More Evidence That Apple Is Working on a Sapphire iPhone

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Source: www.gtat.com

Source: www.gtat.com

Apple’s (NASDAQ:AAPL) interest in sapphire has been well known ever since the company made a $578 million investment in a sapphire manufacturing facility run by GT Advanced Technologies (or, GTAT) last year. At the time, it was unclear if Apple simply wanted to continue using sapphire as a protective covering for the Touch ID fingerprint scanner and the iPhone’s camera lens, or if the sapphire produced at the Arizona-based plant was intended for something else. However, new documents recently uncovered by 9to5Mac’s Mark Gurman and analyst Matt Margolis provide strong evidence that the GT Advanced Technologies plant will be producing sapphire displays for the next-generation iPhone.

Gurman and Margolis previously speculated that Apple was developing a sapphire-covered iPhone based on a letter written by Apple’s Deputy Director of Global Compliance Jim Patton to U.S. Foreign Trade Zone official Andrew McGilvray. In the letter, the Apple executive revealed that the company was hoping to have the sapphire plant opened by February in order to produce a “critical new sub-component” for an Apple product. The phrase, “critical new sub-component,” seemed to suggest that the sapphire would be used for something else besides a protective covering for small components.

However, new import/export documents obtained by Gurman and Margolis offer even more conclusive proof. The documents show that GT Advanced Technologies recently ordered Intego Sirius Sapphire Display Inspection Tool components. As noted by 9to5Mac, these “inspection tool components” are specifically designed to inspect “display-grade components.” In other words, Apple will be making sapphire displays at the plant in Arizona, not just small Touch ID fingerprint scanner covers or camera lens covers.

According to Seeking Alpha, when GT Advanced Technologies first announced the partnership with Apple, it noted that the California-based company’s investment “accelerated the development of its next generation, large capacity ASF [Advanced Sapphire Furnaces] furnaces to deliver low cost, high volume manufacturing of sapphire material.” Despite the large investment, it was initially unclear if all of the sapphire production at the plant would be dedicated to Apple.

However, as noted by 9to5Mac, GT Advanced Technologies’ recent filing with the Securities and Exchange Commission seems to indicate that all of the sapphire manufacturing at the Arizona plant will be exclusively for Apple. Per the Master Development and Supply Agreement filed with the SEC, “[N]either GTAT, nor any GTAT Related Entities, will directly or indirectly, without Apple’s express written permission: (i) supply to any entity (other than Apple) any [***], nor (ii) license to any entity (other than Apple) [***] nor (iii) provide services [***] to any entity (other than Apple) or otherwise enable any such entity to use or produce sapphire goods (whether for the benefit of such entity or for any third party), in each case for use in or in connection with Consumer Electronics Products.” It should be noted that the asterisks indicate portions of the document that have been redacted for confidentiality purposes.

Based on the 518 sapphire furnace and chamber systems that GT Advanced Technologies has already received, Margolis estimated that the plant already has the capability to produce between “103 million and 116 million ~5-inch displays per year.” Additional machines on order could further boost the plant’s production by another 84 million to 94 million displays, reports 9to5Mac. Although the Corning (NYSE:GLW) Gorilla Glass currently used for Apple’s iPhones is relatively durable, sapphire is an even harder and more scratch-resistant material.

Follow Nathanael on Twitter (@ArnoldEtan_WSCS)

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