Rubicon seeing increased Japanese demand

LOS ANGELES Wed Mar 16, 2011 4:23pm EDT

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LOS ANGELES (Reuters) - LED industry supplier Rubicon Technology Inc (RBCN.O) is seeing increased demand from Japanese customers because of supply disruptions after the massive earthquake there, according to its chief executive.

The company's shares ended 1.4 percent higher, while the broad market fell about 2 percent in reaction to the troubles in Japan.

"We are seeing some additional requests for additional materials" from major Japanese LED chip manufacturers, Chief Executive Raja Parvez said in an interview on Wednesday.

"I believe there are some challenges with the one of the Japanese suppliers to provide them with the required quantity," Parvez added.

Top Japanese manufacturers of LEDs include Toyoda Gosei (7282.T) and privately held Nichia Corp.

Rubicon manufactures sapphire substrates, a key raw material for LEDs. It controls about 25 percent to 30 percent of the global market, Parvez said, and most of its sales are to customers in Korea, Taiwan and Japan.

The company still expects prices on its sapphire substrates to be about the same in the second quarter as they were in the first quarter, Parvez said, though he said increased demand from Japan could help support pricing.

"This should enhance the pricing environment, but definitively I can speak only once I have the data with me," Parvez said.

Rubicon has benefited from a sharp increase in the use of LEDs in mobile phones, television screens and other consumer electronics. LEDs, or light-emitting diodes, are also poised to unseat incandescent and compact fluorescent light bulbs as governments, businesses and consumers seek to cut electricity costs and curb emissions of greenhouse gases.

By the end of the year, six-inch substrates will make up the majority of Rubicon's manufacturing, Parvez said. Rubicon dominates the market for six-inch substrates and therefore is well-placed to control pricing that market, he said.

Many LED manufacturers are switching to larger-diameter wafers from two, three or four-inch wafers because they are more efficient and help lower costs, Parvez said.

Rubicon shares closed at $26.87, up 36 cents, on the Nasdaq. They traded as high as $27.16 after Parvez's remarks.

(Editing by Steve Orlofsky)

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