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Sapphire Applications & Market 2015 Report by Yole Developpement


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After a false start in 2014, will Apple finally use sapphire display covers in 2016?
Investing activities continues in sapphire display cover supply chain? Why?

Apple will represents 20% of 2015 global sapphire consumption with its iPhone and watch sapphire components. But Lens recently announced plans to raise US$942M and invest US$532M of the proceed to further increasing sapphire growth and finishing capacity. In 2014, Apple, its partners and their suppliers spent close to US$2B to set up a sapphire display cover supply chain. GTAT built and installed 2135 ASF furnaces, Biel and Lens deployed close to 200 wire saws and 1000’s of finishing tools and ancillary equipment. But the projects faced many problems and Apple eventually gave up on sapphire for its iPhone 6. Reasons were multiple but can be summarized in “too early, to fast, too much”. The project was ambitious in its timeframe and targeted outputs while many of the necessary processes and technologies in crystal growth and finishing were still at an early stage of development. But the venture still set the stage for the future: the partners have developed an unrivalled expertise on how to work with sapphire in high volumes and cost controlled environment. A lot was also learned with the manufacturing of the complex 3D shaped Apple Watch cover...

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Sapphire Applications & Market 2015 Report by Yole Developpement

  1. 1. July © 2015 From Technologies to Market Sapphire Applications & Market 2015: from LED to Consumer Electronic. Report Sample From Technologies to Market
  2. 2. 2 TABLE OF CONTENTS Part 1/V ©2015 | | Sapphire Applications & Market 2015 report Sapphire properties vs. orientation Value chain. Example: Sapphire wafer process Material defects and slicing Core / brick length Major industry players: crystal growth companies Major industry players: wafer slicing and finishing Major industry players: PSS Status of the Sapphire Industry p67 Price trends: cores for LED and optical wafers Material cost structure exemple:Aurora Sapphire Price trends: Conventional sapphire substrates for LED Price trends: Patterned sapphire substrates for LED (PSS) Discussion Price trends: bricks and optical wafers for consumer electronic 2008-2020 price forecast 2014 top 20 Sapphire company revenue for core, bricks & wafers Detailed breakdown by segment Revenue structure: captive and open markets 2014 revenue breakdown for Core & bricks and polished wafers 2014 revenue breakdown for optical and PSS wafers Geographic breakdown per product category Exchange rates impacts Product categories and applications covered in this report p5 Executive Summary p7 The 3 page summary China dominates Sapphire industry growth drivers: Historical perspective Application breakdown Consumer electronic applications List of mobile devices with sapphire components Smartwatches Sapphire display covers 2014 Sapphire company revenue Sapphire supply and demand LED applications Alternative substrates Sapphire wafer forecast Core shipment forecasts What happened to silicon on sapphire? Past year and Noteworthy News p46 Introduction to the Sapphire Industry p56 Industry Overview Sapphire properties overview
  3. 3. 3 TABLE OF CONTENTS Part 1I/V Optical wafer manufacturing: Camera lens covers: overview and adoption trends Fingerprint reader covers: overview/emerging technologies/established technologies/alternative technologies/sapphire use/adoption trends Heart monitor sensor covers OpticalWafers 2012 -2020 volume and revenue forecast/ingot (core) forecast Smart watches market review & forecast p138 Forecasting the Smartwatch market Smartwatch volume forecast 2012-2020 Sapphire in Smartwatches:AppleWatch/other brands/sapphire adoption rate forecast Sapphire smartwatch cover volume & revenue forecast Sapphire covers design and slicing pitch Smartwatch volumes and forecast Sapphire display covers - market review and forecast p148 Mobile devices display covers – Overview Touch panels – technology overview Display and touch sensor structures Touch sensors and display panels supply chain Display cover manufacturing process Supply and demand analysis p86 Definitions and metrics Brick and core extraction Geographic and product category geographic breakdown Crystal Growth Capacity: 2012-2015 evolution by region Crystal Growth Capacity:Top 20 ranking Crystal growth technology breakdown (Q3-2015) HEM furnaces Finishing Capacity: 2012-2015 evolution by region Finishing Capacity:Top 20 ranking PSS Capacity: 2012-2015 evolution by region PSS Capacity:Top 20 ranking Material, finishing and PSS Supply vs demand Attrition and consolidation Why does capacity keep increasing? Focus on China/Taiwan/Korea/Europe/North America Supply vs demand analysis: no sapphire display cover Supply vs demand analysis: sapphire display cover adoption Discussion “OpticalWafers” market review and forecast: Camera lens, fingerprint readers and heart rate monitors covers p123 Sapphire components at Apple ©2015 | | Sapphire Applications & Market 2015 report
  4. 4. 4 TABLE OF CONTENTS Part 1II/V iPhone display covers: current status Partial roll out in a premium model Full roll out in major iPhone model(s) Material supply chain requirements Most significant capacity investments 2014-2016 Material capacity evolution 2014-2016 Who will supply Apple display covers? Who will supply material for Apple display covers? Conclusions Crystal growth technologies for display covers p198 Sapphire growth methods for display covers: KY etc… Sapphire technology –VHGF HEM CHESS EFG Method Orientation for display covers Sapphire display cover manufacturing cost p205 2014 cost model Sapphire brick – GTAT ASF cost Sapphire brick – Kyropoulos cost Brick cost modeling Results Potential benefits of sapphire display covers: mechanical strength / dielectric constant Putting sapphire to the test: GTAT vs Corning/ / impact of finishing process Conclusions on mechanical testing Major issues of Sapphire display covers Summary Current status Apple sapphire patent portfolio overview Which Strategy for differentiation? Sapphire adoption trends Display cover adoption scenario Display cover adoption rate forecast 2015-2020. Apple Sapphire ecosystem and strategy p173 Apple supply chain: overview 2014 revenue from Apple Optical wafers supply chain AppleWatch supply Chain Discussion Display cover supply chain overview: GTAT, Biel and Lens. GTAT – Apple partnership:what went wrong? What’s next for GTAT and the mesa furnace ©2015 | | Sapphire Applications & Market 2015 report
  5. 5. 5 TABLE OF CONTENTS Part 1V/V Alternative LED substrates p238 Gan-on-Si overview GaN-on-Si cost of ownership Gan-on-Si adoption Key players and strategic positioning GaN-On-Gan Alternative substrates adoption forecast LED Epitaxy (MOCVD) capacity trends p245 Gan MOCVD capacity 2010-2015 evolution per region GaN MOCVD capacity supply vs demand trends Gan MOCVD Q3-2015 utilization rate per region Gan MOCVD Q3-2015 utilization rate in China Geographic breakdown and conclusions LED wafer market & forecast p251 LED wafer forecast methodology LED wafers value chain Sapphire wafer consumption Q3-2015 geographic breakdown Incentive for adoption of large diameter wafers Challenges for the adoption of large diameter wafers Q3-2015 Diameter breakdown per region Q3-2015 Diameter breakdown – global 6” adoption and beyond LED wafer diameter breakdown forecast 2012-2020. 2008-2020 sapphire wafer start by diameter Discussions Brick cost structure Yields impact Full display cover cost Conclusions Alternative technologies for display covers p221 Strengthened glass - Gorilla glass Alternative technologies – Coatings Schott “Hard and clear” solution. Alternative technologies – Exfoliation & laminates Alternative technologies – DLC Transparent ceramics:ALONTM & spinel LED market overview p229 LED market growth cycles LED adoption trends per application General lighting market segmentation and main drivers Previous LED market forecast (2014) Updated LED forecast Discussion LED bulb lifetimes LED marketTrends – Display ©2015 | | Sapphire Applications & Market 2015 report
  6. 6. 6 TABLE OF CONTENTS PartV/V 2012-2015 ASP and gross margins trends per product 2012-2014 capacity and utilization rates trends 2015 capacity expansion plans 2012-2014 revenue by product & application 2014 revenue breakdown by product & application 2012-2014 revenue geographic breakdown Major customers 2012-2014 LENSTechnology (蓝思科技股份有限公司) p301 Overview Capacity Revenue breakdown by product and customers Sapphire revenue breakdown Sapphire investment status and future plans Other Company Profiles p309 BIEL Crystal (伯恩光学有限公司) Biel-Roshow Sapphire (伯恩露笑蓝宝石有限公司) Sapphire technology Rubicon technology Monocrystal Saifei (广东赛翡蓝宝石科技有限公司) Crystal Optech (浙江水晶光电科技股份有限公司) NJC (南京京晶光电科技有限公司) Kama Crystal Patterned sapphire substrates – benefits When are PSS used? Pattern design PSS manufacturing process overview Lithography techniques for LED Nano-Imprint Litography PSS market: historical perspectives Q3-2015 CSS and PSS consumption per region PSS supply chain 2008-2020 CSS and PSS volume forecast 2008-2020 core shipment forecasts 2008-2020 LED wafer revenue forecast LED filaments p279 Overview Filament material Filament manufacturing process Performance and cost Analysis LED filament 2012-2020 shipment and revenue forecast Aurora Sapphire (哈尔滨奥瑞德光电技术股份有限公司) p288 Overview 2011-2015 revenue and gross margins trends Growth technology and cost control ©2015 | | Sapphire Applications & Market 2015 report
  7. 7. 7 Biography & contact ABOUT THE AUTHORS Eric VIREY received a Ph-D in Optoelectronics from the National Polytechnic Institute of Grenoble. He’s held various R&D, engineering, manufacturing and marketing positions with Fortune 500 company Saint-Gobain in France and the United States. In its most recent position, he was Market Manager Optoelectronics in charge various product lines and serving the LED and optical telecommunication industries. In parallel, he was leading the corporate “Lighting Community” effort, acting as a market and technology competitive intelligence evangelist to identify and develop new business opportunities in solid state lighting (LED/OLEDs) across multiple business units. Eric has a broad knowledge of the entire solid state lighting value chain. In 2009, he joined Yole Developpement as a Senior Market andTechnology Analyst for LED Devices and Materials. Eric is also author / co-author of the following reports: • LED Packaging • LED Front End Manufacturing • III-V Epitaxy • Bulk GaN • GaN on Silicon • Status of the LED Industry • Sapphire Market & Applications • High Purity Alumina Contact: ©2015 | | Sapphire Applications & Market 2015 report
  8. 8. 8 ACRONYMS A: Ampere AMOLED: Active Matrix OLED ASP: Average Selling Price CAGR: compound Annual Growth Rate Capex: Capital Expenditure CCFL: Cold Cathode Fluorescence Lamp CE: Consumer Electronic CHES: Controlled Heat Extraction System CSS: Conventional Sapphire Wafer CTE: Coefficient of Thermal Expansion CZ: Czochralski DD: Dislocations density EFG: Edge-defined Film-fed Growth FPR: FingerPrint Reader GES : Growth from an Element of Shape HB-LED: High-Brightness Light Emitting Diodes HEM: Heat Exchange Method HPA: High Purity Alumina HVPE: Hybrid Vapor Phase Epitaxy KY: Kyropoulos LCD: Liquid Crystal Display LD: Laser Diode LEC : Liquid Encapsulation Czochralski LED: Light Emitting Diode LEE: Light Extraction Efficiency LOG: Lateral Over-Growth MBE: Molecular Beam Epitaxy MOCVD: Metal-Organic Chemical Vapor Deposition Msi: Million Square Inch nPSS: Nano-PSS OEM: Original Equipment Manufacturer OLED: Organic LED PA: Power Amplifier PSS: Patterned Sapphire Substrate PV: Photovoltaic RF: Radio Frequency RFIC: Radio Frequency Integrated Circuit SoI: Silicon on Insulator SOS: Silicon on Sapphire TAM: Total Accessible Market Tc: Thermal Conductivity Tj: Junction Temperature TIE: Two Inch Equivalent TTV: Total Thickness Variation V: Volt VHGF: Vertical Horizontal Gradient Freezing W: Watt ©2015 | | Sapphire Applications & Market 2015 report
  9. 9. 9 PRODUCT CATEGORIES AND APPLICATIONS COVERED IN THIS REPORT Volume and revenue forecast for the check marked items are covered in this report. Cores Bricks Single side polished Conventional Sapphire Wafers (CSS) for LED and Silicon On Sapphire epitaxy Patterned Sapphire Substrates (PSS) for LED epitaxy Double Side Polished OpticalWafer Covers for camera lens, fingerprint reader and heart rate monitor Covers for camera lens, fingerprint reader and heart rate monitor ©2015 | | Sapphire Applications & Market 2015 report
  10. 10. 10 CONSUMER ELECTRONIC APPLICATIONS • In 2012, Apple introduced the iPhone 5, the first smartphone to use a sapphire camera lens cover. In 2013, it introduced the iPhone 5s which featured a Fingerprint Reader (FPR) protected by a sapphire cover in the “Home Button”. The technology was unrolled in iPad products in 2014. Finally, in 2015, Apple introduced its first smart watch, the Apple Watch which features a heart rate monitor constituted of a combination of green and infrared LEDs and photodiodes protected by 4 transparent sapphire lenses. • As of H1-2015, adoption of sapphire camera lens covers at non-Apple cell phone manufacturers is still limited. But with manufacturing process now reasonably mature, the ASP of sapphire lens covers is expected to fall below $0.5/unit which will increase adoption from 2016. In 2015, leading Tier 2 brands Huawei and HTC both already announced new flagship models featuring sapphire lens covers. • We expect fingerprint readers to become standard on all smartphone by 2020. But the use of sapphire will likely remain an Apple oddity. So far only one other OEM has adopted sapphire in a model introduce in 2015. By successively introducing camera lens covers, fingerprint readers and smartwatch, Apple has created an entire new market for sapphire wafers The HTC One M9 (2015) features a sapphire camera lens The Huawei Honor 7 (2015) features a sapphire camera lens The Meizu MX4 Pro features a front face fingerprint reader with a sapphire cover ©2015 | | Sapphire Applications & Market 2015 report
  11. 11. 11 SAPPHIRE DISPLAY COVERS • But KY and GTAT’s ASF both have room for improvement: GTAT could eventually succeed in producing larger boules of 200, 240 or 260 kg and Monocrystal recently demonstrated a 300 kg KY process. • Other possible options include ARC Energy which also recently announced a 300 kg process based on its new generation of CHES furnaces. Sapphire Technology VHGF technology produces much smaller boules in brick shapes and short cycle times which could prove competitive for display cover applications. • With the ability to produce multiple rectangular ribbons of adjustable width and length in parallel, EFG has always seemed a good fit for the application. Trading companies recently signed an agreement with a Japanese supplier with 20 years of EFG experience to sell high performance furnaces in China which could produce up to 3000 parts per month. The companies claim to already have orders for 300 units in 2015 and expect to sell 1000 in 2016.Various technologies and companies are positioning themselves to win the market Different sizes of slabs produced by Sapphire Technology with the VHGF technology (source: company) A 300 kg boule produced with ARC Energy new CHES furnaces design A 300 kg boule produced by Monocrystal using its Kyropoulos technology ©2015 | | Sapphire Applications & Market 2015 report
  12. 12. 12 SAPPHIRE DISPLAY COVERS • But in any case, we don’t see a quick path for the industry to achieve the kind of cost that Apple and GTAT initially targeted for 2015. • For the bricks, while not out of reach, sub $XX/mm cost will require further process development, economies of scale (consumable, spare parts…) and are at least 2 years away. In the short term, it is going to be challenging for sapphire makers to offer prices even approaching $XX/mm. • As of 2015, we estimate that even in high volume (millions), the price for sapphire display covers would hover around $XX/pcs. With rapid process improvements and economies of scale achieved by the large projects currently under construction, this could drop to around $XX in 2016 and below $XX in 2017.We don’t expect that initial targets set by Apple in 2013 can be achieved until 2017 when the price of a sapphire display cover could finally pass below the $XX bar. ©2015 | | Sapphire Applications & Market 2015 report
  13. 13. 13 2014 SAPPHIRE COMPANY REVENUE [1] Revenue generated by GTAT from smartphone bricks shipped to Biel and Lens for the aborted iPhone 6 sapphire display ramp up are not included (est.: US$ 45M) [2] Lens claims US$412M of sapphire related revenue in 2014.We estimate that US$284 was generated from actual component sales (next page) Adding finished components (lens covers etc…), revenue reached US$1.8b dominated by Biel and Lens: ©2015 | | Sapphire Applications & Market 2015 report
  14. 14. 14 Q3-2014 Toshiba, JP announces plans to invest US$ 500m to ramp up capacity for its GaN-On-Silicon LED technology 150x by 2016 to capture 10% of the white LED market. LED maker Epistar, TW (晶元光電股份有限公司), currently the 2nd largest in term of GaN MOCVD capacity acquires rival Formosa Epitaxy, TW (璨 圓光電股份有限公司). July August September TDG Core, CN ( 天 通 控 股 股 份 有 限 公 司 ) announces a JV with Taiwan-based PSS foundry Phecda Technology,TW (德晶科技股份有限公司) to set up a new PSS manufacturing factory. Each company will invest RMB 20m in the JV. PSS foundry Aceplux Optotech, TW (兆鑫光電 科技股份有限公司) increases capital by NT$297m (US$10m) by issuing 3500 shares at NT$85 each. The proceed will be used to increase capacity from 150k TIE/m to 300k TIE/m. The company will have a total of 15 production lines. EGing Photovoltaic Technology, CN (EGing PV) (亿晶光电科技股份有限公司) will install 50x 100kg sapphire for annual capacity of 750,000 mm of 4” ingot + 370k mm of 2” ingots. Total investment: RMB 132m. Tera Xtal, TW (鑫晶鑽科技股份有限公司) will increase PSS capacity from 100k to 200k TIE/month by the end of 2014. The company intends to implement nano imprint lithography technology. Competitor Rigidtech, CN (銳捷科 技股份有限公司) plans to set up a manufacturing plant in Suzhou (CN) and expand PSS capacity from 800k to 1.2m TIE/month. Sunyes Electronic Manufacturing, CN (深圳市 新亚电子制程股份有限公司) acquires 10.3% of Guangdong Saifei, CN (广东赛翡蓝宝石科技有限 公司) for RMB 280m, valuating the company at RMB 2.72b (~US$440m) and approves a RMB 180m loan to supplement working capital. Southwest Pharmaceutical, CN (西南药业股 份有限公司) acquires Aurora Sapphire, CN (哈 尔滨奥瑞德光电技术股份有限公司) via an asset swap valuing the company at RMB 4.12b (US$644m) and will raise an additional US$167m to fund capacity expansion close to 10 mm of TIE million in 2015. Anhui Guofeng Plastic, CN (安徽国风塑业股份 有限公司) acquires 29.59% of Ning Xia Jiajing Technology (宁夏佳晶科技有限公司), the China- based subsidiary of sapphire maker Procrystal, TW (佳晶科技股份有限公司). Guofeng will later increase participation to 51.02% in February 2015 after further equity transfer and capital increase. Huawei, CN and Vivo, CN release limited edition of their new flagship models with sapphire cover glass Apple announces new iPhone 6 and 6+. None features the highly anticipated cover glass. The company also presents its first line of smartwatch with 2 of the 3 models featuring a sapphire cover. X ©2015 | | Sapphire Applications & Market 2015 report
  15. 15. 15 EXAMPLE: SAPPHIRE WAFER PROCESS Crystal Growth Boule Cropping, X-Ray orientation, Core Extraction & Cropping Core cropping, X-ray core orientation, OD grinding / orientation adjustment, Notch or flat grinding Picture:Thermal Technology Illustration :Rubicon Technology Metrology: Thickness, BOW, TTV, TV5 Thickness and quality sorting (up to 30 bins) Illustration: Meyer Burger Illustration: Meyer Burger Slicing Illustration: Meyer Burger Illustration: Meyer Burger Lapping or Grinding Picture:TeraXtal Shape measurement, flip sorting (concave / convex) Illustration: Meyer Burger Mechanical Polishing + CMP Illustration: Meyer Burger Picture:Corning/Tropel Metrology (Bow, Warp, TTV, LTV, Sori, Sag…) Laser marking Final cleaning Core mounting ©2015 | | Sapphire Applications & Market 2015 report
  16. 16. 16 After severe shortage in 2010-2011, excess supply since 2012 sent back prices to levels close to or below cost for most suppliers. PRICE TRENDS: CORES FOR LED AND OPTICAL WAFERS Cores (cylinders) for the manufacturing of LED or optical wafers are sold by the length (measured in mm) at a given diameter. 6” 4” 2” ©2015 | | Sapphire Applications & Market 2015 report
  17. 17. 17 PRICE TRENDS: CORES FOR LED AND OPTICAL WAFERS • Core prices recovered briefly from Q3-2013 to Q2-2014. This allowed many material suppliers to finally break even. Those which operated at high utilization rates and with the most competitive cost structures even generated reasonable profits (Aurora Sapphire, Monocrystal …). • However, prices starting falling again from Q3-2014 and are likely to reach their lowest level ever by the end of 2015: • 2” ASP might pass below the US$XX/mm level • 4” will get close to or slightly below the $XX/mm bar on spot offers by players eager to utilize their capacity. • 6” is proven more resilient because few suppliers have so far been able to deliver long cores with high quality. • Leading suppliers have made significant progresses in reducing cost in the last 18 months. Improved yields is the most significant contributor but raw materials and crucible cost have also decreased significantly. Some credit should actually be given for that to the Apple-GTAT project which aggressively negotiated prices, and coaxed various suppliers into increasing capacity, developing and implementing new capabilities and new manufacturing paradigms to reduce their costs. • Most high volume suppliers such as Aurora, Monocrystal, STC, USIO, Biel- Roshow design and assemble their furnaces internally, allowing for further savings on equipment and depreciation cost. It’s a cost game and few suppliers can win. Price probably haven’t hit bottom yet and are constantly challenging suppliers ability to reduce cost. Ingots and cores at Monocrystal (source: company) ©2015 | | Sapphire Applications & Market 2015 report
  18. 18. 18 MATERIAL COST STRUCTURE:AURORA SAPPHIRE Aurora highly competitive cost position combined with high utilization rate allowed the company to achieve a XX% gross margin in 2015 US$XX [1] RMB 11.41 at 6.394 RMB/US$ exchange rate Aurora Sapphire 2” cost structure and raw material cost (source: company) • Aurora Sapphire (奥瑞德) claimed a cost around US$XX/mm of 2 inch core in 2014 [1] and expects to bring that figure to $XX/mm by the end of the decade. • The company achieved significant cost structure improvements through reduction of depreciation (improved furnace throughput) and raw material cost. • One however has to be cautious when comparing costs for a given product category from one manufacturer to another. Cost accounting allows some flexibility for example on how fixed costs and overheads are distributed between product lines etc… • Nevertheless, we believe that the company indeed has a very competitive cost structure as demonstrated by a company-level gross margin above 20% in 2014. • We believe that only a handful of manufacturers currently have a cost position close to those levels and can breakeven at current US$XX- $XX /mmm price levels. ©2015 | | Sapphire Applications & Market 2015 report
  19. 19. 19 CRYSTAL GROWTH TECHNOLOGY BREAKDOWN (Q3-2015) • As of Q3 2015, Kyropoulos (“KY”) dominates the worldwide installed capacity, followed by GTAT’s ASF HEM furnaces. • Turnkey equipment is available off the shelves from a dozen suppliers located mostly in Eastern Europe and Asia. Leading Suppliers are Apeks, Juropol, Yufeng New Energy etc…However, the bulk of the installed KY capacity still derives from sapphire companies that design and assemble their furnaces internally such as Monocrystal, Rubicon, Biel-Roshow, USI Opto, DK-Aztec. New companies willing to get a quick start will typically purchase off the shelve equipment and later on, customize the design and build additional or upgrade furnaces internally. Kyropoulos dominates the installed capacity thanks to its long history and the availability of quality off-the- shelves equipment from various vendors. Kyropoulos boules at Monocrystal (Source: company) ©2015 | | Sapphire Applications & Market 2015 report
  20. 20. 20 CHINA: EMERGING COMPANIES Q3-2015 Capacity (TIE/month) Comment • New project. Plans 170 furnaces (HEM type, 110-120 kg boules) • Have installed 700x 80Kg furnaces in Ordos, Inner Mongolia. Plan to upgrade to 120 kg. • Plans to set up capacity for 100 millions sapphire windows per year in Inner Mongolia. Applications include 50M display covers, 37.5M smaller displays , 82.25M nn2 (equivalent to 12.5M windows) for watches. • Will install 600 crystal grower (already 260 as of Q2-2015), 889 crystal processing, cutting and other equipment. • Furnaces supplied by Aurora Sapphire, • Growing100kg boules (equipment from XXXXXXXXXXXXX) • Initial plan for 260t/year. Long term: Plan to install 600x 100 kg KY for annual output of 600 t • Initial plan for 50x 100kg furnaces. • Announced new plan in July 2015 for US$640M and 1000 furnaces. • JV agreement signed with XXX • RMB 1.05b investment to set up PSS capacity of 12m /year with first line to start in 2015 • Sapphire division of XXXXXXXX (CN) • Growth will be 400k in 2016 ©2015 | | Sapphire Applications & Market 2015 report
  21. 21. 21 FINGERPRINT READER COVERS: ESTABLISHED TECHNOLOGIES iPhone + iPad Galaxy S5 Galaxy S6 Huawei Ascend Mate 7 • Apple/Authentec touch sensor • 2D matrix • 7,744 pixels at 500 DPI • Sapphire cover • Synaptic/Validity swipe sensor • Linear • 20 µm linewidth at 40 µm pitch • Hard polymer coating • Synaptic/Validity swipe sensor • Linear • 25 µm linewidth at 47 µm pitch • Hard polymer coating • Finger print Cards AB touch sensor • 2D matrix • 36,864 pixels at 508 DPI • Hard polymer coating 6 x 6.3 mm2 4 x 15 mm2 5 x 14 mm2 10 x 10 mm2 Source: System + Consulting; teardown and reverse costing analysis of the Apple 5s, Samsung Galaxy S5, S6 and Huawei Ascend Mate 7 fingerprint readers. ©2015 | | Sapphire Applications & Market 2015 report
  22. 22. 22 SAPPHIRE COVERS DESIGN AND SLICING PITCH • The Apple Watch display cover design is a 3D design with complex curvatures and edge shapes. We assume a fairly low manufacturing yield for this product (75% exiting 2015) and a slicing pitch of XXX mm. • Other smart watch makers seem so far to have adopted a simpler 2D design.We assumed higher manufacturing yields (>90%). Illustration: the different type of covers The AppleWatch cover has a complex 3D shape (Pictures:Apple, iFixit) The LG Urbane (showed here) or the HuaweiWatch have a much simpler 2D design (pictures: iFixtit) ©2015 | | Sapphire Applications & Market 2015 report
  23. 23. 23 APPLE SAPPHIRE PATENT PORTFOLIO OVERVIEW • We have identified 17 families of patents relevant to sapphire with priority dates dating back from 2012 (the 2007 patent just mentions sapphire amongst a long list of possible transparent material): Mar. 2012 Apr. 2012 May. 2012 Jun. 2012 Jul. 2012 Aug. 2012 Sep. 2012 Oct. 2012 Nov. 2012 Dec. 2012 Jan. 2013 Jul. 2007 Sapphire growth Sapphire strengthening Sapphire Cutting Sapphire parts and components Solving issues specific to the use of sapphire components Apple Inc, sapphire related patents organized by priority date Mar. 2013 Aug. 2013 Sep. 2013 Note: due to the normal delay between filing and publication, its is expected that many more patents have been filled by Apple between Sept 2013 and now (Jul.2015) but have not yet been published by the patent offices. ©2015 | | Sapphire Applications & Market 2015 report
  24. 24. 24 OPTICAL WAFERS SUPPLY CHAIN: LENS, FINGERPRINT READER, HEART SENSOR Material (Cores) Slicing + Polishing Coating + Laser Cutting – Silk Printing Assembly 100% 2014 Material fluxes (in volumes) ©2015 | | Sapphire Applications & Market 2015 report
  25. 25. 25 ALTERNATIVE TECHNOLOGIES - COATINGS • Various companies have announced Al2O3 coating technologies which we estimate could be brought to the market in high volume for less than US$XX per unit, bringing the total glass + coating cost to less than $XX per unit, compared to > $20 for a pure bulk sapphire solution. • Such technologies are being developed by Rubicon and GTAT and various other companies. China-based cell phone OEM Desay (德赛) and Dakele (大可乐) already unrolled such coating in commercial products. We believe that Corning’s “Project Phire” announced in February 2015 relies on a similar approach. • Schott “Hard and Clear” coating technology (next page) expected to be available for mass production from July 2015 also offers performance close to sapphire in term of scratch resistance and doubles as an efficient anti reflective coating (although there seem to be a compromise between reflectivity and hardness) As of July 2015, the overall potential benefits of sapphire remain unclear. Desay “Magic Mirror X5” smartphone retails for RMB 999 (US$160) and feature a strengthened glass display cover with an Al2O3 coating. Hard & Clear - Type I Ultra Hard Hard & Clear -Type II AR Standard toughened Alumino Silicate glass Scratch Resistance Excellent (>95 % scratches reduced) High (>90 % scratches reduced) Medium Residual Reflection (air – glass) Low (~1 %) Excellent (~0.6 %) Standard (~4 %) Coating Visibility Very low Close to neutral Neutral (bare glass) Breakage Strength Excellent Excellent High Schott “Hard and Clear” coating performance. 2 variations are available with emphasize on hardness or reflectivity, ©2015 | | Sapphire Applications & Market 2015 report
  26. 26. 26 GAN-ON-SI OVERVIEW • With the most recent product from Toshiba, performance of GaN-On-Si LEDs have made dramatic progress and essentially bridged the gap with sapphire based best in class LEDs, making those GaN-On-Si LEDs a credible alternative: The best GaN- On-Si LED are now on par with state of the art sapphire LEDs in term of performance. Dec. 2013 Plessey PLW114050: 64 lm/W Jul. 2013 Plessey LED PLW111010 : 36 lm/W30 60 120 150 180 0 Seoul Semiconductor STW8Q14C 175 lm/w Apr. 2013 Low and Mid power package, cold white (5000- 5500k) Best performance based on company claims Samsung LM561B 170 lm/W Everlight L62-217D 150 lm/W Osram Lab result: 104lm/W Lumileds Luxeon 3535 2D 150 lm/W Sapphire Silicon Cree XLamp XH 170 lm/w Toshiba TL2FK : 110 lm/W 90 January 2013 Lattice Power* LPIBB55A: 140 lm/W *Available as die. Lm/w of white package Led is extrapolated Toshiba TL1F4 : 160 lm/W Jun. 2014 ©2015 | | Sapphire Applications & Market 2015 report
  27. 27. 27 GAN-ON-SI COST OF OWNERSHIP • The tear down analysis conducted by System+ Consulting however indicate that droop is still an issue and that to deliver similar efficiency as a state of the art sapphire LEDs, the die size has to be significantly larger. • To achieve the same efficiency as a sapphire LED, the epi surface of the GaN-On-Si LED is therefore XXx larger. • Using the LED CoSim+ cost simulation tool developed by System+ Consulting, we calculated that the epitaxy cost of GaN-On-Si was about US$ XXX/mm2 compared to compared to 4” PSS was about US$XXX/mm2. • To achieve the same efficiency, the GaN-On-Si die cost is therefore still about 25% higher than sapphire. To achieve the same efficiency, the GaN-On-Si die cost is still about 25% more expensive compared to sapphire ToshibaTL1F1 ToshibaTL1L4 Typical Sapphire Year Die Size (GaN Epitaxy surface) Current Density Efficiency (Intermediate Bin @ 25 C) Est. die cost per mm2 Die cost for this LED ©2015 | | Sapphire Applications & Market 2015 report
  28. 28. 28 2008-2020 SAPPHIRE WAFER START BY DIAMETER Total substrate surface shipment is expected to increase by 28% between 2015 and 2020. ©2015 | | Sapphire Applications & Market 2015 report
  29. 29. 29 NANO-IMPRINT LITOGRAPHY • Nano Imprint Lithography (NIL) has emerged as an alternative and potentially cost-effective solution to create nanoscale patterns over large surfaces. • NIL creates the nanostructures by stamping a deformable material (polymer) with a mold. The material is then UV cured and forms a hard mask used to pattern the wafer with standard etching processes. • NIL is based on mechanical replication and is not limited by optical diffraction. It can potentially achieve < 5nm resolution and very good critical defect (CD) control at a very low cost. • The stamp is produced from a master created by using high- resolution electron beam or optical interference lithography. The master’s lifetime is essentially infinite, while stamps can be re-used multiple times. • Different variations of the NIL process are available: • Hard molds: silicon, metal, silica • Conformable molds: PDMS polymer • Due to the higher bow of larger sapphire wafers, a soft mold is preferable for PSS. Nano- Imprint Lithography is a full field, high resolution technology. Resist spin coating Stamp Loading Imprinting + UV curing Stamp Releasing Etching (Pattern transfer) Resist RemovalImprint Lithography process (Source: EVG) ©2015 | | Sapphire Applications & Market 2015 report
  30. 30. 30 AURORA SAPPHIRE: MAJOR CUSTOMERS 2012-2014 • In 2012, XX represented XX% of the revenue but includes the sale of 37 growth furnaces for the JV with XX + 4 directly to XX for a total estimated at US$XX m. the balance is cores and optical wafers. Biel and/or Lens have been the single largest customers since 2012. • In 2014, sales to XX are material and wafers only (no equipment). • Sales to XX are mostly for 101 sapphire furnaces • Other notable 2014 customers included XX at around US$6m as well as XX (the sapphire substrate venture of XX), XX, XX (15 furnaces) and XX. • 2013 sales to XX and XX Sapphire are mostly constituted of sapphire growth furnaces. • Sales to XX are mostly to the Chinese branch (88% of the total). ©2015 | | Sapphire Applications & Market 2015 report
  31. 31. ORDER FORM Sapphire Applications & Market 2015: from LED to Consumer Electronic SHIPPING CONTACT First Name: Email: Last Name: Phone: PAYMENT BY CREDIT CARD Visa Mastercard Amex Name of the Card Holder: Credit Card Number: Card Verification Value (3 digits except AMEX: 4 digits): Expiration date: BY BANK TRANSFER BANK INFO: HSBC, 1 place de la Bourse, F-69002 Lyon, France, Bank code: 30056, Branch code : 00170 Account No: 0170 200 1565  87, SWIFT or BIC code: CCFRFRPP, IBAN: FR76 3005 6001 7001 7020 0156 587 RETURN ORDER BY • FAX: +33 (0)472 83 01 83 • MAIL: YOLE DÉVELOPPEMENT, Le Quartz, 75 Cours Emile Zola, 69100 Villeurbanne/Lyon - France SALES CONTACTS • North America: Steve Laferriere - • Japan Asia: Takashi Onozawa - • Europe RoW: Jérôme Azemar - • Korea: Hailey Yang - • General: (1) Our Terms and Conditions of Sale are available at The present document is valid 24 months after its publishing date: July 28th , 2015 / ABOUT YOLE DEVELOPPEMENT BILL TO Name (Mr/Ms/Dr/Pr): Job Title: Company: Address: City: State: Postcode/Zip: Country*: *VAT ID Number for EU members: Tel: Email: Date: PRODUCT ORDER Please enter my order for above named report : One user license*: Euro 4,990 Multi user license: Euro 5,990 - The report will be ready for delivery from August 5th , 2015 - For price in dollars, please use the day’s exchange rate. All reports are delivered electronically at payment reception. For French customers, add 20% for VAT I hereby accept Yole Développement’s Terms and Conditions of Sale(1) Signature: *One user license means only one person at the company can use the report. Founded in 1998, Yole Développement has grown to become a group of companies providing marketing, technology and strategy consulting, media in addition to corporate finance services. With a strong focus on emerging applications using silicon and/or micro manufacturing (technology or process), Yole Développement group has expanded to include more than 50 associates worldwide covering MEMS, Compound Semiconductors, LED, Image Sensors, Optoelectronics, Microfluidics Medical, Photovoltaics, Advanced Packaging, Manufacturing, Nanomaterials and Power Electronics. The group supports industrial companies, investors and RD organizations worldwide to help them understand markets and follow technology trends to develop their business. MEDIA EVENTS •, online disruptive technologies website • @Micronews, weekly e-newsletter • Technology Magazines dedicated to MEMS, Advanced Packaging, LED and Power Electronics • Communication webcasts services • Events: Yole Seminars, Market Briefings… More information on CONTACTS For more information about : • Consulting Services: Jean-Christophe Eloy ( • Financial Services: Jean-Christophe Eloy ( • Report Business: David Jourdan ( • Press relations: Sandrine Leroy ( CONSULTING • Market data research, marketing analysis • Technology analysis • Reverse engineering costing services • Strategy consulting • Patent analysis More information on REPORTS • Collection of technology market reports • Manufacturing cost simulation tools • Component reverse engineering costing analysis • Patent investigation More information on FINANCIAL SERVICES • Mergers Acquisitions • Due diligence • Fundraising More information on
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  33. 33. © 2015 Yole Développement FromTechnologies to Market
  34. 34. 32 MEMS Sensors LED / OLED Compound Semi. Imaging Photonics MedTech Manufacturing Advanced Packaging PV Power Electronics FIELDS OF EXPERTISE Yole Développement’s 30 analysts operate in the following areas
  35. 35. 33 4 BUSINESS MODELS o Consulting and Analysis • Market data research, marketing analysis • Technology analysis • Strategy consulting • Reverse engineering costing • Patent analysis o Reports • Market Technology reports • Patent Investigation and patent infringement risk analysis • Teardowns Reverse Costing Analysis • Cost SimulationTool o Financial services • MA (buying and selling) • Due diligence • Fundraising • Maturation of companies • IP portfolio management optimization Blu Morpho o Media • website • @Micronews e-newsletter • Technology magazines • Communication webcast services • Events
  36. 36. 34 A GROUP OF COMPANIES Market, technology and strategy consulting MA operations Due diligences Fundraising Maturation of companies IP portfolio management optimization TBA Manufacturing costs analysis Teardown and reverse engineering Cost simulation tools IP analysis Patent assessment Blu Morpho
  37. 37. 35 OUR GLOBAL ACTIVITY Yole Japan Yole Inc. Yole Korea 40% of our business is in EU countries 30% of our business is in North America 30% of our business is in Asia Blu Morpho
  38. 38. 36 RESEARCH PRODUCTS - CONTENT COMPARISON Custom analysis scope is defined with you to meet your information and budget needs Breadth of the analysis Depthoftheanalysis Custom Analysis Workshops Standard Reports
  39. 39. 37 SERVING THE ENTIRE SUPPLY CHAIN Our analysts provide market analysis, technology evaluation, and business plan along the entire supply chain Integrators and end-users Device makers Suppliers: material, equipment, OSAT, foundries… Financial investors, RD centers
  40. 40. 38 SERVING MULTIPLE INDUSTRIAL FIELDS • We are working accross multiples industries to understand the impact of More-than- Moore technologies from device to system From A to Z… Transportation makers Mobile phone and consumer electronics Automotive Medical systems Industrial and defense Energy
  41. 41. 39 REPORTS COLLECTION o Yole Développement publishes a comprehensive collection of market technology reports and patent analysis in: • MEMS Sensors • Imaging • Medical technologies (MedTech) • Advanced packaging • Power electronics • Compound semiconductors • OLED, LED Laser diode • Semiconductor Manufacturing • Photovoltaics • Batteries o Our reports are unmatched in quality and technology depth and typically include: • Technology trends and evolution: costs, barriers, roadmaps, etc. • Supply value chain analysis: business models, relationships, value flows, etc. • In-depth analysis of applications and market drivers: challenges, inflection points, etc. • Market data ($, units, wafer starts, etc.) o Every year, Yole Développement, System Plus Consulting and Knowmade publish +60 reports. o Take the full benefit from our Bundle and Annual Subscription offers.
  42. 42. 40 OUR 2015 REPORTS PLANNING MARKET TECHNOLOGY REPORTS byYole Développement o MEMS SENSORS − Sensors and Data Management for Autonomous Vehicles − AlN Thin Film Markets And Applications − Sensors for Wearable Electronics And Mobile Healthcare − Status of the MEMS Industry − Uncooled IR Imagers − IR Detectors − High End Gyro, Accelerometers and IMU − Non-Volatile Memory o IMAGING OPTOELECTRONICS − Camera Module Packaging (Vol 1 : Market Technology Trends / Vol 2 Teardowns Reverse Engineering) − Uncooled IR Imagers − Wafer Level Optics − Status of the CMOS Image Sensors − Machine Vision o MEDTECH − Microfluidic for Sample Preparation − Microfluidic Applications − Sensors for Wearable Electronics And Mobile Healthcare o COMPOUND SEMICONDUCTORS − High Purity Alumina (HPA) − Sapphire − Wide Bandgap Materials For Power Electronics: SiC, GaN (and also Ga2O3, AlN, Diamond, Graphene… as a trend) * Reports to be decided within 2015 o LED − LED Module − OLED for Lighting − UV LED − LED Phosphors Market o POWER ELECTRONICS − Power Packaging − Thermal Management for LED and Power − Power Electronics for Renewable Energy − Energy Management For Smart Grid And Smart Cities − Status of Chinese Power Electronics Industry − New Technologies For Data Center − Inverter Market Trends For 2013 – 2020 And Major Technology Changes* − IGBT Markets And Application Trends − Power Electronics for HEV/EV* − Status of Power Electronics Industry o ADVANCED PACKAGING − Advanced Packaging in Emerging Markets in China − Status of the Advanced Packaging Industry − Supply Chain Readiness for Panel Manufacturing in Packaging − WLCSP* − Flip Chip Business Update − 2.5D 3DIC Business Update − Fan-Out and Embedded Business Update o MANUFACTURING − Lithography for MEMS, Advanced Packaging and LED − Thinning Dicing Equipment for Advanced Packaging, MEMS, Photovoltaics, LED, CMOS Image Sensors − Non-Volatile Memory
  43. 43. 41 OUR 2015 REPORTS PLANNING PATENT ANALYSIS by Knowmade o Patent Infringement (crossed analysis based on Knowmade and System Plus Analysis expertise) − MEMS Microphone Applications − Infrared Imaging o Patent Investigation (crossed analysis based on Knowmade Yole Développement expertise) − Power GaN − MEMS Gyroscope − 6-axis 9-axis Inertial MEMS IMUs − Microbatteries − Embedded Active Passive Packages − Interposer − Phosphors for LED TEARDOWN REVERSE COSTING by System Plus Consulting More than 30 teardowns and reverse costing analysis and cost simulation tools to be published in 2015. * Reports to be decided within 2015
  44. 44. 42 OUR 2014 PUBLISHED REPORTS LIST MARKET TECHNOLOGY REPORTS byYole Développement o MEMS SENSORS − Technologies Sensors for the Internet of Things: Businesses Market Trends 2014-2024 − MEMS Microphone: Market, Applications and Business Trends 2014 − Status of the MEMS industry − MEMS Sensors for Mobile Phones and Tablets − High End Gyroscopes and Accelerometer Applications − Inertial MEMS Manufacturing Technical Trends − New Detection Principles Technical Evolution for MEMS NEMS − 6/9 DOF Applications in Consumer Electronics o IMAGING OPTOELECTRONICS − Status of the CMOS Image Sensor Industry − Uncooled Infrared Imaging Technology Market Trends − Silicon Photonics o MEDTECH − Point of Care Testing: Applications for Microfluidic Technologies − Solid State Medical Imaging: X-ray and Endoscopy o COMPOUND SEMICONDUCTORS − RF GaN Technology Market Analysis: Applications, Players, Devices Substrates 2010- 2020 − SiC Modules, Devices and Substrates for Power Electronics Market − GaN-on-Si Substrate Technology and Market for LED and Power Electronics − Power GaN Market − Graphene Materials for Opto Electronic Applications − Sapphire Applications and Market: from LED to Consumer Electronics o LED − LED Packaging − LED Front-End Manufacturing Trends − LED Front-End Equipment Market o POWER ELECTRONICS − Power Electronics for HEV/EV − Inverters − Gate Driver Unit Market for Power Transistors o PHOTOVOLTAICS − Emerging and Innovative Technology Approaches in the Solar Industry o ADVANCED PACKAGING − 3DIC Equipment and Materials − 3DIC 2.5D TSV Interconnect for Advanced Packaging - 2014 Business Update o MANUFACTURING − Market Technology Trends in Materials Equipment for Printed Flexible Electronics − Permanent Wafer Bonding for Semiconductor: Application Trends Technology PATENT ANALYSIS by Knowmade − LED Based on Nano-wires Patent Investigation − GaN on Si Patent Investigation (LED, Power devices and RF Devices) − New MEMS Devices Patent Investigation − Non Volatile Memory Patent Investigation TEARDOWN REVERSE COSTING by System Plus Consulting More than 30 teardowns and reverse costing analysis and cost simulation tools to be published in 2014.
  45. 45. 43 MICRONEWS MEDIA o About Micronews Media Micronews Media, powered by Yole Développement, ensures you the best visibility in the disruptive semiconductor community. With our services, we help you to reach your customers worldwide with the media products they prefer, including our website, e-newsletter, webcasts, and magazines. Invest in a high added- value editorial program and get access to Yole Développement’s network (48 000+ contacts). o Five supports and channels for your visibility • A technology magazine to highlight your visibility with advertisements, company profiles, product descriptions and white papers • A webcast to highlight your expertise and develop your business identifying commercial leads • Articles, advertisements logo and banners dedicated to your company, its products and expertise in @Micronews e- newsletter and on Focused community Identified contacts Large community Mass contacts
  46. 46. 44 COMMUNICATION SERVICES All services listed below are available on–demand. o, the website Slider – Banners (on English or Japanese websites) – Articles – Logo and profile as sponsor o @Micronews, the e-newsletter Headline article - Tiles o Custom webcast Develop your dedicated event with a high added-value program. A turnkey event withYole support (logistics, promotion, data…) o Technology Magazines: Custom – Co-produced Increase your visibility through a dedicated technology magazine with ads, company profile, product descriptions and white papers. It can be a custom magazine: your company is the only one to benefit from it – or a co-produced one: up to 2 companies. Contacts: Camille Veyrier ( and Clotilde Fabre (, Media Communication Coordinators.
  47. 47. 45 CONTACT INFORMATION o Consulting and Specific Analysis • North America: Steve LaFerriere, Director of Northern America Business Development,Yole Inc. Email: • Japan:Yutaka Katano, General Manager,Yole Japan President,Yole K.K. Email: • RoW: Jean-Christophe Eloy, President CEO,Yole Développement Email: o Report business • North America: Steve LaFerriere, Director of Northern America Business Development,Yole Inc. Email: • Europe: Fayçal El Khamassi, Headquarter Sales Coordination Customer Service Email: • Japan Asia:Takashi Onozawa, Sales Asia General Manager,Yole K.K. Email: • Korea: HaileyYang, Business Development Manager, Korean Office Email: o Financial services • Jean-Christophe Eloy, CEO President Email: o General • Email: Follow us on