Yole Development forecasts that significant overcapacity and low
LED substrate prices will affect the profitability and viability of
many sapphire players in 2013 and beyond, but emerging applications
could transform the industry. The company points out that the
sapphire material shortage experienced from 2010 to early 2011
created a window of opportunity for new entrants with more than 80
companies that announced their intention to enter the industry. Yole
says that this brings the potential number of players to 130+. More
than 50 of these potential new entrants are reportedly located in
According to Yole, the additional players coupled with slow demand
from LED makers in 2012 have created a very challenging environment
with cores and wafers often selling at prices at or below
manufacturing cost. Yole says that revenues from the sale of
sapphire substrates increased 15% in 2011 but are expected to drop
9% in 2012 due to lower average selling prices, despite volume
increase and a favorable product mix with the percentage of
patterned sapphire substrate (PSS) wafers increasing dramatically.
Yole predicts that these difficult market conditions will trigger
an industry consolidation and attrition that should take place in
2013 and 2014.
Yole Dévelopement’s team expects the industry to evolve
toward a more vertically integrated model in order to limit margin
stacking with a handful of tier-1 worldwide leaders emerging from
this rationalization, along with smaller tier-2 regional players.