Dec 22 2009
Rubicon Technology, Inc. (NASDAQ:RBCN), a leading provider of sapphire substrates and products to the LED, RFIC, Semiconductor, and Optical industries, today released additional details related to the Company’s two year capacity expansion plan which was outlined on its third quarter earnings conference call last month.
The Company is adding production capacity as its existing facilities are nearing maximum capacity and demand for sapphire substrates, particularly for use in the LED industry, is expected to be strong in coming years. Raja Parvez, President and CEO, noted, “We believe we are at the beginning of a long term growth cycle in the LED industry. Demand for LED backlighting for applications such as LED televisions and notebook computers continues to experience considerable growth. In addition, the other current LED applications, such as automotive and signage, should continue to strengthen as the global economy improves, and progress continues to be made in the area of general illumination.”
The Company plans to add a new 2nd generation crystal growth facility near its existing facilities in Illinois which will nearly double the current crystal growth capacity and will house larger furnaces providing even greater ability to serve the growing demand for large diameter substrates. Concurrent with the addition of another crystal growth facility, the Company will build a facility in Asia to expand post crystal growth processing operations. This facility will reduce manufacturing costs while enhancing revenue generating capacity through the expansion of large diameter post crystal growth processing capability.
Mr. Parvez continued, “These expansion initiatives are designed to ensure Rubicon maintains its global leadership in high quality, large diameter sapphire substrates and to ensure our pricing remains competitive while maximizing our revenue and margins generated from our existing and new manufacturing facilities.”
Both new facilities are expected to open by the end of next year. Equipment will then be installed and additional capacity will begin to come on-line. While additional capacity will begin coming on-line once the facilities are opened, the Company estimates that it will take approximately twelve months from the opening for all machinery and equipment to be installed and operational. The Company expects to spend between $60 and $65 million over the next two years on these two new facilities.
William Weissman, Rubicon’s Chief Financial Officer said, “We expect both facilities to be fully operational by the end of 2011 and that this new capacity will increase our annual revenue generating capacity to at least $130 million once the facilities are fully operational. This estimate is based on today’s pricing and certain assumptions related to our product mix.”