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By Michael Kanellos

A sapphire weighing in at 441 pounds was revealed to the world earlier this month.

But, no, it's not going to a jeweler. You'll probably find parts of it in notebooks later this year.

Rubicon Technology (NASDAQ:RBCN) synthetically crafted the stone, which is essentially one massive crystal, as part of its ongoing effort to expand the market for light emitting diodes, the solid state light sources that are expected to see an upsurge in demand in the next few years. Unlike microprocessors or memory chips, LEDs are not made from silicon substrates.

"People try it, but silicon is not a good match," said senior vice president of marketing Hap Hewes. Instead, LED makers deposit gallium nitride onto sapphire wafers to make their products.

Thus, that massive stone is going to be melted down at 2,300 degrees and turned into 4-inch diameter wafers.

"That's about half of the temperature of the surface of the sun," Hewes adds. "Sapphire is the second hardest material."

From a technical standpoint, LEDs are perhaps the best light sources in the world (see Missile Defense Tech Lights Luxury Condos). The chips can last up to 50,000 to 60,000 hours, emit a variety of colors of light, and now emit light in tones and temperatures that humans find comfortable and enjoyable. The "alien autopsy" shades of early LED bulbs and flashlights are fading away.

But, oops, there's the price. An LED bulb that emits about the same kind and quality of light as a 60-watt incandescent bulb or a 15-wall compact florescent can cost $60 to $90. Cheaper versions are available, but the light quality is often shoddy, says, among others, Jim Parks, who runs energy efficiency programs at the Sacramento Municipal Utility District.

To bring down that price, component suppliers and chip makers have been tinkering with ways to cut their own costs. The sapphire substrate accounts for about 5 percent to 10 percent of the overall cost of an LED, said Hewes.

To cut costs, Rubicon has been expanding the diameter of its wafers. The larger the wafers, the larger number of LEDs that can be made simultaneously, which in turn means a lower cost per chip. Two-inch diameter wafers remain the industry standard. Later this year, Rubicon will be able to deliver three- and four-inch wafers in volume. Ideally, the four-inch wafers will result in more than twice the number of chips per wafer (think ∏r2) with a lower increase in overall costs.

It is also working on six-inch wafers. (Silicon wafers are much larger. Large chipmakers like Intel use 12-inch wafers in its current fabs.)

There is also experimentation in substrates. Some companies are continuing to try to produce LEDs on silicon, but Hewes claims that it won't have a major impact for three to five years at best. Others are also trying aluminum nitride substrates, but they remain "unbelievable expensive," he claimed. A wafer from that material might cost $5,000. An equivalent sapphire wafer would cost $15 to $20.

Despite the high prices for LEDs, volumes are growing. Notebook makers are already stocking up. "Notebooks are a no-brainer," he said. By the fourth quarter, nearly 90 percent of the backlights in notebooks will be LEDs. Apple and Dell have already been rapidly adopting LEDs.

Big TV makers are also rapidly adopting LEDs as backlights (Scott Alberts, a venture partner at DCM, largely agrees that demand is somewhat strong from notebook and LED makers).

Street lighting will follow. But LEDs in your house?

"In 2011, you'll see demand kick in for replacing regular bulbs," said Hewes.

Source: Light Emitting Diodes: Rubicon Synthetically Creates World's Biggest Sapphire