Sapphire is a kind of single crystal of alumina. It has unique lattice structure, wear resistance and wind erosion resistance. Its hardness is second only to diamond. It has good light transmittance, special conductivity and electrical insulation. It is an ideal lining for LED and SOS. Bottom material. In the early days, sapphire was first used as a jewellery and watch on the surface due to its high hardness, wear resistance, gloss translucency, and high processing level and scarcity caused by insufficient production. Since the 1990s, LED lighting has gradually penetrated into human life, and sapphire has been widely used in LED substrate materials. After more than 10 years of development, Apple uses sapphire as the protective glass for the iPhone5 camera and the Home5 protection glass for the iPhone5s. Sapphire officially entered the consumer electronics market, and consumer electronics opened up new market space for the sapphire industry.
Second, the sapphire industry structure analysisSapphire has the advantages of wear resistance, scratch resistance, good light transmission and high hardness. It has a wide range of applications in aviation, defense, LED, medical, consumer electronics and other fields. The LED substrate is the most important application downstream of sapphire, with a market share of over 50%. Consumer electronics, on the other hand, bring a wider incremental space to sapphire materials.
According to the China Forecast and Investment Strategic Planning Analysis Report released by the Prospective Industry Research Institute, LEDs consumed 77.23% of the world's sapphire production capacity in 2015, followed by mobile phone glass, camera lenses and watches.
Figure 1: Structural characteristics of global sapphire products in 2015 (unit: %)
Sapphire is a unique crystal that combines excellent optical properties, physical properties and chemical properties. It is an important foundation material for modern industry. Its unique lattice structure, excellent mechanical properties, and good thermal properties make sapphire crystals an ideal substrate material for practical semiconductor lighting (LED), large-scale integrated circuits SOI and SOS, and superconducting nanostructured films. At the same time, sapphire has high strength, hardness and erosion resistance. It is widely used as a screen material in smart equipment, infrared military equipment, satellite space technology, high-intensity laser window and other fields.
Starting from the “Eleventh Five-Year Plan†in 2006, the state promoted semiconductor lighting engineering as a major project. In 2009, China's “Ten Cities and Ten Thousand Miles†LED lighting demonstration project led to the development of GaN blue LED dies and the advancement of GaN epitaxial growth and chip fabrication technology. The "12th Five-Year Plan" for the development of semiconductor lighting technology requires that by 2015, the LED industry will reach 500 billion yuan. At present, the application of sapphire on LED substrates accounts for nearly 80% of the sapphire market share. In the short term, the LED market trend determines the trend of the sapphire industry.
Consumer electronics applications provide a broad imagination for the sapphire market, and sapphire materials may be widely used in future smartphones and wearables. The three major hardware innovations of the Apple iPhone 5S are fingerprint recognition, processors and cameras, where both the fingerprint recognition and camera components use sapphire material. As the trend leader of the smart phone industry, Apple's development direction has often become the vane of the transformation of the entire industry, causing other mobile phone manufacturers to follow suit. Since the launch of Google Glass in 2013, mobile wearables have become the focus of the market. In the recent CES 2014 e-consumer show in the United States, wearable devices shined, and many products were made using sapphire. For example, the Sapphire health watch launched by Wellograph uses sapphire. The downstream of the sapphire industry is mainly related to the semiconductor lighting and consumer electronics industries related to the LED industry.
According to the statistics of French YOLE, in the past three years, LED substrate materials accounted for more than 80% of sapphire demand, while non-LED applications accounted for about 20% of sapphire demand. Non-LED applications are mainly reflected in consumer electronics demand. Such as: the camera lens of the smartphone protects the glass, the Home button, the sapphire crystal, and the like. Until now, LED substrate materials are still an important application for sapphire.
Fourth, the application status of sapphire in the field of consumer electronicsThe cost of sapphire in consumer electronics mainly includes the protective cover of the smartphone camera, the fingerprint recognition HOME key cover, the smart watch screen cover and the smartphone screen cover that may be promoted in the future. It is estimated that driven by the demand for Apple products, the proportion of mobile phone sapphire in the sapphire market has increased rapidly from 1% in 2012 to 3% in 2015; the home button with sapphire is from scratch, accounting for 2015 The proportion of the entire sapphire market has reached 9%. As the leader of the smart terminal trend, Apple's enthusiasm for sapphire will drive the application of sapphire to other consumer electronics brands, and consumer electronics will take the LED, becoming the main driving force for the growth of the sapphire industry in the future.
In the consumer electronics market, smartphones continue to dominate. According to IDC, in 2016, global smartphone shipments will reach 1.435 billion units per month, and by 2019, shipments will reach 1.86 billion units. In 2015, the number of smart watches shipped in global wearable devices was 37 million. In 2016, wearable devices began to enter the market. Smart watches are expected to increase shipments by 121.6% to 82 million.
According to different types of demand in consumer electronics demand, as well as shipments of smartphones and smart watches, global sapphire material consumer electronics market revenue will increase from 7.05 billion yuan in 2015 to 34.15 billion yuan in 2020. The average compound growth rate reached 37.1%.
Chart 2: Global scale and forecast of sapphire market for consumer electronics in 2015-2020 (unit: billion US dollars)
LED is a kind of light source with energy saving, long life and multi-purpose, and its energy conversion efficiency is much higher than that of incandescent lamps and energy-saving lamps. LED technology is currently the mainstream trend in the lighting industry. LED lamps are the third lighting technology revolution after incandescent lamps and fluorescent lamps, and have gradually replaced the traditional incandescent lamps and fluorescent lamps. According to the new market report released by LEDinside, the LED market is still dominated by tablet and smartphone backlighting in 2014, and the lighting application segment has grown significantly in the engineering, commercial and outdoor lighting markets.
With the improvement of luminous efficiency and the overcoming of price barriers, LED lighting products are in a period of continuous explosive growth. In 2013, the penetration rate of LED lighting reached 17%. In 2014, the penetration rate of LED lighting increased to 32.7%. Among them, the penetration rate of a wide range of bulbs and lamps was 20% and 15% respectively. It is expected that the penetration rate of LED lighting will rapidly climb to 47% in 2015 and reach 80% in 2020. The penetration rate of LED lighting in the global market is rapidly increasing. LEDinside data shows that in 2014, the output value of LED lighting will reach 17.8 billion US dollars, the total number of LED lighting products shipped will reach 2.67 billion, and the overall shipment will grow 68% compared with 2013.
Up to now, LED substrate materials are still an important application of sapphire. According to the statistics of French YOLE, the application of substrate materials accounts for more than 75% of the demand for sapphire, and the application of non-substrate materials accounts for about 25%. A 1% increase in LED lighting penetration will directly drive the growth of approximately 1.07 million sapphire substrates. The rapid growth of LED downstream industry applications will lead to a large demand for upstream sapphire substrate materials.
According to the statistics of National Semiconductor Lighting Engineering R&D and Industry Alliance from 2007 to 2014, the overall scale of China's semiconductor lighting industry has increased from 4.8 billion yuan to 350.7 billion yuan, with an average annual compound growth rate of 32.70%. It is expected that by 2017, China's semiconductor lighting industry market will reach 748.5 billion yuan, with an average annual compound growth rate of 28.50%.
Analysis of the overall scale trend of China's LED industry 
According to the statistics of National Semiconductor Lighting Engineering R&D and Industry Alliance, the scale of China's semiconductor lighting industry reached RMB 350.7 billion in 2014, up 36% from 2013 (257.6 billion yuan), maintaining a sustained high growth trend. Among them: In 2014, the industrial scale of China's semiconductor lighting application field reached 285.2 billion yuan. Although it was affected by the continuous price reduction, it was still a fast-growing link in the industrial chain, and the overall growth rate of application was close to 38%. In 2014, shipments of smartphones, tablets and large-size TVs continued to expand, and the growth of LED backlight applications slowed down, with an annual growth rate of about 20% and an output value of 46.8 billion yuan. With the maturity of small-pitch LED Display technology and the gradual reduction of cost, LED display applications also experienced rapid growth in 2014, with an annual growth rate of approximately 35% and an output value of approximately 32.4 billion yuan. In addition, LED automotive lighting, medical, agricultural and other emerging fields are also constantly expanding, and smart lighting, optical communications, and wearable electronics have become the new highlights of LED applications in 2014.
In 2015, the overall scale of China's semiconductor lighting industry reached RMB 424.5 billion, an increase of 21% compared with 2014. Compared with the annual growth rate of more than 30% in the past 10 years, the growth rate has decreased, mainly due to the increase in output. And the price continues to fall. Since 2014, the sapphire industry has been declining in price as costs have fallen. In 2015, the average selling price of LED wafers fell by 18%, offsetting the increase in revenue generated by its shipment growth (+16%).
According to Yole's forecast, the compound annual growth rate of LED wafer shipments will be 5.2% in the next five years, but the price will still decline slowly, and the output value will be basically flat.
Price trend unit for sapphire substrates from 2008 to 2020: US dollar 
In 2015, the output value of LED epitaxial chips in China was about 15.1 billion yuan, an increase of about 10% compared with 2014. Due to the increase in the number of MOCVD equipment and the increase in capacity utilization, the output of epitaxial wafers increased by 31% compared with 2014, and the output of chips increased by 40%. %; LED packaging sector overall development is stable, the output value reached 61.5 billion yuan, with the substantial expansion of some enterprises, the production capacity increased by more than 30% compared with 2014, coupled with the release of the previous production capacity, the overall growth of LED packaging device production reached 50%. Due to the decline in prices in 2015, the output value of each link has not increased as much as the output. The industry scale of LED application field reached 347.9 billion yuan. Although it is affected by the continuous price reduction, it is still a fast-growing link in the industry chain, and the overall growth rate of application is close to 22%. Among them, LED general lighting is still the main driving force for market development, with an output value of 155.2 billion yuan, a growth rate of 32.5%, and a penetration rate of over 30%. The proportion of the application market has also increased from 41% in 2014 to 2015. 45%. Although the output value of the three major industrial sectors has increased, the growth rate of each link has dropped significantly, indicating that China's semiconductor lighting industry has begun to shift to the new normal of medium and high-speed growth. The semiconductor lighting industry has established a dominant position in the lighting industry after several years of rapid growth. With the stabilization of the LED industry environment and the global “banâ€, it is expected that the semiconductor lighting industry in China will continue to rise in the next two years, but the growth rate has slowed down due to the economic environment. High-speed growth has shifted to “medium-speed†growth.
2 The rapid expansion of the application field of consumer electronics drives the explosive growth of the sapphire industry in the futureSapphire materials have high hardness, high strength, and wear resistance. Since Apple first used high-transparency double-polished sapphire as the cover for mobile phone lenses in Apple iPhone 5, sapphire materials have been obtained in the consumer electronics industry. A wide range of applications. As sapphire screen thickness decreases, ingots, ingot utilization efficiency increases, cut and throw losses decrease, and processing costs decrease, sapphire applications will gradually expand into emerging applications.
At present, sapphire is mainly used in the camera lens protection glass, Home button, sapphire crystal, etc. of the iPhone. Whether it is the Home button or the camera, the required sapphire window is small in size and the area is only tens of square millimeters. If iWatch and iPhone use sapphire cover as screen protector in the future, the screen of iPhone is about 100 home keys. The demand for sapphire on iPhone screen is more than 100 times that of home button. The area of ​​single sapphire window will reach several hundred. Thousands of square millimeters, the demand for sapphire cover is very large. If all smartphones use sapphire covers, the demand for sapphire will jump and further increase the market demand for diamond wire for the sapphire industry.
3 Global LED upstream industry gradually shifted to ChinaWith the continuous development of the LED industry, the number of LED companies has also increased rapidly. Japan, South Korea, which are at the high end of the industrial chain, Japan, Europe, and the middle and lower reaches of the industrial chain are gradually shifting to emerging markets with lower manufacturing costs. With huge domestic market development space and the attraction of national preferential policies, many large-scale LED companies in the world have successively invested and built factories in China. On the one hand, they have introduced advanced R&D and production technologies and management models to improve the international competitiveness of the domestic LED industry; On the other hand, it has greatly increased the supply of upstream raw materials and promoted the rapid development of packaging and application fields. China will be a globally important producer of the LED industry.
According to CSAResearch4, DigiTImes5 data, globally, MOCVD shipments in 2014 were 228 units, a year-on-year increase of 54%. This is the first time since 2011 that MOCVD global new volume has achieved positive growth, indicating the global recovery of the LED industry. . Among them, China purchased more than 150 MOCVD units, a year-on-year increase of 36%, and its global shipments accounted for 66%. For four consecutive years, it has become a region with a large number of MOCVD purchases worldwide. It is estimated that global MOCVD shipments are expected to reach 252 units in 2015, an increase of 11% year-on-year, of which about 74% will come from land-based enterprises, and Chinese chip companies will begin to enter a new round of capacity expansion cycle. In terms of equipment ownership, China's MOCVD volume accounted for 31% of the global total in 2014, followed by Taiwan's 26.8%, which together accounted for nearly 60% of the total. It is a global chip production base. It is estimated that by 2015 China's MOCVD ownership will increase to 34.7%, while Taiwan, South Korea, Japan and Europe and the United States will all decline slightly, and the global LED upstream industry will further concentrate in China.
4 Major domestic sapphire manufacturers expand production in large-scale consumer electronics applicationsWith the general increase in production capacity, the manufacturing cost of sapphire materials and the decline in sales prices, sapphire materials will usher in further development opportunities in the field of LED substrates and consumer electronics, and the supporting equipment will gradually open up the market. First, the LED sapphire substrate will still dominate. From a comprehensive perspective, the LED sapphire substrate will gradually evolve from 2 inches to a larger size. Typical manufacturers have begun to make layout transitions to adapt to the trend toward large size; At the same time, multiple smartphone brands have chosen sapphire materials to make their applications in consumer electronics enter a sweet period. The demand for sapphire in the field of LED substrates and consumer electronic products is gradually increasing, and the requirements for the production process and equipment level of the upstream sapphire crystal growth section are correspondingly increased, and there will be more demand for sapphire single crystal growth equipment, processing materials and equipment. . Based on the continuous upgrading of sapphire technology and the rapid expansion of the application market, 4-inch and 6-inch substrate wafers will be adopted by domestic mainstream chip companies due to their inherent advantages in production utilization.
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