Demand in the LED industry has been returning and some LED chipmakers have been enjoying 90% capacity utilization rates. Nevertheless, inventory levels are still high, causing sapphire substrate prices to remain flat. Industry sources believe market conditions have been improving and February revenues for sapphire substrate makers will outperform those in January.

The 90% capacity utilization rates of most LED chipmakers are due to increasing orders from TV firms and sales of LED lighting products. Order visibility is clear through June, said industry sources.

The decline of LED ASPs in first-quarter 2012 has eased off, but profits are still limited.

The return of demand in the LED industry has not been helping the price of sapphire substrates to increase. The current price of 2-inch sapphire substrates is around US$6-8/unit, flat compared to fourth-quarter 2011. Sapphire substrate makers noted that orders have been increasing.

Tera Xtal's 2-inch sapphire substrate monthly capacity is currently around 450,000 units and it hopes to ramp up to 600,000 units in 2012. Tera Xtal also hopes to self-produce 30% of its sapphire ingot needs.