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Sapphire Applications & Market 2016: LED and Consumer Electronics
Sep.2016

2016_material_consumption_breakdown_per_applications_yole_report
6 490 €

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Description

couv lyer sapphire

As the prospect of adoption in smartphone display covers dwindles, what is the future for the sapphire industry

2015 was a rough year for the LED industry but substrates volumes are reaching historical highs in 2016

The BLU market decreased significantly in 2015 due to a 5% drop in sales of LCD TVs and reduced number of chips per set. Significant increase of 4K TVs with higher LED count were not enough to offset the trend. At the same time, general lighting didn’t grow as anticipated.

LED ASP dropped 30 to 40% Y/Y and certain LED chipmakers took drastic decisions. Epistar, which until recently was the worldwide capacity leader, stopped 125 of its oldest and less efficient reactors and froze more than 25% of its capacity.

A major glut of inventory at all levels of the supply chain prompted a dramatic drop in sapphire wafer sales in Q3 and Q4-2015.

MOCVD utilization rates have since recovered, especially in China where capacity keeps increasing and companies like San’an or HC Semitek prepare for global dominance. In Taiwan, Epistar resumed investments and ordered multiple new high productivity MOCVD reactors in order to ramp capacity up again with more cost effective tools. By July 2016, sapphire wafer shipments had reached an all-time high.

In this report you will find a detailed update of MOCVD capacity per region with a ranking of epi companies as well as LED substrate volume and revenue forecast.

2016 material consumption breakdown per applications Yole report 

Consumer electronic applications are stalling and now mostly captive

Two years after the demise of GTAT, adoption in cover glass appears increasingly unlikely, although activity has not stopped completely and glimpses of hope remain. Including LEDs for display backlight, Apple represents close to 20% of sapphire consumption. Camera lens covers could see a boost with the likely introduction of a dual camera iPhone model this quarter and a lens diameter increase on its single camera models. Sapphire lens covers also appear in models from Xiaomi, Huawei and HTC but adoption remains sporadic and decided on a model to model basis.

It seems likely now that Apple will start ditching the home button on the 2017 iteration of its iPhones. This will put a serious dent on optical wafer demand for consumer applications.

Smartwatches sales were disappointing in 2015, including for the highly anticipated Apple Watch that shipped only 10-12 million units with the sapphire models representing only a small fraction. Sales of sapphire for the Apple Watch stopped in March 2015 and haven’t resumed since.

Apple relies exclusively on Biel and Lens for the sourcing of sapphire components. Both companies are now essentially fully integrated from sapphire growth to the final products. Suppliers that were shipping cores, bricks or optical wafers into the Apple supply chain have seen this revenue stream dried completely.

In this report, you will find an analysis of recent trends in consumer electronic applications and display covers as well as detailed forecasts of sapphire volume shipments for those applications

Evolution of MOCVD capacity Yole report 

The sapphire industry is still plagued by overcapacity and rapid price declines

Demand for LED is increasing but won’t provide enough volumes to sustain the close to one hundred sapphire makers competing in the market. Up to 30 companies have stopped their sapphire-related activities over the last 18 months. The most prominent were OCI, DK-Aztek, HQC, Shangcheng etc. Many more have frozen most of their capacity and China counts dozens of “zombie” companies kept alive by political will.

Capacity increased again over the last 12 months, although the pace is abating, thanks to a reduction in the number of new projects and significant attrition. But continuous excess supply combined with the significant drop in LED wafer demand in Q3 and Q4-2015 led to an acceleration of ASP decrease over the last 12 months. Prices for cores and wafers have dropped 50 to 70% over the last 2 years. Four inch wafers have been hard hit and 2” cores now sell for no profits, as a fall-off of 4” and 6” manufacturing and for the sole purpose of absorbing fixed cost.

The 2” core market is disappearing as the LED industry transitions to larger diameters and optical wafers are now a captive market. Suppliers need to find new applications for the parts of the boules that are left over after extracting 4” or 6” cores. For now, those are often sold by the kg at low prices for the manufacturing of small optical and mechanical parts.

With strong price pressure and an increasing fraction of the market being captive, revenue of sapphire companies have dropped 20% in 2015 despite a volume increase of 20% across all applications.

Unless strong signals emerge soon to indicate that the display cover opportunity could finally materialize in 2017, many more companies will disappear within the next 12-18 months. While this situation is critical for many players, on the longer term, the market will finally be weeded out of its weakest players. The survivors could emerge stronger and the overall industry healthier. Despite a slight reshuffle in the ranking, the top 5 companies by revenue in 2015 remained the same as in 2014. But 2 newcomers from China, TDG and JeShine appeared in the top 20.

On the way to industry maturity, new applications such as microLED displays could emerge. While they won’t represent an opportunity of the same scale as display covers, they could offer nice upsides to the companies that can capture them.

In this report, you will find a detailed analysis of company revenues per region and product type as well as the update on capacity for crystal growth, finished and PSS wafers with all major changes and information on dozens of existing and emerging players.

2015 vs 2014 sapphire revenue ranking Yole report
 

Objectives of the Report

The report provides a detailed analysis of the status and prospect of the sapphire industry for: LED, camera lens & fingerprint reader covers, smartwatch & smartphone displays:

  • Trends and drivers in established and emerging applications
  • LED chip manufacturing industry evolution
  • Sapphire supply & demand: will global capacity decrease? Where are prices headed? Impact on revenue. Who will survive?
  • Identify and know the key players (established and emerging)
  • Geographic trends and specificities
  • Technology trends: crystal growth, wafer diameters, PSS.
  • Emerging applications

what's new

  • Status of the sapphire industry and evolution vs. 2015
  • 2015 wrap up: winners and losers, casualties and survivors
  • Is there still a future for sapphire display covers? What will happen to the industry if this opportunity never materializes?
  • How much can LED demand sustain the industry?
  • Is China going to completely dominate?
  • How much longer can sapphire prices go down?
  • Could new applications emerge? Augmented reality or microdisplays?

 

Table of contents

About the authors  p8


Acronyms p9


Product categories and applications covered in this report   p10


LED wafer forecast methodology     p11


Exchange rates                            p12


What we saw, what we missed       p13


Executive summary             p14


•    Sapphire application breakdown
•    LED substrates
•    LED filaments
•    Consumer electronic applications
•    Apple supply chain
•    Smartwatches
•    Display covers
•    Supply and demand
•    Price trends
•    Captive and open markets
•    2015 revenues
•    Long term revenue forecast for finished products

 

Noteworthy news for the last 18 months  p50


Introduction to the sapphire industry     p58


•    Sapphire industry overview
•    Sapphire properties overview
•    Sapphire properties vs. orientation
•    Value chain
•    Example: sapphire wafer process
•    Crystal growth geometric yield
•    Crystal growth process yield
•    Material defects and slicing
•    Core/brick length
•    Major industry players: crystal growth
•    Major industry players: wafer slicing and finishing
•    Major industry players: PSS

 

Status of the sapphire industry  p71


•    Overview
•    Price trends: cores for LED and optical wafers
•    Impact of 2” market disappearance
•    Grey market
•    Price trends: conventional sapphire substrates for LED
•    Price trends: patterned sapphire substrates for LED
•    Discussion
•    Price trends: bricks and optical wafers for consumer electronic
•    Long term price forecast
•    2015 top 20 sapphire company revenue for core, bricks and wafers
•    Detailed breakdown
•    Revenue structure: captive and open markets
•    2015 revenue breakdown for core and bricks and polished wafers
•    2015 revenue breakdown for optical and PSS wafers
•    Geographic breakdown by product category
•    Exchange rates impacts

 

Status of the LED industry   p95


•    Status of the LED industry: 2015
•    Status of the LED industry: 2016
•    2011-2021 nitride LED substrate breakdown by application
•    LED market trends - Lighting
•    LED bulb lifetimes
•    LED market trends - Displays
•    LED video displays

 

LED epitaxy (MOCVD) capacity trends p104


•    GaN MOCVD capacity 2010-2016 evolution by region
•    Top 10 global LED chipmakers by capacity
•    Top 20 LED chipmakers in China
•    Focus on China
•    GaN MOCVD capacity supply vs demand trends
•    GaN MOCVD Q3-2016 utilization rate by region
•    Capacity and wafer start - Geographic breakdown

 

LED wafer market & forecast p113


•    LED wafer value chain
•    Vertical integration
•    Sapphire wafer consumption: Q3-2016 geographic breakdown
•    Incentive for adoption of large diameter wafers
•    Challenges for the adoption of large diameter wafers
•    Conclusion
•    Q3-2016 diameter breakdown by region
•    Q3-2016 diameter breakdown - global
•    6” adoption status
•    LED wafer diameter breakdown 2008-2021.
•    2011-2021 sapphire wafer start by diameter
•    Patterned sapphire substrates – Benefits
•    When are PSS used?
•    PSS market: historical perspectives
•    Pattern design
•    PSS manufacturing process overview
•    Lithography techniques for LED
•    Nano-PSS
•    Nano-imprint Litography (NIL)
•    Random structure NPSS
•    NPSS status
•    Q3-2016 CSS and PSS consumption by region
•    PSS supply chain
•    PSS consumption and sourcing strategy
•    PSS capacity breakdown by region and company type
•    2011-2021 CSS and PSS volume forecast
•    2011-2021 core shipment forecasts
•    2011-2021 PSS revenue trends
•    2011-2021 CSS revenue Trends
•    2011-2021 revenue summary

 

Alternative LED substrates   p150


•    LED-on-Si overview
•    LED-on-Si cost of ownership
•    LED-On-Si status update
•    Key players and strategic positioning
•    GaN-On-GaN
•    Alternative substrate adoption forecast

 

“Optical wafers” market review and forecast:     p160


•    Introduction
•    Sapphire components at Apple
•    Optical wafer manufacturing
•    Camera lens covers: overview
•    Recent flagship phones
•    Dual cameras
•    Dual camera for iPhones
•    Lens cover extraction schemes
•    Camera lens covers: adoption trends
•    Sapphire camera lens cover – 2022 adoption forecast
•    Fingerprint reader covers: overview
•    Fingerprint reader technology trends
•    Fingerprint reader covers: alternative technologies
•    Fingerprint reader covers: sapphire use
•    Fingerprint reader covers: sapphire cover adoption trends
•    Heart monitor sensor covers
•    Optical wafers 2012 -2021 volume and revenue forecast
•    Optical wafers 2012 -2021 ingot (core) forecast

 

 

 

 

 

 

 

Smart watches market review & forecast   p182


•    Introduction
•    Forecasting the smartwatch market
•    Sapphire in smartwatches: Apple watch
•    Sapphire in smartwatches: other brands
•    Sapphire in smartwatches: sapphire adoption rate forecast
•    Apple supply chain 2015-2016 and excess inventory
•    Sapphire covers design and slicing pitch
•    Sapphire smartwatch cover volume and revenue forecast

 

Sapphire display covers     p192


•    Mobile device display covers - Overview
•    Touch panels – technology overview
•    Display and touch sensor structures
•    Touch sensors and display panels supply chain
•    Display cover manufacturing process
•    Potential benefits of sapphire display covers: mechanical strength
•    Potential benefits of sapphire display covers: dielectric constant
•    Putting sapphire to the test: GTAT vs Corning
•    Putting sapphire to the test
•    Impact of finishing process
•    Conclusions on mechanical testing
•    Major issues of sapphire display covers: cost etc.
•    Major issues with sapphire display covers: reflectivity
•    Anti-reflection coating
•    Can ion implantation solve the reflectivity problem?
•    Summary
•    Current status
•    Apple sapphire patent portfolio overview
•    Rugged or curved displays: which strategy for differentiation?
•    3D displays
•    Sapphire adoption trends
•    Motorola shatterproof display
•    Motorola shatterproof display
•    Status at Apple
•    Scenario: partial roll out in a premium model
•    Conclusions
•    Display cover adoption rate forecast 2015-2021.
•    Display cover volume forecast 2015-2021

 

LED filaments       p225


•    Overview
•    Filament material
•    Filament manufacturing process
•    Performance and cost
•    Industry trends
•    LED filament 2012-2021 shipment and revenue forecast

 

Supply and demand analysis  p236


•    Definitions and metrics
•    Brick and core extraction
•    Definitions and metrics: TIE
•    From TIE to FIE (4-inch equivalent)?
•    Finishing, CSS and PSS geographic capacity breakdown
•    Crystal growth capacity: 2012-2016 evolution by region
•    Crystal growth 2015 to 2016 capacity bridge
•    Crystal growth capacity: top 20 ranking
•    Crystal growth technology breakdown
•    Finishing capacity: 2012-2016 evolution by region
•    Finishing: 2015 to 2016 capacity bridge
•    Finishing capacity: Top 20 ranking
•    PSS capacity: 2012-2016 evolution by region
•    PSS: 2015 to 2016 capacity bridge
•    PSS capacity: top 20 ranking
•    Material, finishing and PSS supply vs demand
•    Year on year capacity trends
•    Why is capacity still increasing?
•    The zombie companies
•    Attrition and consolidation
•    Recent attrition and casualties in the sapphire industry
•    Supply vs demand analysis: no sapphire display cover
•    Supply vs demand analysis: sapphire display cover adoption
•    Discussion

 

Focus on China    p269


•    Overview
•    2014 vs 2015 revenue
•    Recent projects
•    Aurora sapphire: recent trends
•    Aurora sapphire: 2011-2015 revenue and gross margins trends
•    Aurora sapphire: 2015 ASP and gross margins per product
•    Apple supply chain evolution: Biel and Lens
•    Recent events: Lens
•    Recent events: Biel
•    LED vertical integration: San’an and Crystaland
•    Crystaland 2015 revenue and gross margin breakdown
•    Leading established companies
•    Tier-2 and emerging companies

 

Focus on Taiwan       p288


•    Overview
•    2011-2016 revenue trends
•    2014 vs 2015 revenue
•    Recent revenue trends: CAT and Tera Xtal
•    Recent revenue trends : Crystalwise and Rigidetch
•    Recent revenue trends : Aceplux and Phecda
•    Recent revenue trends: Procrystal
•    Leading and emerging companies

 

Focus on Korea           299


•    Overview
•    2014 vs 2015 revenue
•    Recent revenue trends (iljin, STC, Hansol)
•    Major companies

 

Focus on Japan       p304


•    Overview
•    Major companies

 

Focus on Europe & Russia      p307


•    Overview
•    Major companies
•    Monocrystal

 

Focus on North America  p312


•    Rubicon
•    Rubicon: 2014 and 2015 revenue breakdown
•    GTAT

 

Emerging applications     p317


•    Introduction
•    Example: traditional watch industry
•    Augmented reality
•    MicroLED displays
•    Overview
•    MicroLED benefits
•    Challenges: overview
•    Challenge in LED epitaxy and chip technologies
•    Chip separation technologies
•    Chip handling and hybridization
•    Color conversion
•    Conclusions

 

Yole Presentation p332


 

Companies cited

Aceplux Optotech
Aimcore
Apple
Aucksun
Aurora Sapphire
Bengbu North Technology
Biel Roshow
Changelight
Corning
Crystal Applied Technology
Crystal Optech
Crystaland
Crystalwise
Dakele
DARX-Ordos
Desay
DK Aztec
EGCM
EGing
Electech (ETI)
Epilight
Epistar
Epitop
Focus Lighting
Formosa epitaxy
Fujian Crystal Technology
GAPSS
GTAT
Saifei Fuyan Sapphire Technology
Hansol Technics
HQC
HTOT
Huawei
Huijing Optoelectronic
HC Semitek
Hyperion Geocrystal
Iljin Display
JingCheng
Kama Crystal
KQT
Kyocera

Lens
Lextar
LGS
Lovme
Luxvue
Magic Leap
Meizu
Meyer Burger
Monocrystal
Namiki
Nanjing J-Crystal Photoelectric (NJC)
Nantong Tongfan
Nationstar
Nichia
OCI
OCOC/ECBO
Osram-OS
Lumileds
Phecda
Plessey
Procrystal
Rigidtech
Rokor
Rubicon
Samsung
San’an
Sapphire Technology (STC)
Seoul Viosys
Shangcheng Science & Technology
Shinkosha
Silian Sapphire
Sinonitride
SSLM
TDG Core
Tera Xtal (ACTC)
TXC Quartz
Union Light Technology
USI Opto
Vivo BBK
Yangzhou Zhongke
Zhuma Sapphire

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KEY FEATURES OF THE REPORT

  • 2015 revenue per product & region: cores & Bricks, PSS and CSS wafers in China, Korea, Taiwan, Japan, USA & Europe
  • Detailed analysis and forecast for consumer electronic applications: camera lens, fingerprint readers, smartwatch, display covers
  • LED market: MOCVD capacity & wafer start analysis (per region, diameter…), forecast
  • Supply and demand per product category: cores and bricks, sapphire wafers, PSS
  • Price trends & forecast
  • 2016-2021 volume & revenue forecast
  • Status of the sapphire industry: detailed analysis by region (Capacity, key players…)