Sept. 30, 2008 – The sapphire substrate market will grow at a 21% annual clip through 2012 to top $400M, led by demand from LED makers now focused on Western markets where pricing remains stable, according to a report from Yole Développement.

Nitride LEDs have been the main driver for sapphire substrates, accounting for $100M in sales in 2007 and expected to keep growing 15% through 2012. But silicon-on-sapphire (SoS) devices, which were <$35M in 2007, should also cross the $100M threshold in 2011, the analyst firm notes. SoS "ultra-CMOS" technology is gaining momentum mainly for use in cell phones to replace switch technologies such as PiN diodes and GaAs pHEMT.

A major regional shift in the sapphire market for LEDs is occurring thanks to “huge pressure on prices in the main Asian regions,” Yole notes. A LED die-on-wafer now sells for $0.02-$0.03, and LED producers are pressing for as low at $17 for a 2-in. substrate, which is forcing some sapphire suppliers to “focus on western countries where market prices are more attractive.” Shifting to larger wafers is another trend, Yole notes — migration to 4-in. wafers is “booming” with announcements by Osram and Showa Denko among others, while Samsung is planning to shift to 6-in. nitride LED production, and Monocrystal is working on 8-in. c-plan sapphire.

Asia represents about two-thirds of total sapphire business revenues and more than 88% of sales into LEDs (more than half from Taiwan alone), Yole notes. Sapphire for SoS-based devices was originally located in Australia with Peregrine, but that firm’s move toward a more fabless operation is shifting work to Asia, specifically to Korean semiconductor fabs.

Kyocera is still the top global vendor with estimated 2007 sales of $100M for both electronics and optical materials, followed by Namiki and Rubicon. Russian firm Monocrystal’s acquisition of domestic firm Atlas will vault the company into the top 3 suppliers, while Honeywell is leaning toward a market exit by selling its Canadian plant to China’s SilianTech.