Continued profitability is difficult to bear down the performance of the sapphire substrate plant in the second half of the year

[Source: "High-tech LED - Research and Review" September issue GLII]

After the bleak operation in the second half of 2011, Taiwan sapphire substrate manufacturers ushered in the recovery phase in the first half of 2012, in which PSS became the key to Taiwan sapphire substrate manufacturers profit.

For the trend of the market in the second half of the year, the High-tech LED Industry Research Institute (GLII) believes that the current LED industry is moving forward rationally, and there will be no longer a situation in which the entire industry turned sharply last year. However, as the backlight turns lighter, the lighting demand is not enough. I fear that the shipments of Taiwan sapphire substrate manufacturers will decrease in the second half of the year. At the same time, it is difficult for PSS to support Taiwan's sapphire substrate manufacturers in the short term.

Shipments increased by 29% year-on-year

In the first half of 2012, large-size, medium- and small-sized backlights and lighting demand rebounded, driving Taiwan's sapphire substrate shipments to climb all the way. In addition to Hejing Optoelectronics, the shipments of other Taiwanese sapphire substrate manufacturers in the first half of the year have increased to varying degrees. Among them, Jingmei Application, Ruijie Technology, Zhongmeijing and Jiajing Technology all increased by more than 30%. Ruijie Technology performed the best. The shipment volume in the first half of the year was about 793,000, which was 3.5 times that of the same period last year.

Overall, the total shipments of seven major sapphire substrate manufacturers in Taiwan in the first half of 2012 were approximately 8.88 million units, a year-on-year increase of 29%. After experiencing a low market in the fourth quarter of 2011, sapphire substrate manufacturers ushered in a brief recovery in the first half of 2012.

Figure 1 Shipment of Taiwan sapphire substrate manufacturers in the first half of 2012 (in 2 inches)



Data source: The company's financial report high-tech LED industry research institute (GLII)


Revenue decreased by 42% year-on-year

However, the sharp increase in shipments failed to drive revenue growth. In the first half of the year, Taiwanese sapphire substrate manufacturers generally faced pressure from continued low product prices to drag revenue growth.

In terms of price, the price of 2-inch polished sapphire substrates in the first half of this year was 8-9 US dollars, only one-third of the same period last year. The 2-inch PSS is priced at $17-18, which is one-half the price of the same period last year. Due to the strong demand for PSS from lighting and the higher gross margin of PSS, sapphire substrate manufacturers are increasing the proportion of PSS shipments.

In the first half of 2012, only the Ruijie Technology, which had a year-on-year increase in revenue, benefited from the PSS demand. Its revenue in the first half of the year was 81 million yuan, up 188% year-on-year. Other Taiwanese sapphire substrate manufacturers experienced a sharp decline in revenues in the first half of this year, with a drop of between 37% and 75%. Overall, the continued low level of sapphire substrate prices is still a key factor affecting the performance of sapphire substrate manufacturers. GLII statistics show that in the first half of this year, Taiwan's sapphire substrate manufacturers' total revenue was about 750 million yuan, down 42% from last year.

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