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news digest ♦ LEDs


inventory at the end of the period and wafer costs exceeding market price, there was a $1.1 million adjustment to align wafer inventory to market value.


William Weissman, Rubicon’s CFO, commented, “Idle plant and development costs at our wafering facility are the main cause of our negative margins. However, utilisation will be improving with the recent sales activity and we expect wafer costs to come down over the course of this year as we move from development to production.”


The company’s net loss in the first quarter was $0.43 per share. Rubicon established a tax valuation allowance in the fourth quarter and consequently does not currently record a tax benefit on its Statements of Operations.


Second Quarter 2014 Guidance


Commenting on the outlook for the second quarter of 2014, Parvez said, “We expect the LED market to continue to strengthen in the second quarter resulting in some pricing improvement, particularly for four-inch material.”


He continued, “Core sales volumes in the second quarter will decline somewhat as we have exhausted our excess boule inventory. We also believe we will see meaningfully higher wafer revenue in the second quarter which will improve utilisation but, in the near-term, will not improve margins. With reduced core revenue offsetting increased wafer revenue, we expect total revenue in the second quarter to be similar to the first quarter. We expect our loss per share in the second quarter to be between $0.38 and $0.46, based on a share count of 26.1 million shares.”


Parvez also commented, “We are building momentum in the wafer business and with increasing volume and experience, and as customer specifications are defined, we will reduce our idle plant costs and our wafer product cost. The higher wafer sales mix will allow us to generate significant growth without adding crystal growth capacity and improve margins as our utilization and efficiency increase.”


Conference Call Details


Rubicon hosted a conference call to review the first quarter 2014 results and the second quarter 2014 outlook. The conference call is available to the public through a live audio web broadcast via the Internet via the Investor Relations section of Rubicon’s website at http://ir.rubicontechnology.com.


Yole: Substrates influencing LED front-end industry


Large sapphire substrates are still in the reckoning and may dominate marketshare over GaN and GaN-on-silicon substrates


There are a number of factors affecting the LED market . According to Yole Développemen, the main one is substrates.


Increased demand for larger size sapphire wafers with big 78 www.compoundsemiconductor.net June 2014


INCREASED COMPETITION WILL ACCELERATE NEW LED MOCVD REACTOR DEVELOPMENT


LED epitaxy has also been of central interest to the LED Front- End industry that has seen the entry of several new players in the MOCVD reactor market since 2011 / 2012.


Even if increased competition has not really affected the market’s top leaders (Aixtron, Veeco and Taiyo Nippon Sanso), it has forced them to accelerate development of the next generation of MOCVD tools to lever market entry barriers.


This generation of MOCVD reactors should focus on Cost of Ownership, with the emergence of enhanced designs, including new heating systems, new gas-flow designs, and increased automation.


Regarding lithography, plasma etching and deposition, PVD and testing, mostly incremental evolutions have occurred, such as improvement of throughput, and ASP decrease, reflecting a saturation in technological development.


FLIP-CHIP TECHNOLOGY AS THE NEW BATTLEGROUND


As flip chip gradually matures, LED manufacturers are actively developing this technology as it provides several advantages: larger light-emitting area and highest luminosity, better heat dissipation, adjustable dimensions and no wire-bonding.


players, such as LG, Sharp and Osram are moving to 6” wafers and Taiwanese players are moving to 4” wafers.


Also, increased demand for PSS (patterned sapphire substrates) that has now become mainstream in the industry (87 percent share as of Q1-2014), even if some questions remain concerning key patent holders’ strategies.


What’s more, the penetration of these alternative substrates will be secondary to future improvements in terms of performance and cost. Otherwise, GaN-on-silicon and GaN-on-GaN LEDs will not be able to fully compete with sapphire-based LEDs.


The impact of the sapphire industry on the LED industry is likely to become bigger in the future because of the recent partnership between GTAT and Apple (Q4-2013) to set up a large sapphire manufacturing plant ($1 billion).


The plant, having a rough capacity of double the current qualified sapphire capacity, could totally modify the structure and evolution of the sapphire and LED industries in the next few years.


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