Preannounces Fourth Quarter Revenue
Rubicon Technology, Inc. (NASDAQ:RBCN), a leading provider of sapphire substrates and products to the LED, RFIC, semiconductor, and optical industries, announced today that it has entered into a new contract with its largest customer for large-diameter sapphire wafers. The amount of the contract is $20 million, and it represents a baseline level of shipments that will be made from June through December 2012. The previous contract expired at the end of December.
"We are pleased that we will continue as a key supplier to our valued six-inch wafer customer in 2012," said Raja Parvez, President and Chief Executive Officer of Rubicon. "As other LED chip manufacturers make the transition to large-diameter substrates in pursuit of greater efficiency, Rubicon—the world's largest, most experienced and most reliable provider of large-diameter sapphire wafers—stands to benefit greatly. However, with LED chip capacity presently not fully utilized, the inflection point in demand for large-diameter sapphire wafers for LEDs is still some months in the future."
In light of current market conditions and in the interest of further establishing a long-term customer relationship with our prominent customer, Rubicon granted adjustments to fourth-quarter 2011 price and volume requirements under the expiring six-inch contract, as management had indicated was likely in remarks made November 8. Consequently, Rubicon's revenue for the fourth quarter ended December 31, 2011, was between $19 and $20 million, slightly below its previous guidance of $20 to $23 million. The Company expects to release complete results for the fourth quarter on February 23, after the market closes.
In another matter, but also related to the current market conditions, Rubicon disclosed today that the Company, as an accommodation to certain key customers of its small-diameter sapphire ingots (cores), wrote off $1.8 million of accounts receivable in the fourth quarter.
"The fourth quarter of 2011 was a period of limited demand for sapphire substrates resulting from the accumulation of excess inventory in the LED supply chain," Mr. Parvez said. "This temporary decline in channel demand in turn resulted in sapphire prices falling sharply in the second half of 2011. Out of consideration for our important customer relationships, we made certain concessions that we deemed to be in the best long-term interest of our company."
"The near-term demand from the LED market continues to be limited, as inventory adjusts throughout the supply chain, but orders for two-inch and four-inch cores have begun to recover somewhat in the first quarter of 2012, and demand for large-diameter wafers for the Silicon on Sapphire (SoS) RFIC market is growing. As the channel inventory situation improves, and as LED technology further penetrates both the backlighting market and the general lighting market, we expect significant strengthening of the market for sapphire substrates later this year," he said.
"We remain optimistic on the long-term outlook for the LED market and Rubicon's positioning to capitalize on the opportunity. To date, Rubicon has shipped more than 230,000 six-inch sapphire wafers to the LED manufacturing and RFIC industries. This has provided us with the experience and scale to drive process and cost efficiencies throughout our system while maintaining our industry leading quality and service. Cost and quality leadership are instrumental to the acceleration of LED adoption in the marketplace and, as such, are strategic priorities for Rubicon," Mr. Parvez concluded.
About Rubicon Technology, Inc.
Rubicon Technology, Inc. is an advanced electronic materials provider that is engaged in developing, manufacturing and selling monocrystalline sapphire and other crystalline products for light-emitting diodes (LEDs), radio frequency integrated circuits (RFICs), blue laser diodes, optoelectronics and other optical applications. The Company applies its proprietary crystal growth technology to produce very high-quality sapphire in a form that allows for volume production of various sizes and orientations of substrates and windows. Rubicon is a vertically-integrated manufacturer with capabilities in crystal growth, high precision core drilling, wafer slicing, surface lapping, large-diameter polishing and wafer cleaning processes, which the Company employs to convert the bulk crystal into products with the quality and precision specified by its customers. The Company is the world leader in larger diameter products to support next-generation LED, RFIC and optical window applications.
Further information is available at www.rubicon-es2.com.
Contacts:
Rubicon Technology, Inc.
Dee Johnson, VP-Investor Relations
847-457-3426
djohnson@rubicon-es2.com
or
Garfield
Group Public Relations
Beth Hespe, 215-867-8600 x235
bhespe@garfieldgroup.com
