Sapphire Industry: More Than Just LEDs!

Estimated reading time: 5 minutes

LED remains the dominant sapphire application in 2016. Overall, rates of usage in smartwatches have been disappointing and have decreased below 2015 levels. In parallel, smartphone display screen opportunities haven’t taken off. Within the highly competitive sapphire industry, players are chasing any opportunity to survive and optimize their cost structure. Prices seem to have reached bottom and stabilized after a rough ride over the last 12 months. After a dip in the second half of 2015, LED substrate demand has been growing strongly through 2016 and is now at record high levels, even triggering a limited shortage of high-quality 4" materials and wafers. According to Yole Développement (Yole), the worldwide quarterly sapphire wafer consumption for LEDs has reached 28.5 million of TIE (Q3, 2016). 

In its new report, Sapphire Market 2016: Substrates & Consumer Electronics Applications (September 2016, Yole Développement), Yole, the More than Moore market research and strategy consulting company, has analyzed the sapphire industry’s latest technology and market trends. Yole used a dedicated methodology based on both top-to-bottom and bottom-up approaches that included interviews across the entire value chain and a strong knowledge of the industry to review the status and prospects of sapphire technologies for LEDs, camera lenses, and fingerprint reader covers, as well as smartwatch and smartphone displays. 

Once again this year, the consulting company collaborated with CIOE to present a powerful program at the International Forum on Sapphire Market & Technologies, 2nd edition (Shenzhen, China - Sept. 6 & 7, 2016 – Agenda). Sapphire industry leaders attended the conference and discussed the latest innovations and market challenges.

What is the status of the sapphire industry? After the 2014 crash, the episode with Apple, and GTAT’s bankruptcy, are there still some survivors? What are their today’s strategies? Beyond existing applications, could we expect emerging applications? Yole’s analysts offer you an overview of the current sapphire industry and announce 2017 trends. 

The LED sector still has the highest demand for sapphire. However, Yole’s analysts confirm: the expected volumes cannot sustain the one hundred or so sapphire producers currently competing in the industry. As a consequence, some sapphire companies are leaving the most commoditized markets and shifting their development strategies toward niche markets with higher added-value such as medical, industrial, and military applications. Other business opportunities could materialize, including microLED arrays and other consumer applications. Meanwhile, lower quality production is being dumped on a large grey market serving a multitude of applications including optical, mechanical, industrial, watches, etc.

In Shenzhen, China, at the beginning of September, more than 100 executives gathered and discussed the sapphire industry’s status. With an impressive program including 18 presentations, multiple debates and networking sessions, the sapphire industry’s future was defined and analyzed by sapphire leaders. Yole and its partner CIOE collected good feedback from attendees and are already thinking about a 2017 session. 

During this Forum, many relevant and exciting presentations took place, mainly focused on optimizing costs and identifying new markets. Dr. Eric Virey from Yole highlighted the sapphire industry, its latest technical and market trends with a special focus on emerging applications. (See Dr. Eric Virey presentation – 2nd Int. Forum on Sapphire Market & Technologies).

In the same session, leading sapphire manufacturers Monocrystal and Aurora Sapphire also reviewed their insights as key sapphire market players:

• Mikhail Berest, VP of Sales at Monocrystal, detailed Monocrystal strategies: “The market is challenging not only for sapphire producers, but also for our customers. Our major focus is to strongly support our customers during this market storm by providing them with the highest quality product at a competitive price. We make this possible because Monocrystal’s sapphire is industry-leading due to its low internal stress and low etch pit density. This translates into longer LED lifetime and narrow wavelength distribution on our customers’ side...” (Full discussion on i-micronews, compound semi. news)
• Xinhong Yang, VP & Technology Director, Aurora Sapphire, presented the latest technology innovations. He also focused his presentation on the future of the sapphire industry.
• On the application side, Unionlight’s CTO, Huang XiaoWei, discussed military applications of sapphire in the last sapphire Forum session.

Reducing costs and improving quality were major topics discussed at the Forum. Fujian Jing’an Optoelectronics highlighted the importance of subsurface damages. Edouard Brunet, R&D Manager Grains & Powders Asia, Saint-Gobain High Performance Materials, introduced a 1-step polishing process with significant potential for cost reductions. Bernard Jones, VP of Technology & Product Development at Fametec, showed an innovative growth technology for large diameter LED wafers, and Ivan Orlov, Scientific Visual’s CEO, triggered extensive discussions after his presentation on automated ingot inspection and mapping equipment and standardization proposals.

“Once again, the International Forum on Sapphire Market & technologies brought together many players”, comments Jean-Christophe Eloy, President & CEO, Yole Développement. “It showed that in the difficult market environment we’ve experienced since late 2015, the industry needs to gather and exchange information in order to optimize ownership costs and enable new applications.”

Yole & CIOE’s sapphire Forum provided a great platform to stimulate discussion and new ideas with extensive networking opportunities for people and companies to find new partners for the next stage. 

“The International Forum on Sapphire Market and Technologies is the key industry event for the main sapphire makers,” asserts Oleg Kachalov, CEO of Monocrystal.“For Monocrystal, it is a chance to meet long-term partners and experts and reach our customers with our new developments, which will allow them to strengthen their position in the LED market.” 

“I was impressed by the quality of content presented at Yole & CIOE’s sapphire Forum 2016, which provided not only trend analysis but also deep insights”, says Margaret Connolly, VP of UBM Asia. “The event was well attended by the industry’s key decision makers. The collaboration between CIOE and Yole has been quite successful as the teams are committed to the common objective which is to support long term technology development and innovations. I look forward to attending the 2017 edition in Shenzhen.” UBM owns 100% of eMedia Asia, the majority owner of the annual CIOE.

What can we expect for 2017 and the years after?

Massive adoption of sapphire in display screens now seems unlikely… Many companies have partially or completely exited the industry over the last 12 months. Independent crystal growers in Korea such as DK-Aztek, OCI, and Unid LED have all stopped their sapphire activities. Historical players in Taiwan such as Tera-Xtal, Crystal Applied Technology or Procrystal appear to be on the verge of bankruptcy and U.S. leader Rubicon recently shut down its facility in Malaysia and exited the LED wafer market to refocus on the optical, industrial, and defense markets. But key players are still investing.