Sapphire stirs up five years and pays more attention to processing

Over the past five years, the LED industry has experienced significant fluctuations, marked by industrial turbulence and volatile prices for sapphire materials. This period has seen a lot of uncertainty, especially in the upstream supply chain, where sapphire availability and pricing have been major concerns. Despite the widespread belief that sapphire overcapacity is a real issue, this notion has never truly materialized. In reality, very few new capacities have been added in recent years, even though the national market seems to be flooded with excess supply. The reason lies in the high production costs, which often exceed the selling price, making it difficult for projects like Changjing to maintain sustainable operations. Profitability remains limited, with only a few companies achieving consistent returns. From 2013 to now, sapphire crystal rod prices have steadily increased, indicating that many of the crystal growth projects launched between 2010 and 2012 are still in the early stages of commercialization. When analyzing production capacity, it's essential to distinguish between domestic long-crystal enterprises and foreign suppliers. Given that sapphire is a key component in China’s 12th Five-Year Plan, relying on foreign sources is not a viable long-term strategy. Domestic production must be expanded to ensure supply stability and technological independence. As the global sapphire crystal growth industry evolves, upstream dynamics are shifting. In 2010, sapphire crystal rods were priced as high as $15 per mm, driving fierce competition focused on crystal quality and weight. But by 2011, prices dropped dramatically to as low as $2.3 per mm, leading to a decline in performance for some large international crystal manufacturers. Today, the industry faces the challenge of producing high-quality crystals in large volumes while maintaining cost advantages. Equipment suppliers are under increasing pressure to meet these evolving demands. On the positive side, the drop in sapphire prices has opened up new application opportunities beyond traditional LED uses. Since 2012, non-optical applications such as smartphone camera lenses, home buttons, and watch components have gained momentum. These applications require significantly more sapphire than LED-related ones, creating new market potential. While sapphire may appear simple on the surface, mass production is far from easy. Currently, only a few countries, notably the U.S. and Russia, have successfully scaled up production. Sapphire manufacturing is a highly integrated process that combines advanced equipment and technology. Companies must continuously improve their processes and adapt to new standards. Looking back, many manufacturers could grow crystals and even turn a profit during earlier periods. However, as competition intensifies and customer demands become more complex, the focus has shifted toward overall operational efficiency and equipment reliability. Industrial investors are now more cautious, and equipment manufacturers face ongoing challenges related to energy consumption, thermal field life, and system stability. In the next five years, sapphire companies will need to demonstrate stronger capabilities in both roughing and finishing processes, as customer demand becomes more customized. Investment in these areas will be just as critical as in the long crystal growth phase. Superior processing can enhance the cost advantage of long crystal production, while poor processing can negate it entirely. The future of the industry depends on continuous innovation and optimization at every stage.

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