LED sapphire substrate suppliers are expected to keep prices flat in the fourth quarter of 2010 despite dropping demand from the end market and seasonality, and expect prices to increase again in March 2011 as demand picks up.

With China actively increasing its capacity of MOCVD sets, China will be the development focus of sapphire substrate suppliers in 2011.

Sapphire substrate supplier Crystal Applied Technology is scheduled to start trading on the Taiwan Stock Exchange (TSE). Crystal Applied's EPS in the first half of 2010 was only NT$1.50 but surged to NT$11.75 at the end of November. The company noted that earnings growth was mainly due to increasing prices for sapphire crystals, as well as increased capacity in the second quarter of 2010.

A sapphire substrate shortage was most serious during July-August with 0.3-0.5 months of inventory level, Crystal Applied noted.

Despite recent dropping demand and orders from LED chipmakers, sapphire substrate suppliers did not lower prices in the fourth quarter as they expect demand to start picking up after the Lunar New Year and sapphire substrate will be in shortage again. Crystal Applied expects shortages of sapphire substrate to happen in the second to the third quarters of 2011.

Crystal Applied indicated that the company will expand its capacity to 400,000 substrates at the end of 2010 and to 600,000 substrates in 2011.