Crystalwise Technology (CWT), a Taiwan-based maker of sapphire wafers used to make LED epitaxial wafers and chips, has invested US$13 million to set up a sapphire ingot factory in northern China, with production expected to meet 30% of its in-house demand in early 2012, according to the company.

The factory has 30 sapphire crystal-growing furnaces currently and 20 are in operation generating monthly trial production of 10,000-20,000mm of ingots, CWT indicated. 20 furnaces will be added to the factory during the second half of 2011 to a total of 50.

As production cost of sapphire ingots is US$7-8/mm and international prices are US$20-25/mm, increased in-house production will decrease overall production cost of sapphire wafers, CWT pointed out.

In addition to the capacity expansion, CWT plans to hike the proportion of total shipment for patterned sapphire substrates (PSS) from 23% in April 2011 to 30% eventually due to relatively high gross margins for the product.

With monthly production capacity of 2-inch sapphire wafers to be hiked from 350,000 units currently to 600,000 units at the end of 2011, CWT will also increase output of 4-inch sapphire wafers and has started small-volume production of 6-inch wafers.

While international prices for sapphire wafers may fall, the global demand will keep going up because 660 new MOCVD sets (to make LED epitaxial wafers from sapphire wafers) will be installed globally to a total of 1,563 sets in 2011, CWT indicated.