Rubicon Technology, Inc., a provider of sapphire substrates and products to the LED, semiconductor, and optical industries, today reported financial results for its first quarter ended March 31, 2014.

The Company reported first quarter revenue of $14.3 million as compared with $11.5 million in the prior quarter. The general lighting segment of the LED market continued to strengthen in the first quarter as adoption of this disruptive technology continues to gain momentum. Overall LED growth in the quarter was tempered by seasonality associated with the backlighting market. Demand from this market is typically lower at the beginning of the year. As a result, overall demand in the first quarter was similar to the prior quarter and sapphire pricing, therefore, remained fairly consistent with the previous quarter.

The Company reported progress in growing the wafer side of its business. They received their first production order for their recently introduced patterned sapphire substrates which will be delivered in the second quarter. They also received their first production order of four-inch polished wafers which started in the latter part of the first quarter.

Raja Parvez, President and CEO of Rubicon, commented, “Patterned sapphire substrates (“PSS”) and polished wafers are an important part of our strategy and I am pleased with the sales progress we made in the quarter.”

However, costs in the wafering operations were high in the quarter resulting in an increase in pre-tax loss from $9.1 million in the fourth quarter to $10.9 million in the first quarter. Wafer costs were higher than normal due to the large number of PSS samples produced and the cost of establishing a four-inch polishing line. In addition, due to the increased number of wafers in inventory at the end of the period and wafer costs exceeding market price, there was a $1.1 million adjustment to align wafer inventory to market value.

William Weissman, Rubicon’s CFO, commented, “Idle plant and development costs at our wafering facility are the main cause of our negative margins. However, utilization will be improving with the recent sales activity and we expect wafer costs to come down over the course of this year as we move from development to production.”

The Company’s net loss in the first quarter was $0.43 per share. The Company established a tax valuation allowance in the fourth quarter and consequently does not currently record a tax benefit on its Statements of Operations.