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.”
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