TrendForce Projects PSS Market Value in 2014 to reach US$ 711 million

Strong LED market demands this year have led to patterned sapphire substrate (PSS) manufacturers expanded production capacity, according to “2014 Global Sapphire Substrate Market Report” by LEDinside, a LED research division of TrendForce. The 4-inch PSS market current supply shortage situation was mostly caused by Taiwanese and Chinese LED chip manufacturers introduction of large volume PSS into products, and manufacturers shift towards 4-inch PSS production. However, since manufacturers are expected to expand PSS production by the end of the year, tightened market supply conditions are expected to ease. 

“PSS market value in 2014 is expected to up 8% Year-on-Year (YoY) to reach US$ 711 million,” said LEDinside Research Associate Manager Joanne Wu. The industry is mainly benefiting from leading Taiwanese chip manufacturer Epistars patent license alliance with Philips,which has torn down previous patent barriers. Additionally, Taiwanese and Chinese LED chip manufacturers are allocating more production capacity to 4-inch wafer production, which is leading to supply shortages.

Graph 1: 2010-2016 PSS Industry Market Value Forecast 

Source: LEDinside

Under PSS supply shortage conditions triggered by high market demands, Taiwanese and Chinese manufacturers have all responded with plans of scaling up PSS production capacity. Taiwanese sapphire manufacturer Crystalwise Technology aims to boost PPS production capacity expansion from 510K/M in 2013 to 800K pcs/M this year. Another Taiwanese manufacturer Rigidtech Microelectronics plans to raise production to 1200K pcs/M before the end of 2014, while Crystal Applied Technology 260K pcs/M during the same period. Other makers including Tera Xtal Technology, Sino Nitride Semiconductor and Zhejiang Crystal-Optech are planning to raise production capacity through strategic alliance or production expansions. LEDinside estimates, PSS production capacity will expand 8% YoY to 52.9 million pcs in 2014 as a result. 

Despite tightened PSS supplies, there has not been any significant price upticks, observed Wu. The 2-inch PSS prices remaining at US$12.40-12.90 during second quarter of 2014, while 4-inch PSS prices have remained at around US$52-55. Due to intense market competition from Chinese manufacturers, LED chip manufacturers are in a difficult spot when it comes to profitability, and are strongly against PSS manufacturers raising prices, added Wu.