Touch screens displays semiconductor defense and consumer applications sapphire 2013 Report by Yole Developpement


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Non substrate applications account for 25% of the US$1 billion sapphire industry. But emerging mobile phone applications could bring this total to more than $3 billion by 2018.

Display cover applications could more than triple the size of the industry within the next 5 years

Established applications could generate US$366 million in 2018. But adoption of sapphire for smartphone display covers could generate an additional $1.3 to $2.6 billion depending on the adoption scenario.
Sapphire is currently used in some exotic, luxury phones. However the sapphire price reduction combined with the massive adoption of touch screen in smartphones have stimulated the interest of cell phone OEMS for this material. Crystal growth equipment manufacturer GTAT is leading the charge and recently created a lot of buzz around this application and on the OEM front. Apple is rumored to have conducted an extended due diligence.

Adoption of sapphire in mobile display covers represents the single largest opportunity discussed in this report. It remains, however, uncertain. We see 4 major challenges: technology, supply chain, cost and market acceptance. Crystal growth and finishing technologies still need to be optimized in order to guarantee stable performance and reduce the price gap with chemically strengthened glass like Corning's Gorilla. We estimate that the current cost of manufacturing a sapphire display cover is around $22 but could drop to $12 and ultimately below $10. It remains to be seen if the Bill Of Material increase vs. the $3 glass display cover will be absorbed by the OEM in exchange for increased market share or if the consumer will value the increased durability brought in by the sapphire cover and accept paying a premium.

It is difficult to predict the success of sapphire in this application. However, we expect that some OEMs will probe the market and introduce some models featuring sapphire by late 2013 - early 2014. Initial customer reaction will have a strong influence on the future of the technology. If successful, strong market traction could ease the funding for the more than $1.5 billion in capex needed to serve this industry and set up the supply chain to serve this application.

Glass cover lens manufacturers might seize the opportunity. Because of their vast existing glass finishing capacity that could be converted to process sapphire and their privileged access to leading smartphone OEMs, those companies could beat established sapphire finishing companies into this market. However, another scenario would see collaborations between some leading sapphire and cover lens makers in order to pool technical knowledge, capacity and customer access under the push of some smartphone OEMs.

In any case, if this opportunity materializes, it will transform the sapphire industry with new players emerging...

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Touch screens displays semiconductor defense and consumer applications sapphire 2013 Report by Yole Developpement

  1. 1. © 2013• 1Copyrights © Yole Développement SA. All rights reserved.Sapphire ApplicationsTouch Screens, Displays, Semiconductor,Defense & Consumer Applications of SapphireAppleSaint-Gobain CrystalsMeller Optics
  2. 2. © 2013• 2Copyrights © Yole Développement SA. All rights reserved.Application Characteristics• The table below summarizes the main applications discussed in this report as well as the key sapphireattributes that justify this material choice.Market Application Shapes Dimensions Optical Mechanical Thermal ChemicalPlasmaCompat.Bio-Compat.DielectricPropertiesMedical /IndustrialPOS Scanner Window Windows Medium X XViewports Windows ,disks Medium X X X XDental Braces Custom Small X X XFluid delivery tubes TubesSmall,MediumX XNMR Spectroscopy Tubes Small X XSapphire Knives Custom Small X X X XWindows for endoscopy X X XThermocouple protection Tubes Small X X XLight guides RodsSmall,mediumX (X) (X) (X)Mechanical parts (Cylinders,pistons, gears, bearings…)Rods, balls,customSmall X XSkull PinsLightingLamp tubes (HPS, Xenon,metal halide)Tubes Small X X X XOpticalPrisms BlockSmall,MediumX XLens WindowsSmall,MediumX XWindows WindowsSmall,MediumX XOverview
  3. 3. © 2013• 3Copyrights © Yole Développement SA. All rights reserved.Executive SummaryAerospace and DefenseMay 2013
  4. 4. © 2013• 4Copyrights © Yole Développement SA. All rights reserved.Key PlayersCrystalGrowthCuttingshapingFinishingAssembly,Coating, testingSystemIntegrationAerospace and DefenseNote: no major actors have been identified in China and Russia however, we expected both countries to actively develop theirdomestic supply chain for highly sensitive defense projects.
  5. 5. © 2013• 5Copyrights © Yole Développement SA. All rights reserved.Alternative Materials:ALONTM• ALONTMresults from the incorporation of nitrogen into aluminum oxide. The Nitrogen stabilizes the matrix,and results in a cubic crystal structure that is isotropic and can be produced as a transparent polycrystallinematerial. Approximate composition is Al23O27N5.• One of the key benefits of polycrystalline ceramic materials is that they can be produced in complexgeometries using conventional ceramic forming techniques such as pressing and slip casting in order tomanufacture complex shapes that are difficult to achieve with sapphire.• The technology for the making of ALONTMtransparent ceramics was transferred from Raytheon Company toSurmet Corporation in 2002.Polished ALON Hyper Hemispherical dome(source: Surmet)Large polished ALON plate(source: Surmet)Finished ALON dome(source: Moore Nanotechnology Systems)Aerospace and Defense
  6. 6. © 2013• 6Copyrights © Yole Développement SA. All rights reserved.EOTS & ISRATFLIR (Raytheon)Overview:• The ATFLIR (AKA AN/ASQ-228) was developed by Raytheon(US).• It is currently used by the US Navy on some F/A-18.Volumes:• We estimate that there are a total of 450 pods in service. Inaddition 6 pods are to be delivered to Malaysia by 2017. TheATFLIR uses a medium size windowElements of Supply chain:• The pod only uses a small sapphire window for laser targeting.Other windows are made of ZnS.• The sapphire windows were finished by Goodrich andassembled internally by Raytheon.• In addition, spinel windows manufactured by TechnologyAssessment and Transfer and ArmorLine Corporation have beentested within the frame of a US Army ManTech program endedin April 2012. However, as of today we believe that noproduction models have been delivered with Spinel windows.ATFLIR Pod (Source: Raytheon)ATFLIR ZnS Windows (Source: Goodrich)Aerospace and Defense
  7. 7. © 2013• 7Copyrights © Yole Développement SA. All rights reserved.Transparent ArmorsMajor applicationsGround Vehicles:HMMWVs, Tanks, Trucks, ResupplyAir Vehicles:Helicopters, Anti Tank aircraftsPersonal ProtectionExamplesPartDescription• Windshield• Side windows• Gunner protection kits• Windshields• Blast Shields• Lookdown windows• Sensor protection• Blast Shields• Face Shields• GogglesRequirements• Withstand multiple hits (automatic weapons) + Armor Piercing threats.• Low weight• High transparency and durability (exposure to sand, chemicals…)• Compatible with night vision goggles.• Light weight• Protection against blast anddebris (IED)CurrentsolutionsGlass (or glass-ceramics) + polymer laminates PolycarbonatesEmergingSolutionsSapphire, ALON or Spinel + polymer laminatesAerospace and Defense
  8. 8. © 2013• 8Copyrights © Yole Développement SA. All rights reserved.Missile Domes and WindowsManufacturing• Various EFG-type techniques have been developed for near-to-shape domes:– 1 point contact (Fig 1): the crystal is formed by rotation in contact with a point like die. This approach is very slowand leads to dome with high residual stress due to the offset of the crystal vs the axis of the heater– Spiral shape (Fig 2): with this design, the gradual enlargement of the dome is obtained by slowly rotating a revolvingspiral die while pulling the crystal.– Fixed die arc (Fig 3): the enlargement of the dome is obtained by horizontal movements of the rotation axis of thecrystal relative to the fixed die.• Similar technique were also developed by Saphikon (now part of Saint-Gobain Crystal) around 1990.Variants of EFG growth of near to shapedomes and conesSource: Experimental Factory of ScientificEngineering (“EZAN”, Russia)Fig 1 Fig 2 Fig 3Image: Meller OpticsAerospace and Defense
  9. 9. © 2013• 9Copyrights © Yole Développement SA. All rights reserved.Infra-Red Counter Measures (IRCM)Overview• The success rate of IRCM depends on the ability of the system to overpower the signal from the aircraft.Systems concentrating a high amount of IR energy in the direction of the seeker are more likely to succeed.• IR lasers are therefore increasingly replacing flares. They’re assembled in Directed Infra-Red CounterMeasure (DIRCM) systems. In DIRCM, the IR source is mounted on a movable turret and uses the missileplume to accurately aim the laser beam at the seeker. The most sophisticated systems can defeat multiplethreats.• IRCM are used extensively in all types of military aircrafts but are also increasingly being considered toprotect civil commercial, business and VIP aircrafts from infrared (IR) guided man-portable air defensesystems (MANPADS) missile in high threat routes and environments.Decoy Flares Lamp Based Laser Based1960 1985 2000Evolution of IR Counter Measure SystemsAerospace and Defense
  10. 10. © 2013• 10Copyrights © Yole Développement SA. All rights reserved.Sapphire Tubes:Usage and Characteristics• Sapphire tubes are used as plasma applicators and specified in some but not all microwave plasma sourcewith a fluorine chemistry. They can typically be found in:– Most ashers: fluorine chemistry used for both process and chamber cleaning– Some PECVD using a remote microwave source with fluoride chemistry for chamber cleaning– Some dry etching tools using a remote microwave source with fluoride chemistry for chamber cleaning• Tubes are typically 1” to 1.5” in diameter and 10-13” length. EFG is therefore the preferred growth method.Leading suppliers for this segment are Saint-Gobain Crystal (US), Gavish (IL) and PST (LT).• Failure mode is essentially thermal: defects  hot spots  cracking. We estimate the typical lifetime of atube to be in the 3000-4000 hour range, leading to a significant aftermarket for replacement parts.• ASP vary from $xxxx to $xxxx per piece depending on dimensions.F ,HchemistryWithmicrowaveplasma sourcefor cleaningTotal PECVDmarketPotential for sapphire tubes(competing with quartz)F,HchemistryWithmicrowaveplasma sourcefor cleaningTotal dryetcher marketPotential for sapphire tubes(competing with quartz)AshermarketMostlymicrowaveplasma sourcewith fluorinechemistry: quartzor sapphire tubesSemiconductor
  11. 11. © 2013• 11Copyrights © Yole Développement SA. All rights reserved.Watch Market Segmentation:Sapphire Window AdoptionLuxury:> $5000High End:$1500-$5000Medium End:$300-$1500Entry Level:$100-$300Commodity Watches:<$100Volumes(Million Units)SapphireAdoption %Sapphire Windows(Million units)xx m xx% xx mxx m xx% xx mxx m xx% xx mxx m xx% xx mxx m xx% xx mTotal: 3xx mTrend:Increasing penetrationof sapphire in lowerend modelsWatch Windows
  12. 12. © 2013• 12Copyrights © Yole Développement SA. All rights reserved.Projected Capacitive Touch PanelsOverview• The touch screen module is generally manufactured as a stand alone component that is later laminatedonto the top of the LCD display. The diagram below shows a generic P-Cap touch screen display structure.• The top surface which is exposed to the environment and with which the user interacts is often called the“cover lens” or “cover glass”. Glass has displaced plastic since the first iPhone and the adoption of touchscreens in most smartphones. It is this component, that could potentially be substituted with sapphire.• There are multiple possible designs for projected capacitive touch panels. Design choices can impact thesupply chain and the acceptance of sapphire as a substitute to glass covers. The most common designs arediscussed in the following slides.Transparent cover = lens (plastic, glass…)Transparent conductor film: X axis electrode (ITO…)Separator (Glass, sputtered SiO2, polymer…)Transparent conductor film: Y axis electrode (ITO…)Thin Film Transistor array on glassLiquid CrystalColor Filters on glassPolarizerTouchmoduleLCDdisplaymoduleGeneric structure of a mobile device P-Cap touch screen (Yole Developpement)Nissha PrintingAUOMobile Devices
  13. 13. © 2013• 13Copyrights © Yole Développement SA. All rights reserved.Projected Capacitive Touch PanelsIn-Cell / On-CellCover LensLiquid CrystalTFT Array GlassLCD PolarizerColor Filter GlassIn-Cell P-Cap structures have the X-YITO electrode array deposited underthe top polarizer in the LCD stack or ontop of the color filter glass. The coverlens is added to protect the LCD stacksurface.Cover LensLiquid CrystalTFT Array GlassLCD PolarizerColor Filter GlassITO X-axisITO Y -axisX-Y ElectrodesInsulatorColor Filter coatingHybrid On-Cell / In-Cell have the Y electrode depositedon top of the color filter glass and the X electrodeunderside, before the color filter coating is deposited.The cover lens is added to protect the stack, however,performance can be reduced due to the increaseddistance between the finger and the X electrodesCover LensLiquid CrystalTFT Array GlassLCD PolarizerColor Filter GlassIn-Cell P-CapHybrid On-Cell / In-Cell• The structure presented so far are all discrete touch panel modules manufactured separately from the TFT-LCD display. The 2 elements are then assembled (laminated) to create a touch display.• Some LCD manufacturers are now integrating the touch sensor within the TFT-LCD stack. Those structuresare called In-Cell or On-Cell.Mobile Devices
  14. 14. © 2013• 14Copyrights © Yole Développement SA. All rights reserved.Touch Panel Supply ChainMajor PlayersPlayers Country Cover Lens Module TFT LCD Apple Supplier ? Comment3M USALPS JP YesBIEL Crystal CN YesCando TW Controlled by TPKDigitech Systems KRECW EELY CNG Tech Optoelectronic TW 37% owned by Hon HaiHanns Touch TWIljin KRJtouch TWLBGK (Laibao Hi Technology CNLens (one) Technology CN YesLuminous Optical Technology TW/CNMelfas KRMoreens KRNissha Printing JPOcular USPanjit TWProware CNS-Mac KRSMK JP YesSwenc (Hanghao Tech) TWTouch International USTPK TW Yes Owns 19.9% of CandoTruly HKVitalic Industry CNWintek TW YesXingxing Firstar Panel Tech CNYoung Fast TWYu Shun (“Success Electronic”) CNMobile DevicesCurrent leadingmodule suppliers are:TPK (#1), Wintek,Youngfast and Jtouch
  15. 15. © 2013• 15Copyrights © Yole Développement SA. All rights reserved.Cover Lens ManufacturingSheet or Piece Process• Manufacturing can be conducted:• At the glass substrate level = Sheet type processing• Or after cutting of the individual lens cover = Piece type processing.• For TOC type of touch screen (=sensor electrodes deposited directly on the back of the cover lens), thesheet type is often preferred. However, some companies like TPK use a piece type.• Piece type tends to be more complex to manufacture and is often geared toward higher end devices.ChemicalStrengtheningITOdepositionandpatterningCutting,forming, holedrillingScreenPrinting andcoatingsCutting,forming, holedrillingChemicalStrengtheningScreen Printingand coatingITO depositionand patterningLarge Glasssheet(up to 1 m2)Sheet typeprocessPiece typeprocessCover Lens Maker TP MakerGlass SupplierGlass SupplierVertically Integrated Cover Lens + TP makerMobile Devices
  16. 16. © 2013• 16Copyrights © Yole Développement SA. All rights reserved.Cost SimulationProcess FlowWire slicingAnnealingShaping + Beveling Grinding or lapping Hole DrillingPolishingDimension control,Cleaning and finalinspectionEdge PolishingNote: screen printing and the various coatings were not included in our cost simulationMobile Devices
  17. 17. © 2013• 17Copyrights © Yole Développement SA. All rights reserved.Cost SimulationCurrent Cost• Scenario: “mid-volume” manufacturing of 250,000parts per month conducted by an established sapphiremanufacturer using tools, consumable at currentlyavailable prices.• Result: we estimate that a COGS of <$22 is achievableunder reasonable yield assumptions:– Crystal growth process yield*: 70%– Finishing yield: 90%• Growth, slicing, polishing and lapping are the largestcontributors, representing 91% of total cost.Wafer Process FlowCost(USD/Cover)BreakdownCrystal Growth $ xxx xx%Boule cutting $ xxx xx%Boule Orientation $ xxx xx%Boule Inspection & Mapping $ xxx xx%Cropping / Bricking $ xxx xx%Blank Slicing $ xxx xx%Shaping and Beveling $ xxx xx%Lapping (or Grinding) $ xxx xx%Hole Drilling $ xxx xx%Annealing $ xxx xx%Polishing $ xxx xx%Edge Polishing $ xxx xx%Flatness and dimension control $ xxx xx%Cleaning $ xxx xx%Final Inspection $ xxx xx%TOTAL $ xxx 100%Detailed simulated cost breakdown (Yole Developpement)Mobile DevicesMay 2013
  18. 18. © 2013• 18Copyrights © Yole Développement SA. All rights reserved.Adoption ScenarioOverviewQuarterlyVolumesGroup #1 Group #2 Group #3 Group #410 m5 m1 mApple iPhone,Samsung GalaxyLuxury:Gresso, Vertu..HTC, Huawei,ZTE…Sony, Nokia,BlackberryScenario #1:Step FunctionScenario #2:Smooth RampCurrent statusMobile DevicesMay 2013
  19. 19. © 2013• 19Copyrights © Yole Développement SA. All rights reserved.Smooth Ramp ScenarioVolume & Revenue• Under this scenario, the adoption of sapphire is initially driven by adoption in a few high end, low/midvolume smart phone models.• The graph below assumes sapphire penetration increasing from 0.3% of smartphone in 2013 to 8% in 2018.• OEM would use those first products to test both consumer acceptance and perception of the added valueof a sapphire cover, and the capabilities of the supply chain.• For suppliers, this allows for a smoother ramp up, with capacity being added at a slower pace, on a perneeded basis as market acceptance growth.Mobile DevicesMay 2013
  20. 20. © 2013• 20Copyrights © Yole Développement SA. All rights reserved.Exfoliation as a Potential Enabler:Cost Estimate• Typical implantation thickness is a few 10’s µm. A sapphire exfoliated layer laminated on glass or othermaterial would retain some but not all the benefits of bulk sapphire: scratch resistance will be maintainedbut other mechanical or dielectric properties will be essentially driven by the carrier material.• As details of the technologies are not published, attempting a precise cost modeling is challenging. We havesimulated the exfoliation assuming the following process flow (other key hypothesis listed on next page):SapphireInitial part: 1.5 mm thickdouble side polished part.Implantation (35 µm) Bonding ExfoliationGlass GlassGlassPolishingGlassCleaningPolishingMobile Devices
  21. 21. © 2013• 21Copyrights © Yole Développement SA. All rights reserved.Yole ActivitiesYole FinanceM&A / Due Diligence /Fund raising© 2012 21www.yole.frMedia businessNews feed / Magazines /WebcastsReportsMarketResearchConsulting servicesMarket research,Technology & Strategy
  22. 22. © 2013• 22Copyrights © Yole Développement SA. All rights reserved.© 2012 22Compound Semiconductor reports from YOLEUV LED MARKETLED PackagingStatus of the LEDIndustryLED Front EndManufacturingTechnologiesGaAs Wafer Market &ApplicationsIII-V Epitaxy Substrates& Equipment MarketSiC MarketSapphire CoSim+New! New!Sapphire for Display,Defense, Consumer…Sapphire for LED