[In-depth analysis] China LED substrate market opportunities outside the substrate

Abstract Insiders said that the sapphire industry has entered a good period of increasing profits and profits. At this moment, we maintain this view unchanged, and even the mobile phone protection screen application prospects are more optimistic than our expectations. Liansi Technology started the issuance of funds soon after it was listed on the market.
Insiders said that the sapphire industry has entered a good period of increasing profits and profits. At this moment, we maintain this view unchanged, and even the mobile phone protection screen application prospects are more optimistic than our expectations.
Soon after the listing of the company, it launched an additional issuance project, raising 6 billion yuan, of which 3.4 billion will be invested in the sapphire field, and Bourne is continuing to add investment to Berne, a joint venture company specializing in the production of sapphire. Apple's two major glass processing suppliers are clearly more aware of Apple's determination to use sapphire for mobile phone covers than most people in the market. Foxconn, the first-generation OEM of Apple's mobile phone, is also determined to enter the sapphire industry, and it is a strong signal.

It is only this conclusion that seems to be a conflict between the observed price trends of sapphire substrates. The price of 2-inch crystal rods has dropped by nearly 50% compared with the same period of last year. Why?
This is why sapphire is actually a layered market. Only observe the substrate market. At first glance, it seems that the price of the 4-inch crystal rod has fallen more than 2 inches, but if you compare the market price high point of 2Q in 2014, the 2-inch drop will reach 48%, far exceeding the 4-inch drop. 38%.
In order to explain this phenomenon, a simple model is established to illustrate that, in the current sapphire industry, the common crowbar method is to first 掏 4 inches and then 掏 2 inches, corresponding to different crystals, there is a fixed optimal crowbar scheme in production 4 At the same time, the associated crystal rods will produce 2 inch ingots in equal proportions, so the production of 2 inches and 4 inches or the supply is complementary (shown by the green line in the figure).
From the perspective of demand, most of the extension manufacturers are currently switching capacity from 2 inches to 4 inches. The 2 inch and 4 inch requirements are an alternative relationship (shown by the blue line in the figure).
South Korea's extension manufacturers switched their production capacity to 4 inches and 6 inches at the earliest. Therefore, the 2 crystal rods produced by the Korean sapphire suppliers of epoch manufacturers have always used China as an export market. However, with Chinese manufacturers such as Sanan, Huacan's production capacity has also begun to shift to 4 inches, and the market demand for 2吋 has shrunk sharply. As shown in the figure, when the 4-inch demand is D4, the demand for 2吋 is D2. At this time, in order to meet the demand of 4 inches, the market will produce 4吋 of the number of S4, but at the same time, it will be accompanied by the production of 2 inches of S2. At this point, the supply of 2 inches on the market far exceeds the demand of 2 inches, and the excess is (S2-D2).

Switching to the time axis, we can see that over time, the 2 inch and 4 inch demand are inversely related, while the 2 inch and 4 inch supply is positively related. Later, the 2 inch excess supply The more serious the situation. It is foreseeable that the demand for 2-inch substrate will be a disappearing market in the future. How to use the remaining crystal blocks after the 4-inch crowbar to do other ways to increase the added value is a topic worthy of further study.

Also because it is a tiered market, if we turn to the demand for the mobile phone cover market, we will find another completely different picture. The main problem of supply and demand in this market is that the current production capacity of the sapphire industry is far from meeting the demand of hundreds of millions of mobile phones as a mass consumer product. Therefore, the current mobile phone manufacturers including Apple can only introduce a relatively limited number. Limited edition. For some time to come, the entire sapphire supply chain will continue to increase production capacity to meet the capacity reserves needed as a mass product.

For the future supply and demand of the sapphire market, simulations and predictions are made in two situations. Without considering the demand for mobile phone covers, the overall sapphire market has a certain degree of oversupply, but the demand for LED substrates continues to decline. The market demand for Applewatch covers and other window pieces will continue to increase, but it is not enough to digest the overall industrial supply pressure.
In another case, considering the application of the sapphire protection screen for mobile phones, if APPLE can import the sapphire protection screen into the iPhone7 in 2016, the sapphire optical application demand will take off quickly. There is not only an opportunity to change the excess capacity in the market, but even the phenomenon of short supply in the short term from 2016 to 2017.
However, it is necessary to be vigilant that for enterprises, in the case of a large proportion of single customers, enterprises will face certain operational risks. For the sapphire industry, the biggest variable in the future is still the iPhone. The vast majority of the market demand for the entire industry comes from a product of a company, which is undoubtedly the biggest risk that the industry will face.

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