVD utilization rates in 2012 reached 59 percent and 42 percent in Mainland China , causing sapphire substrate demandincrease to be less than forecasted, according to statistics by a related organization. At the same time, continued increase of sapphire substrate production capacity aggravated the supply and demand situation. The demand to supply ratio only reached 66 percent, leading to sapphire substrate price drop. With ]penetration rates picking up for LED direct-view type LED backlight in 2013, and rise in LED lighting demand, MOCVD utilization rates rose to 74 percent (63 percent in China) driving sapphire substrate demands rebound. Demand to supplyratio slowly began to improve. Demands for 2012 demand reached 57.13 million pieces (pcs) per year increased to 83 million pcs per year (2-inch equivalent), demand to supply ratio reached 80 percent became the main factor that pushed sapphire substrate prices back up.
Demand in LED is expected to rise in 2014 and sapphire substrate is hoped to follow suit. LED lighting products price drops are anticipated to continue, where some products have already reached prices equivalent to CFL which is spurring a rapid increase in LED lighting demands. This year will also see a global move towards banning incandescent luminaries. EU, Japan, and other regions have already begun implementing these new standards in 1H13. Other regions are projected to carry out related standards after the end of the year advancing LED lighting demand penetration rates which is estimated to continue drive sapphire substrate material demands back up. The Chinese media estimatedthat sapphire substrate supply to demand ratio in 2014 to further increase to 91 percent supply is hoped to improve.
iPhone application is opening up a new application venue for sapphire substrate. If new Apple products launched in 2014 use sapphire substrate in protect covers, 2014-2015 has a possibility to reach 40 million in sales generating RMB 120 million (US $19 million) in profit. This will drive up sapphire substrate demand to 97.14 million pieces a year, 29.14 pieces a year for 2-inch equivalent making 2014 almost equal to the lowest volume amount for the entire LED application market for sapphire substrate. According to these statistics, the sapphire substrate market is hoped to growlarger than five times.
