Stable Development of Sapphire Substrate Market, Consumer Electronics into New Markets

With Apple Watch coming out, the second spring of sapphire substrate seems to be coming, and the related stocks have soared. The past traditional sapphire industry, mainly includes LED sapphire substrate and window market. The window market tends to be customized, whose price elasticity is low, and the substrate market depends on the downstream demand of LED.

At present, sapphire is mainly applied in LED substrate, accounting for about 90% of the amounts. A few years ago, the blind expansion of the LED industry brought about the madness of sapphire industry. As a result, the investment overheating leads to excess capacity, which makes sapphire substrate price drop rapidly. It means the price for 2 inches sapphire substrate falls from the peak price about $35-40 to about $30 or so. In 2012 the falling range had more than 100%. Until 2013 the price rebounded, floating at $7. In the first half of 2014, the sapphire market showed an upsurge again with the LED downstream demand increasing. Especially the crystal rods, its price continued to be bullish. 

Huge potential market opportunities will promote the rising investment confidence in great size sapphire substrate material. High Yield Research Institute of LED points out that the investment project of 4 inches sapphire substrate will also further enhance the profitability in the future as the sapphire substrate price picks up.

From the point of costs, the sapphire cost proportion accounts for about 10%. In the popularization of LED lighting application products and the price keeping falling, the rising in price is clearly not the trend of the Times, which is against the market competition rules. Especially the sapphire substrate, in whose related products price is still falling, it is impossible that those epitaxial chip makers as sapphire substrate customers will allow the sapphire manufacturers to raise the price!

Therefore, from the point of market demand, the major chip manufacturers make the epitaxial wafer production capacity rapidly expanded with the drive of LED lighting in 2014. In order to stabilize the market share with new lighting market demand, the domestic first-line LED chip manufacturers have accelerated and improved the capacity utilization, to seize the market and further drive the sapphire substrate demand.

With communication, technology and intelligence development, mobile phones and wearable electronic equipments put forward higher requirements for electronic functional materials. Sapphire, as a new generation of high quality material, has been widely used in the above applications. Compared to the matured LED market, the market is still waiting for the sapphire which is a protective material used in mobile phones and other consumer electronics fields.

And this year sapphire finally appears in Apple Watch. It is obvious that the Apple company hasn't given up the idea that the sapphire material is used in their electronic products.

GGII thinks sapphire is still likely to become a member of the Apple mobile phone chain as long as the sapphire technology, quality and production capacity can be effectively improved. IPhone7 with sapphire screen will be a great probability event.