LED sapphire ingot maker Alpha Xtal and substrate maker Tera Xtal will merge on December 10. According to Alpha Xtal, revenues for November and December are likely to be flat compared to October. The firm believes demand will return in first-quarter 2012. Alpha Xtal's monthly capacity will maintain around 80,000-100,000 and will be solely supplied to Tera Xtal after the merger.

Tera Xtal currently has a monthly capacity of 300,000-450,000 units, which means Alpha Xtal can only supply less than 50% of Tera Xtal's ingot demand. However, Alpha Xtal's new plant in Hukou, Hsinchu, Taiwan will be completed in first-quarter 2012 and new equipment will be installed. The new plant is likely to expand current capacity by five- to ten-fold, according to Alpha Xtal.

2-inch sapphire ingots currently account for more than 50% of Alpha Xtal's total revenues.

China-based firms have been eager to enter the upstream sapphire material industry recently, however, Taiwan-based firms have strong confidence in quality and competitiveness. The new entries are unlikely to disrupt shipments from Taiwan-based firms, said industry sources.