Monocrystalline synthetic sapphire- an artificially grown crystal, widely used in microelectronics, optoelectronics, optics, mechanical and instrument making, medicine, for the manufacture of “scratch-proof” watch glasses of various shapes, as well as in the manufacture of blue semiconductor lasers for systems requiring high data recording density, for example, in modern game consoles, Blue-ray players and other HD-DVD devices. Sapphire is the main material in the production of LEDs, since its crystal lattice allows the growth of an epitaxial layer of gallium nitride (GaN) with good performance characteristics and price/quality ratio.
Sapphire has a number of advantages:
- resistance to high temperatures and aggressive environments;
- hardness and strength;
- long service life (in some environments the service life of sapphire is 5 times that of quartz);
- high purity;
- wide spectrum of transmission in ultraviolet, visible infrared and microwave ranges;
- high thermal conductivity.
The raw material for the production of synthetic sapphire is aluminium oxide.
The key technology for sapphire production is the industrial method of crystal growth improved Kyropoulos method. This method makes it possible to grow sapphire crystals with a diameter of more than 300 mm with a low dislocation density of up to 10 3 cm -2.
Epi-polished (epi-ready) sapphire substrates- plates made of sapphire crystal and having low roughness< 0.3 нм, необходимой для последующего эпитаксиального роста гетероструктур. Epi-ready подложки являются сырьем для производителей светодиодов и микроэлектроники.
The project will produce epi-polished wafers in sizes 2, 3, 4, 6 and 8 inches, as well as cut/ground blanks (both standard and to customer specifications).
Characteristics of plates manufactured within the project:
- high purity of the material: > 99.997%;
- low content of Ti impurities:< 1 ppm;
- low dislocation density:< 10 3 см -2 ;
- Orientation tolerance: up to ±0.05 degrees.
Sapphire substrates are mainly used to produce two types of products:
- LED technology and other products created using gallium nitride on sapphire technology. This segment accounts for 92% of the total consumption of sapphire substrates.
- High-frequency integrated circuits created using silicon-on-sapphire technology. Despite the low share of this segment, it is also the focus of attention of the world's major manufacturers, as it requires more expensive, high-quality substrates with large diameters (12 inches).
Metallization pastes - material used to make contacts on solar panels and ensuring the flow of generated electrical energy from the silicon solar cell to the grid. The greatest use of pastes is observed in solar energy.
The Russian company Monocrystal (Stavropol Territory) is recognized as the largest manufacturer of artificial sapphires in the world with annual revenues of $87 million. Monocrystal employees explained that this conclusion was reached by the world's leading analysts of high-tech markets at Yole Development in a published report for 2014.
“Monocrystal is one of the few companies that managed to show an operating profit at the end of the year,” said the company’s chief manager for the sapphire product, Evgeniy Zalozhny.
According to him, the company has improved its cost structure, significantly increased production capacity and, having overtaken Japanese competitors, taken a leading position in two main market segments - sapphire for LEDs and mobile electronics.
Sapphire, being the second hardest after diamond, has outstanding mechanical, optical and chemical properties. That is why it is used in Swiss watches and mobile devices. In addition, its crystalline structure has allowed it to become the main component of light-emitting diodes, commercially used in LED TV backlights and general lighting.
Let us recall that in July, the Stavropol Monocrystal plant was the first in the world to grow a 300-kilogram sapphire crystal using the Kyropoulos method using its own technology. The company has 30 years of experience in sapphire production; previously, sapphires weighing 100 and 140 kilograms were grown here.
By the end of the year, the plant plans to increase production capacity by more than 20% and occupy 30% of the world market for artificial sapphire for industrial use. In general, Monocrystal holds 27% of the world market for sapphire for optoelectronic applications and 11% of the world market for aluminum pastes for solar energy. Four of the 10 world leaders in LED production use sapphire wafers produced by Monocrystal, and eight of the 10 largest global sapphire processing companies consume sapphire ingots produced by the company.
Monocrystal is a subsidiary of the diversified industrial holding Concern Energomera and exports more than 98% of its products to more than 25 countries. Over the past five years, the volume of sapphire production at the plant has increased ninefold. Exports in 2014 exceeded $100 million, and 98% of manufactured products were supplied to Asia, Europe, and the USA.
The Monocrystal plant, part of the Stavropol concern Energomera, is one of those few participants in our ranking of the largest exporters in the South who supply finished high-tech products abroad. About 90% of sapphire substrates for electronics and pastes for metallization of solar cells produced in Stavropol are supplied to 50 Asian, European and American companies operating in the electronics industry. It is unlikely that anyone will be able to repeat the success of Monocrystal in the coming years. It is too difficult to put together all the necessary heterogeneous components: to preserve the achievements of the Soviet scientific school, form a team of engineers and managers, and most importantly, see a free “window” in a competitive international market.
Grain brand
“Do they grow sapphires? Where, in the fields?”, a Stavropol taxi driver with 15 years of experience, it seemed, did not fully believe my remark that the largest production of synthetic crystals for technical purposes in Europe operates in his city. “They would have said right away - to the shopping center,” he summarizes, having found the building of the Monocrystal plant on the map. The wing of the former industrial premises, where the taxi was parked, actually turned out to be occupied by shops selling building materials. The shopping center is an echo of the 1990s, when former secret “boxes” were perceived by business almost exclusively as real estate within the city. However, Monocrystal was luckier than many larger Soviet electronics factories, which were usually located in the Moscow region. “A stereotype has long been formed regarding the Stavropol region - there is nothing here except wheat and rye. It is difficult for our and foreign businessmen to fight the image that appears in their minds: mountains of grain, and suddenly somewhere among them is the production of crystals. The electronics industry is usually associated, for example, with Zelenograd. But in reality there are only ruins of the former industry. The Moscow region plant, whose analogue was today's Monocrystal, broke up into many small enterprises. We managed not only to preserve the plant, but also to bring the business to the global level,” says the development director of the Energomera concern. Andrey Komkov.
The future is in LED light
Oleg Kachalov shows the iPhone and explains: “I bought it at one of the Taiwanese exhibitions when I found out that inside the smartphone there is a chip based on our substrate.”
The production of sapphire crystals was launched at the Stavropol plant in 1984. It was assumed that, based on sapphire substrates, radiation-resistant microcircuits could be created for military needs. At this time, no one could have imagined that ten years later the privatized Monocrystal would begin preparations for the export of sapphire substrates to Asia and Europe. It is noteworthy that the first group of sales managers was formed not from technical specialists, but from students of the Pyatigorsk Institute foreign languages. “The enterprise had a fairly wide range of technologies. Now it is difficult to say exactly why the owners focused specifically on growing sapphires: intuition, luck, and understanding of the market played a role. And most importantly, the managers of Monocrystal felt the interest of foreign businesses in the product,” recalls Mr. Komkov.
Today there is no doubt about the interest of foreign partners. The global sapphire market has been growing by an average of 20% per year over the past few years. Mainly due to increased demand for light-emitting diodes. One of the key components in the production of LEDs are miniature sapphire plates - in the electronics industry they are called substrates.
Talking about development prospects, Monocrystal cites research data from independent agencies: the capacity of the global LED market in 2006 was $4.2 billion, and by 2011 the capacity is expected to more than double - to $9.4 billion. There are serious reasons for such a forecast: in the USA, in a number of countries in Europe and Asia, there are already government programs in the field of energy saving that involve a transition from traditional light sources to more economical LED ones. It is expected that LCD TV manufacturers and automobile factories will increase their purchases of LEDs.
According to the director of sales and marketing of Monocrystal Oleg Kachalov, over the past five years, the capacity of the Stavropol plant has grown annually by approximately 30–45%. Now, taking into account the capabilities of the Belgorod Atlas plant acquired at the beginning of this year, the company can produce about 200 tons of synthetic sapphire per year. “We expect a real boom in demand for LEDs starting in 2011. By this time, semiconductor light sources will already be able to compete in price with traditional lamps. It’s good for us that the boom will not happen tomorrow - in two or three years we will have time to increase capacity to optimal,” notes Mr. Kachalov.
This is no place for beginners
The growth installations where sapphires are grown look simple - a shiny tank half the height of a man, indicators, levers... According to experts, the growing process also seems simple: 50 kilograms of aluminum powder, more than 2000 degrees Celsius, two weeks for growth - this is the crystal and ready. As Andrey Komkov explains, the installations developed by Monocrystal scientists are assembled at the electrical equipment plant that is part of the Energomera concern: “Each of the sapphire manufacturers has a close partner who produces equipment. The mechanism for growing crystals has been known for almost a hundred years. However, each manufacturer has its own developments. If competitors received our equipment, they either would not be able to work with it, or would spend too much time on adaptation.”
Monocrystal managers speak extremely carefully about competitors; they do not advertise the list of buyers. The market for synthetic sapphire is narrow and behind the scenes; producers and consumers know each other almost by name. The Stavropol company supplies about 80% of the sapphire substrates exported to factories in Japan, South Korea and Taiwan. The remaining volume is exported to Europe and North America. Having heard the expected question about buyers, Oleg Kachalov shows a popular iPhone smartphone and explains: “I purchased it at one of the Taiwanese exhibitions when I found out that there is a chip inside the smartphone based on our substrate.” The growing use of sapphire substrates for the production of high-frequency microcircuits - these are the same ones used in mobile phones - is another, as Monocrystal believes, proof of the correctness of the chosen direction.
The world's three leading sapphire producers, along with Monocrystal, include the Japanese corporation Kyocera and the American company Rubicon Technology, created by immigrants from Russia. For beginners, according to Andrey Komkov, the path to the sapphire market is practically closed. “Investments in sapphire production are not that large-scale by the standards of large businesses. In any case, it is cheaper than buying an English football club. However, it is difficult to predict how a know-how project will develop from scratch. If the project does not provide profitability at the level of the core business, shareholders of large companies will begin to ask unpleasant questions to management. Who needs it? Therefore, if the “big guys” come into the sapphire business, it will only be through the purchase of an existing manufacturer,” Mr. Komkov is convinced. Oleg Kachalov adds that this is not the only reason why it is extremely difficult to catch up with today’s leaders: “Sapphire producers can be counted on one hand. If a newcomer appears, increased demands will be placed on him. It will take a long time to prove that for some reason it is better to purchase his products. New players may have a chance if there is an acute shortage of sapphire substrates on the market. However, for now, existing plants are ahead of market needs.”
Leak protection
The appearance of an artificially grown sapphire crystal causes slight disappointment to a non-specialist - outwardly, these are melted glass blocks, marked for cutting with a marker. True, cutting such “glass” can only be done with a diamond-coated tool. Monocrystal still has several Soviet machines for processing crystals, but the main product - wafers for substrates - is cut and polished on equipment purchased from last years Japanese and European equipment. About a thousand wafers two inches in diameter can be cut from one crystal. From one such plate - already at Japanese and Taiwanese factories - about 20 thousand substrates are made for the production of conventional LEDs.
The quietest place in the plant is in the corridor in front of the final polishing room. Behind the glass is a “clean room” with a ventilation system that removes dust microparticles from the air. The situation is calm enough to finally ask Monocrystal managers the most difficult questions - about the threat of personnel and technology leakage. By and large, these issues are among the key ones for Monocrystal.
The Soviet school of materials science, which gave impetus to the development of the Stavropol plant, was considered one of the strongest in the world. It is no coincidence that American and European companies are still hunting groups or individual specialists from former research institutes. Monocrystal's current competitor, the Rubicon company, was founded by one of these groups. Another such group launched the production of synthetic sapphires in Belgorod - at the same plant that was later purchased by the Stavropol Energomera. One of the measures to protect against theft of technological solutions, according to Andrey Komkov, is a well-thought-out information policy. “Each specialist individually knows only about a narrow area of work. By luring such a specialist, you can only get a fragment of knowledge about the technology,” explains Mr. Komkov.
Non-traditional exporter
Over the past five years, the capacity of the Stavropol Monocrystal plant has grown by 30–45% per year
The issue of protecting know-how arises again when we move to isolated laboratories where aluminum and silver pastes and powders for metallization of solar cell elements are produced. Initial experience in the production of pastes was accumulated by Stavropol residents back in Soviet time- the plant carried out a number of space orders. They returned to producing pastes at Monocrystal about four years ago, when it became obvious that the demand for solar panels in energy-scarce Europe would constantly grow. According to Oleg Kachalov, today Monocrystal has formulations that make it possible to increase the productivity of solar cells compared to competing solutions by tenths of a percent. “Even such an advantage in a highly competitive market is serious. Manufacturers of solar cells set prices based on the performance of the batteries, explains the Monocrystal manager. - With our pastes, productivity increases at least a little. This means that batteries can be sold at a higher price.”
Preserving paste and powder recipes is not an easy task. There is no point in obtaining international patents. Patents must specify the composition, and disclosing it means providing information to competitors. It will be impossible to prove later that any Chinese workshop used the Stavropol recipe. At Monocrystal one of the most effective methods protection consider the high speed of development of new recipes for pastes and powders.
It is noteworthy that Monocrystal managers talk about the problems faced by traditional Russian exporters as something of secondary importance. The situation on the sapphire market is predictable for years to come - it is obvious that customs duties are unlikely to change dramatically. Political risks are minimal: it is difficult to imagine that, for example, Japan or South Korea would restrict the import of substrates, thereby paralyzing some of their own enterprises. To a greater extent, the owners and managers of the Stavropol plant are concerned with the issues of training and retention of personnel, and the preservation of know-how. And, of course, the issue of investment. Now the owners of Energomera are considering a plan for a possible placement of Monocrystal shares on one of the stock exchanges. With favorable conditions on stock market the placement could take place late next year.
Stavropol Monocrystal has strengthened its position as a global market leader in its niche. Most Russian companies can only dream of this, but life for the main player in the global market is not at all so rosy
Founder and owner of the Energomera concern Vladimir Polyakov
“Two residents of the city of Stavropol created an organized group, which involved employees of one of the regional enterprises,” the press service of the Main Directorate of the Ministry of Internal Affairs for the Stavropol Territory reported in March. These people transferred information constituting a trade secret to “another organization” for money, causing damage of 14 million rubles, the press release says.
The affected company was not named. But the local agency "Regional Reporter", citing a source in the security forces, clarified that it was the Monocrystal plant: the accused tried to steal its technology for the production of artificial sapphires, and the criminal case itself was the result of a "special operation against Chinese industrial intelligence and Chinese industrial espionage specialists " Monocrystal grows artificial sapphires and makes sapphire substrates from them, which are used for the production of light-emitting diodes (LEDs). The same sapphires are used to make glass for the screens of some mobile phones and watches, including the smart Apple Watch. The plant exports almost all of its products and is the world's largest producer of sapphires, occupying 20 to 30% of this market, overtaking companies from China, Taiwan, Japan and the United States.
“For the last five or six years, they have been trying to steal Monocrystal technology, but without success. Until we see exact copies technologies,” says Vladislav Tropko, investment director of Rusnano, which bought 5% of Monocrystal in 2011 for $42 million.
They didn’t talk to RBC about Chinese spies at Monocrystal, but secrets are protected here: at the entrance they give out stickers, with which you need to cover the camera on your phone. But before the RBC correspondent arrived, the stickers ran out. “Go ahead,” they waved their hand at the security booth.
62-year-old Vladimir Polyakov is reluctant to communicate with the press, speaks in a low voice and thinks for a long time before answering each question. He doesn't look at all like the innovator we might imagine from the glossy success stories of American tech entrepreneurs. Polyakov is the founder and owner (he owns 86.1% of the shares) of the Energomera concern, which includes Monocrystal. In 2015, he took 192nd place in the Russian Forbes ranking with a fortune of $400 million; he is not in this year’s ranking.
For half of his adult life, Polyakov worked for the country's defense: for about 13 years - at the Gomel Radio Plant, where he started as an equipment adjuster and ended up as deputy chief engineer. In 1989 he became the chief engineer of the Stavropol Signal plant, and in 1994 he went into business. The Energomera concern began with the production of electricity meters and throughout the 1990s, mainly in the Stavropol Territory, it bought up shares of small factories that in Soviet times worked for the defense industry and experienced problems with sales of products. One of them was the Analog plant of electronic devices and materials, which was engaged in growing monocrystalline silicon and producing silicon wafers for microcircuits and transistors and unsuccessfully tried to establish conversion. Polyakov bought a controlling stake in Analogue for $1 million.
In 1999, Analogue was transformed into Monocrystal OJSC, in which Polyakov identified five enterprises. Three, including those related to silicon, had to be closed a few years later, two more - the production of sapphire and resistive pastes - had no sales in Russia, they had to be brought to the world market, “where, naturally, no one was waiting for us,” recalls Polyakov. “There was no great foresight in my decision to go into sapphire; I was simply trying to make the most of the existing equipment at the plant,” he adds.
Girls' best friends
Analog learned how to produce sapphires back in 1984, and the technology used by the plant for growing single crystals using the Kyropoulas method has been known since 1926. Crystals are grown in growth machines - large metal tanks with displays. Aluminum oxide is poured into it, heated under special conditions to more than 2 thousand degrees Celsius, and after a few weeks the finished sapphire, the so-called boule, is extracted. Then it is cut, cut into cylinders and briquettes, and these, in turn, into plates, which are polished in special devices.
Today, the largest consumers of sapphire wafers, or substrates, are LED manufacturers, but in the late 1990s the market was still in its infancy. And Monocrystal began with the production of sapphire glasses, which watch companies were ready to buy.
To establish work in foreign markets, Polyakov hired graduates of local linguistic universities, who had to work for some time at Monocrystal in working positions, mainly in technical control operations - “to stop being afraid of the product,” then learned how to draw up contracts and customs documents. Polyakov sent those who passed this stage to foreign exhibitions.
“Beautiful girls looked good against the background of sapphire,” recalls Polyakov. “At first they came to see what kind of girls were there, but over time serious clients appeared.”
“At that time, LEDs were produced by unknown companies. Some of them no one will remember now, but there are also those that over the years have become market leaders with a multi-billion dollar turnover. Both of them were our first customers,” says Monocrystal general director Oleg Kachalov, who came to the plant in 2002. “In the first months, sales of Monocrystal were unconvincing and amounted to $5-10 thousand per month,” Polyakov clarifies.
When the industry became interesting to large companies, some of them bought up small producers and continued to work with Monocrystal. This happened with the Taiwanese company Epistar, which absorbed all Taiwanese LED startups and has now become one of the largest LED manufacturers. But other giants, such as Samsung and LG, built this business from scratch, and relationships with them had to be built from the beginning. According to Kachalov, this process usually took two to three years. “The testing process itself takes about a year. But even before they start testing you, you have to build these relationships for about a year at all levels - from purchasing and sales, then with technical specialists and ending with relationships at the top management level,” he says.
The research company Yole Developpement names Chinese Fujian San'an, Korean Hansol Technics and Iljin Display, and American Caterpillar among Monocrystal's clients. Monocrystal itself does not disclose its customers, but Kachalov claims that the plant now cooperates with six of the ten largest LED manufacturers in the world (mainly Chinese and Taiwanese companies).
About 70% of Monocrystal's revenue comes from LEDs, 25% from mobile electronics, protective glass for cameras, glass for fingerprint scanners, screens for Apple and Huawei smart watches, 5% from other products, including glass for regular watches and protective optics in lasers.
“I have been saying for many years that the day will come when we will wake up rich and famous, because the sapphire market will explode,” repeats Vladimir Polyakov (Photo: Ivan Kurinnoy for RBC)
Up and down
Since the mid-2000s, the LED market has grown at 20-30% per year, mainly driven by demand for LEDs used in lighting. But in 2010, a small revolution occurred: Samsung used LEDs to backlight a TV screen for the first time. Other companies immediately followed suit, which caused a one-time shortage on the world market - prices for two-inch sapphire substrates for LEDs almost quadrupled over the year - from $4.7 to $16.7.
In the first years, Monocrystal did not bring profit to Polyakov - it had to be subsidized by the production of meters. But in 2010, the plant increased revenue almost 3.5 times, to $89 million. “In two years, we made a profit of about $100 million, recouped all our investments and invested money in further development production,” recalls Polyakov. On this wave, Monocrystal, following one of its main competitors, the American Rubicon Technology, planned to enter an IPO, counting on a capitalization of $0.8-1.01 billion. In the same 2010, the company received a loan of $10 million for five years from the International Financial corporation, and the investment fund UCP of Ilya Shcherbovich became a minority shareholder of Monocrystal.
The sharp rise in prices for sapphires attracted new players to the market: in China alone, several dozen companies engaged in growing sapphires were founded in a short period of time, and prices began to fall already in 2011, and in 2012 they collapsed below the 2009 level - to $3. 2 per two-inch plate. Due to market volatility, Monocrystal's IPO was cancelled.
UCP left Monocrystal two years later: a Vedomosti source close to the fund claimed that the investment was “profitable” for him. In the summer of 2011, 5% of Monocrystal was bought for $42 million by Rusnano, which still owns this stake.
But prices continued to fall, and in the fall of 2014 the market experienced a new disappointment: Apple announced that it would not use sapphire glass in the iPhone 6 model. The scale of the disaster can be assessed by just one fact: in July 2014, the market capitalization of the American company GT Advanced Technologies (GTAT), which was going to supply Apple with sapphire glass for the iPhone, reached $2.8 billion. After Apple changed its mind, due to the fact that GTAT was unable to make screens of the required quality, the company almost immediately filed for bankruptcy.
In 2015, prices for sapphire wafers dropped to $2. Monocrystal has so far managed to maintain first place in the world market in terms of revenue. What does the Stavropol plant hope for?
300 kg
“Early on, we came to the conclusion that the main thing in this industry is the ability to grow a high-quality sapphire crystal as large as possible,” says Kachalov. “We had the same growing equipment as everyone else, and using equipment like everyone else, it’s difficult to do something outstanding.”
All manufacturers of artificial sapphires use the same technology, but each is trying to increase the size of the grown boule. The larger the crystal, the lower the power consumption, and therefore the cost. Larger die can be cut into larger wafers: the industry has moved almost entirely from two-inch wafers to four-inch wafers and is now moving to six inches. Finally, there is a direct relationship between the size of the crystal and its quality: the larger it is, the clearer the crystal lattice.
Monocrystal began to develop its own growth units, and in 2004, their first generation was produced at the Energomer production facilities. In 2015, the company grew a sapphire single crystal weighing 300 kg—no one has yet managed to surpass the record: its closest competitor, the American Rubicon Technology, is stuck at 200 kg, Kachalov says proudly. “Crystals weighing about 10 kg were grown at Analogue,” he adds.
While trying to grow a crystal of a record size, GTAT, in which Apple invested more than $1 billion, also failed. GTAT, after an agreement with Apple, planned to grow boules weighing approximately 290 kg, but before that the company only made growth furnaces and did not try to grow crystals. As a result, according to the Wall Street Journal, the backyard of the GTAT factories resembled a “boule graveyard” - the crystals were cracked and completely unusable.
“It’s difficult to enter the world market, but it’s even more difficult to stay on it,” says Dmitry Loigas, a technologist at Kama Crystal Technology, a company that recently began producing artificial sapphire in Naberezhnye Chelny. “To do this, we need to reduce the price every year.” In 2014-2015, the devaluation of the ruble played into the hands of Monocrystal. In addition, according to Kachalov, even before the exchange rate change, the gap in the cost of sapphires with its closest competitors at the Stavropol plant was more than twofold. According to the forecast of the general director of Monocrystal, prices will continue to fall in the near future - by at least 10% per year.
The race to reduce costs has been going on at Monocrystal almost from the very beginning: every year it is reduced by 30%, says Kachalov. There is an effect from an increase in the scale of production - since its founding, the capacity has increased several times (the company does not disclose the exact figure). But the company is not counting only on production capacity.
Process improvement
The words that both Polyakov and Kachalov use in conversation more often than others are “continuous improvement” and “production system.” Polyakov borrowed the philosophy of kaizen, continuous process improvement, from Toyota. He says that in the mid-2000s he realized: the Soviet experience was not enough, we needed to look for something new in the experience of other companies. Now at Monocrystal everyone must continuously improve everything.
“The purchasing manager must extract discounts, and the technologist must produce more product with fewer resources, make it of better quality,” Kachalov tries to explain. “We are constantly thinking about how to spend less material, do it in a shorter time, and achieve higher quality. When this work is prescribed in the instructions, then you achieve the predicted high result.”
Polyakov himself spends four hours a day in kaizen teams with plant engineers. “We get together and solve creative problems. This is not a meeting, but a conversation, where the most important thing is not who is the boss, but the one who has the idea,” he says.
Like other companies whose leaders are passionate about kaizen (in Russia, these include, for example, German Gref and Oleg Deripaska), Monocrystal has instructions for everything: from general policies describing global processes like personnel management or sales, to standard operating cards, where each operation is described in detail - literally down to the diagram for finding the “On” button on the system unit.
Around 2010, Polyakov introduced selection of the best and worst employees at Monocrystal - “personnel differentiation” borrowed from General Electric. In addition to their main responsibilities, employees must make suggestions to optimize their work or the operation of the plant. If the proposal is accepted, points are awarded for it. “Points can be earned for any process modification that improves something, speeds it up or makes a profit,” says a former Monocrystal employee who asked not to be identified. — You can, for example, get points for improving your job description" Every year in the fall the commission calculates the points. As a result, employees are divided into categories: A, B, B+ and C. A is the “golden” reserve, C is the worst employees.
When asked what happens to category C employees, Polyakov says, slightly embarrassed: “We don’t lay off anyone, we simply announce to the employee that he has fallen into category C and he has no great prospects in the company. As a rule, after this people gradually leave.” Employees who fall into the worst category see everything a little differently.
“They started dumping things on me that I didn’t like and weren’t part of my responsibilities. I said I don't like it. I was told that I was in category C and could be fired under the article,” says a former employee of the plant. “They gave me a month to find a job, but I decided not to leave.” The pressure began: God forbid you are late or forget something! I got to the point where I wrote reports every day about what I was doing at work. In the end, I worked for three months and left on my own: I was tired.” Polyakov is sure: without a “production system” built at the plant, one cannot survive in the technology race.
Light and darkness
The LEDinside industry portal describes the state of the market for LED components in 2015 as “gloomy”: according to a report from the consulting company Strategies Unlimited, it’s all due to an oversupply and a price drop that is outstripping forecasts. The company's analysts believe that in the next five years the market volume in monetary terms will grow by no more than 4.5% per year.
“Most companies in the sapphire industry have been losing money for the past three years,” Jerry Chen, general manager of Monocrystal in Taiwan, said at a conference in Taipei this spring. According to him, during this time three of the 12 leading manufacturers of artificial sapphires left the market. Monocrystal sees new opportunities in this: according to Chen, in 2016 the company will increase its share of the global market to a solid 30% (he estimated the share in 2015 as “between 20 and 30%”).
Kachalov is confident that the main market driver will be LEDs for lighting. “LED lamps now occupy less than 5% of the overall market. But their share is growing, and this will continue for another five or six years,” he says.
Now the lion's share of the LED market comes from backlighting in phones and TVs, says director of scientific work GC "Inter RAO LED Systems" Dmitry Bauman. In his opinion, LED lamps are too expensive for the mass consumer, and sapphire substrates now have little effect on the price of lamps. The main part of the cost of a lamp is the power supply, housing, assembly, and prices for them are falling very slowly. “The main reserve for reducing the cost of lamps is an increase in sales volumes, and this will not increase until the lamps become significantly cheaper. A vicious circle,” says Bauman.
The smartwatch sector looks mixed, with Apple not releasing Apple Watch sales data. According to IDC, the company sold 12 million copies in a year, but analysts were counting on 20 million. Monocrystal and the entire market have one more hope - greatly reduced sapphires can attract the attention of smartphone manufacturers. Currently, only the luxury manufacturer Vertu and Huawei use sapphire glass for screens, which released a limited edition of the Huawei P8 smartphone with sapphire glass for the Chinese market.
The release of mass-produced smartphones with sapphire screens would mean explosive growth for Monocrystal, says Kachalov. According to his estimates, a 5.5-inch sapphire screen for a smartphone now costs about $20. For mass products, this is expensive, says Evgeny Kuznetsov, commercial director of Vobis Computer (Highscreen smartphones): “The screen of a smartphone is a sandwich of several layers, there is a “screen”, a touch panel and protective glass. All together it costs $15-25. And here one layer is $20.”
Polyakov continues to invest money in expanding the capacity of Monocrystal. The plant, according to him, makes a “reasonable” profit: last year the EBITDA margin was 31%. “But the price of sapphire continues to fall. It’s hard to say how this year will end,” he says. Answering the question: “What would he invest $1 billion in now if he had it? - After thinking and sighing, Polyakov answers: “We would only develop our agricultural segment: the most stable and profitable industry.”
In the diversified industrial holding JSC Concern Energomera, the business segment Electronic Materials and Components is represented by a group of subsidiaries of Monocrystal. For the third year in a row, we have held the title of the world's largest producer of synthetic sapphire for high-tech applications. Monocrystal is a vertically integrated company. We have the world's largest growth park, developed by our own corporate institute, as well as the world's latest sapphire processing technologies. Sapphire produced by us highest quality Applied to the production of high brightness light emitting diodes, consumer electronics, radio frequency integrated circuits and other high-tech optical, semiconductor and electronic applications. In addition, we are one of the world's leading manufacturers of pastes for metallization of solar cells used in photovoltaic systems. Today, our Company is a global leader in these industry markets, controlling about 49% of the global market for synthetic sapphires for the LED industry and 10% of the global market for metallization pastes for solar energy needs at the end of 2017.
The structure of the Electronic Materials and Components business segment includes three enterprises:
- plant "Monocrystal" (Stavropol, Russia);
- plant "BZS "Monocrystal" (Shebekino, Belgorod region, Russia);
- Monocrystal PV plant (Changzhou, Jiangsu province, China).
The main product lines of the business segment are:
- synthetic sapphire for optoelectronic applications;
- composite (metallization) pastes and powders for the needs of solar energy (photovoltaics).
Over the past 5 years, the Monocrystal company has increased its synthetic sapphire production volumes 9 times, investing more than $220 million in capacity expansion.
We believe that our Company’s leadership in global markets is ensured by:
- advanced production system
- High ability to advance technology faster than others and create best-in-class products
- highly qualified personnel.
About 95% of our products are supplied to more than 20 countries in Southeast Asia, Europe and the United States - regions that determine the dynamics of the global LED, mobile electronics and solar energy markets.
In 2016, Monocrystal JSC won the Development Award established by Vnesheconombank in the category “Best Export Project in Russia”. The State Corporation Vnesheconombank (one of the key institutions for implementing state economic policy) and Monocrystal JSC entered into a Memorandum of Cooperation in 2016. The document provides for a comprehensive mechanism of state support for the Russian company, a world leader in the industry's high-tech markets.