Here Are the Details of Apple’s Huge Sapphire Deal

  Google+  Twitter | + More Articles
  • Like on Facebook
  • Share on Google+
  • Share on LinkedIn

Source: www.gtat.com

As reported by Seeking Alpha earlier this week, GT Advanced Technologies (GTAT) revealed a $500 million-plus sapphire supply deal with Apple (NASDAQ:AAPL) in its third quarter earnings report. Sapphire, also known as corundum, is an extremely hard scratch-resistant material that Apple already uses as a protective cover for the rear camera lens and the Touch ID fingerprint scanner on the iPhone 5S.

However, the iPhone maker’s supply deal with GT Advanced Technologies may be even more significant than previously thought, reports All Things D. As noted by Cantor Fitzgerald analyst Brian White via All Things D, GT Advanced Technologies has predicted that the 2014 revenue from its sapphire sales will be in the range of $480 million to $640 million. In contrast, GT Advanced Technologies has only made $28.9 million from sapphire sales so far this year.

This suggests that Apple is planning to dramatically expand its use of sapphire far beyond its current use as a covering for particularly sensitive iPhone components. Although Apple currently uses Corning’s (NYSE:GLW) Gorilla Glass for its devices’ touch screens, the scope of GT Advanced Technologies’ deal suggests that the Cupertino-based company may soon be fully switching to sapphire crystal. On the other hand, Apple may simply be ramping up its sapphire supply in anticipation of a new product, such as an iWatch.

Although sapphire is more scratch-resistant than Gorilla Glass, it is also significantly more expensive to produce. According to Corning, Gorilla Glass costs “less than a tenth of sapphire.” However, Apple may have already found a method to lessen some of the prohibitive production costs associated with sapphire.

Earlier this year, Apple published a patent that outlined new methods for manufacturing and fusing sapphire sheets together. In the patent titled, “Sapphire Laminates,” Apple noted that sapphire’s extreme hardness makes “cutting and polishing the material both difficult and time consuming.” However, the Apple’s proposed method would allow the company to efficiently manufacture sapphire “windows, mirrors, cover glass, lenses and so forth in cameras, computers, mobile devices, watches, display devices, touch screens, and clocks, among other things.”

Although it is not known if Apple will completely abandon its use of Gorilla Glass, the iPhone maker’s significant investment in a sapphire manufacturer has made some investors a little skittish of Corning. Corning’s stock has slipped 1.06 percent since the news broke on Monday. Here’s how Apple has traded over the past five trading sessions.

236

Follow Nathanael on Twitter (@ArnoldEtan_WSCS)

Don’t Miss: Does This Apple Patent Offer Yet Another iWatch Clue?

More Articles About:

To contact the reporter on this story: staff.writers@wallstcheatsheet.com To contact the editor responsible for this story: editors@wallstcheatsheet.com

Yahoo Finance, Harvard Business Review, Market Watch, The Wall St. Journal, Financial Times, CNN Money, Fox Business