30 Oct 2013
Sapphire specialist Rubicon Technology benefits from new fingerprint recognition system as it predicts a wider recovery in 2014.
Rubicon Technology, the US-headquartered maker of sapphire boules and polished wafers, says that it is re-starting some of its crystal-growing equipment thanks to increased demand for the material.
Following an extended period of slack demand and declining prices, CEO Raja Parvez told an investor conference call that things were starting to look up on more than one front.
And although that increasing optimism is yet to translate to any major sales boom for the company, 2014 looks to be shaping up as a year of significant growth as demand for LEDs used in general lighting kicks in.
Optimism for 2014
“We are very optimistic about wafer demand next year, but it will take another couple of quarters to see a meaningful improvement in wafer orders,” investors were told by CFO Bill Weissman, who added: “We are now starting the process of re-engaging idle crystal growth furnaces.”
Ahead of that anticipated recovery, Rubicon is benefiting from the wider use of sapphire products in smart phones.
Last year saw Apple adopt a sapphire camera lens cover in its new iPhone – a move that is now being imitated by other smart phone manufacturers for their newer models.
But in Apple’s latest model, the iPhone 5S, the company is also using sapphire for the “home” button. “Apple chose to switch to sapphire for this home button in the 5S because sapphire is virtually scratch-proof, which is important to ensure the effectiveness of the fingerprint recognition security they have built into the phone,” explained Parvez.
He added that the widespread expectation that mobile devices will be used as payment devices in the future means that the security built into the phones will become critical. “Biometrics such as fingerprint recognition provides significantly greater security than the password and we believe it’s likely to become increasingly popular in mobile devices,” said the CEO. “Therefore the use of biometrics could be a significant growth driver for sapphire in coming years.”
However, the core market for Rubicon’s sapphire remains the LED industry – a sector that has been in the doldrums since the spurt of growth required to service demand for TV backlighting ended around two years ago.
Since then, TV manufacturers have been able to exploit advances in LED chip brightness and clever optical designs to actually reduce the number of LEDs needed in display backlights.
But Parvez reported that with their utilization rates of key deposition equipment now increasing, LED makers would soon need to either invest in additional tools or find ways to make their fabs more productive – usually done by fabricating devices on the larger semiconductor wafers that Rubicon specializes in.
“We have been aggressively marketing six-inch wafers to the top-tier LED chip manufacturers and are seeing an increased level of interest,” Parvez said. “In the fourth quarter [of 2013] we will begin shipping six-inch qualification samples to one of these [top-tier] chip manufacturers and we expect to see production volume orders from this customer as early as the second quarter of next year.”
Any widespread transition by the LED industry to six-inch wafers will inevitably take some time - and will arrive much later than Rubicon had previously been hoping - but the economies of scale that should result from the move ought to help drive down the cost of LED lighting products and in turn stimulate additional demand.
Patterned substrates launch
In the meantime, Rubicon has launched a new range of patterned sapphire substrates that are expected to generate an extra $15 million in sales during 2014. The patterns, which can be customized, are designed to help LED makers maximize light extraction from their devices.
Pointing to recent reports predicting rapid growth of the LED lighting sector over the next three years, Parvez said: “As LED-based general lighting gains worldwide adoption, large-diameter patterned sapphire substrates will become necessary to meet the demands of the rapidly growing lighting market.”
Looking ahead, the CEO concluded: “2014 should be a very exciting year for Rubicon. We expect strong acceptance of our new [patterned] products, [and] we believe that we will finally begin to see some meaningful migration to six-inch substrates in the LED market.”
But for the third quarter of fiscal 2013, the company continued to suffer from the weak market overall. It posted an operating loss of $9.6 million on revenues of only $11.1 million for the three months ending September 30.
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