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Rubicon: LED Production Nearing 6-inch Mark

The sapphire substrate maker highlights that larger wafer sizes and Taiwanese LCD manufacturers are beginning to make their mark on the LED industry.

At least one LED maker is looking to crank up their competitiveness by moving to manufacturing on 6-inch diameter sapphire substrates within 18 months.

That s according to sapphire supplier Rubicon Technology, which says that it received development-scale 6-inch wafer orders in the quarter ended June 2008.

“Every time we visit our customers, which is every four to six weeks, we see more advancement in this area," said Raja Parvez, Rubicon's CEO. “My estimation of when you will see volume production is 12 to 18 months."

With Rubicon s growth facilities on the outskirts of Chicago, Illinois, now providing 8-inch wafers for RF silicon-on-sapphire manufacturer Peregrine Semiconductor, it's well-positioned to meet any trend to larger substrates.

According to Parvez, several manufacturers now have MOCVD reactors capable of 6-inch wafer growth, and back-end equipment for processing at this diameter is also readily available. He also suggests that larger chip sizes in LEDs, to produce higher total brightness, will help drive the industry s substrate sizes upwards.

Within Rubicon's LED substrate business, 3- and 4-inch wafer sales grew at 9 percent over the previous period, while 2- and 2.5-inch sales grew just 6 percent. Overall revenues from LED substrates for the quarter clocked in at approximately $6.9 million, with 60 percent of that figure earned by 2- and 2.5-inch wafers.

“Compared to the same quarter of last year, 3- and 4-inch grew 54 percent while 2 and 2.5-inch are down by 2 percent, reflecting our continued migration to larger diameter substrates," said Bill Weissman, chief financial officer.

Another LED industry trend set to benefit Rubicon is the entry of Taiwanese flat screen display companies AU Optronics and Chi Mei Optoelectronics into chip manufacturing. Rubicon sells blanks to polishing companies that are set to supply their high-grade substrates into these new LED players.

“I believe that they will go into volume production in early 2009," said Parvez, “and for the long term, there is a significant growth for us and for our customers."

On July 30 Rubicon reported that it made a net profit of $2.2 million in the June quarter, up from an $8.8 million loss in the previous year.

However, its share price responded by continuing an ongoing slump. At the time of writing a share in Rubicon was worth $11.51, the lowest level in the brief time since its November 19 2007 debut on the NASDAQ exchange at $17.50.

A major factor that seems to be concerning stock market analysts is a switch in strategy at Peregrine. The RF chip company has changed from making its own devices to a model where 95 percent of its manufacturing is outsourced.

“This has resulted in a short-term inventory situation partially with their foundries and partially with Peregrine," Parvez conceded.

In the June quarter, 60 percent of Rubicon s sales were to LED manufacturers, 30 percent were to silicon-on-sapphire electronics customers and 10 percent were for optical uses of sapphire.

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