Seven figure to understand the Chinese LED substrate Market

[LED] China network LEDinside in February 2015 had issued a document that the sapphire industry has entered a period of good volume growth Lizzie, to this moment, we maintain the same point of view, even to protect the screen mobile phone applications, more optimistic than we expected.

Blue Synopsys in raising listed soon, namely the launch of additional projects, fund-raising 6 billion, of which 3 billion 400 million will be on sapphire field, and Bourne also continue to increase the professional production of sapphire joint venture subsidiary Bourne roshow invested two glass processing supplier of apple in this market than most people are more aware of apple sapphire for the determination of mobile phone cover. The first generation of Apple's mobile phone industry on behalf of Foxconn to enter the sapphire industry is also determined to win, but also a strong signal.

But this conclusion seems to be observed in the sapphire substrate price trend of conflict, the price of 2 inch crystal rod fell nearly 50% compared to the same period last year, which is why?

This relates to the fact that sapphire is actually a layered market. Only observe the substrate market, at first glance, it seems that the price of 4 inch crystal rod fell even more than the size of 2 inches, but if the market price in 2014 compared to the high point of 2Q, a decline of 2 inches to reach $48%, far more than the decline of 4 inches by 38%.

In order to explain this phenomenon, LEDinside established a simple model to illustrate, to present the sapphire industry generally is the first dig stick, 4 inch and 2 inch cut out, corresponding to different crystal, a fixed optimal dig stick scheme, in the production of 4 inch crystal bar at the same time, the proportion will be associated the production of 2 inch crystal, so 2 inch and 4 inch production or supply is complementary to each other (the green line shows).

From the demand point of view, at present, most of the manufacturers are in the extension of the capacity from 2 inches to 4 inches switch. 2 inch and 4 inch requirements are an alternative relationship (as shown in the blue line).

South Korea's epitaxial manufacturers will be able to switch to the first 4 inches and 6 inches, so the South Korean suppliers of epitaxial sapphire manufacturers associated with the production of the crystal stick has been 2 inches of China's export market. However, with the China manufacturers such as three, Huacan capacity also began to turn most of 4 inch, 2 inch more sharply reduced market demand. As shown in the figure, the demand for 4 inch D4, 2 inch D2 and the market demand, in order to meet the demand of the 4 inch, 4 inch would produce a number of S4, while the number of S2 associated to production of 2 inch, 2 inch at this point, the market supply is more than 2 inches of demand. Beyond the amount of (D2 S2).

To the time axis, we can see that with the development of time, a reverse relationship between 2 inch and 4 inch, 2 inch and 4 inch supply is positively correlated, more to the latter, the more serious the excess supply of 2 inch case. It can be predicted that the demand for 2 inch substrate will be a disappearing market in the future, how to use the remaining pieces of the crystal after the 4 inch stick to do more to enhance the use of additional value is a topic worthy of further study.

Also because it is a layered market, so if we turn to observe the needs of the mobile phone cover market, will be found to be completely different scene. The supply and demand of the market, the main problem is that the current production capacity can not meet the sapphire industry as a mass consumer demand for a year hundreds of millions of mobile phone, the mobile phone manufacturers including apple, can only launch a quite limited number of limited edition. The next period of time, the entire sapphire supply chain to do is to continue to enhance production capacity, in order to meet the needs of a mass production capacity as a reserve.

LEDinside supply and demand for the future sapphire market in the 2 case of simulation and prediction, without considering the mobile phone cover demand, the overall market has a certain degree of sapphire substrate LED but pile up in excess of requirement, the proportion is still in demand continued to decline, Apple watch cover and market demand of other windows tablet proportion will continue improved, but not enough to digest the whole industry supply pressure.

In another case, taking into account the use of sapphire phone screen protection, if the sapphire screen APPLE can be imported into the iPhone7 in 2016, sapphire optical applications will take off quickly. Not only have the opportunity to go to the market on the excess capacity, and even cause short supply in the short term 2016~2017 phenomenon.

However, it is necessary to guard against the fact that, for enterprises, in the case of a single account is too high, companies will face some operational risks. The sapphire industry, the future is still the biggest variable iPhone, the vast majority of the market demand for the entire industry from a company's products, no doubt the industry will face the greatest risk. (/LEDinside senior analyst Wang Fei)

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