Inventory backlogs at downstream firms have been causing the price of sapphire ingots to fall continuously. Sapphire ingots are an upstream material for the LED industry and due to slow growth of demand, price negotiations have been changing from quarterly to monthly. Furthermore, supply has been sufficient with the entry of many new firms and capacity expansion of existing firms. The price for sapphire ingots fell by 15% in April and the fall is expected to continue through May.

Taiwan-based sapphire ingot supplier USI Optronics showed falling April revenues in comparison with revenues in March. USI Optronics is a subsidiary of Acme Electronics, a Taiwan-based provider of Mn-Zn ferrite cores. According to Acme, the demand for sapphire ingots has been below expectations in the second quarter, however, capacity expansion will continue as planned. By the end of June 2011, total capacity will reach 300,000mm.

The price of sapphire ingots was US$8/mm in first-quarter 2010. By fourth-quarter 2010, the price had increased to US$25/mm. Gross margins for suppliers have also increased to about 60% causing many firms to enter the market eagerly.

According to industry sources, the price for sapphire ingots will fall about 20% in second-quarter 2011 and hopefully the price will rebound in the third quarter. The overall price decrease is expected to be between 25-30% for 2011.