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Apple signs $578M sapphire deal with GT Advanced Technology

post #1 of 54
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GT Advanced Technologies Inc. announced a multi-year, $578 million contract with Apple to supply advanced sapphire material.



The contract, detailed in GT's quarterly results announcement, involves the Arizona factory that Governor Jan Brewer announced would create 700 jobs and employ 1,300 construction workers.

Apple's investment is a prepayment funding the accelerated development of GTAT's "next generation, large capacity" Advanced Sapphire Furnace, which is designed to produce high quality sapphire material at a breakthrough low price.

"Based on 40 years of proven sapphire production and crystalline growth process technology," GT states, "the ASF combines a highly automated, low risk operating environment capable of producing consistently uniform sapphire boules that yield high quality material for a lower cost of ownership."

Apple is building the facility that will house the GT-owned ASF equipment, and GT will reimburse Apple over the five year contract, beginning in 2015. The contract stipulates a minimum level of capacity and involves supply exclusivity for Apple.

Apple's infusion of capital is critical for GT because production from the new ASF equipment is initially expected to generate much lower margins than the company has historically earned. However, following the Apple deal GT restated its 2014 revenue range to $600 to $800 million (up from 2013's revenue projection of roughly $550 million), noting that the "sapphire segment [is] expected to contribute approx. 80% of the year's revenue" and projecting 2014 revenues to double by 2016.



The deal provides Apple with a new supply of sapphire, which it currently uses in camera lenses and for the protective disk that serves as the Touch ID home button for iPhone 5s (depicted above). Sapphire is also used in LED production, as GT describes in the above video.

Sapphire, a crystalline form of aluminum oxide, can also be used to create an advanced virtually unscratchable alternative to silicon dioxide conventional glass, as described below. It's a potential alternative to Corning's potassium-enhanced Gorilla Glass, which Apple currently uses in its iPhone screens. Sapphire can be made thinner, and therefore lighter, but has historically also been more expensive.



"We are very excited about this agreement with Apple," GT's president and chief executive Tom Gutierrez said in a statement, "as it represents a significant milestone in GT's long term diversification strategy."
post #2 of 54
no mention of GT's patents. but that has to be part of the deal too ...
post #3 of 54
Quote:
Originally Posted by Alfiejr View Post

no mention of GT's patents. but that has to be part of the deal too ...

GT has to pay Apple back for the build costs beginning in two years. Apple didn't buy the company so unlikely to have bought the patents. It probably has more to do with Apple needing to ensure a steady supply and no vendors willing to make the upfront investment in plant to guarantee it.
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post #4 of 54

This is an interesting twist. Most manufacturers will changer the OEM a fee to develop something for the OEM and the OEM can pay it upfront or amortized it over all the product they buy. In this case Apple is paying the up front cost for this company to go off and do the engineering to build stuff for them but they have to pay Apple back for the investment. 

 

I have not seen that one done before.

post #5 of 54
Sapphire watch crystals....hmm

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post #6 of 54
It's definitely not only for TouchID, but iWatch faces. They'd need a ton of glass for them, and sapphire + liquidmetal = nearly indestructible, yet literally a jewel of a piece.
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post #7 of 54

I doubt this is for home buttons and camera windows - not at that price.  Apple must have something else in mind.  The watch?

post #8 of 54
Sapphire glass has no elasticity of any measure without fracturing. This is the sensor interfaces for all future hardware that most certainly will include the Mac Mini, Mac Pro, iMac, iPad, iPhone, iPod Touch, AppleTV, etc.
post #9 of 54
Thinner. Lighter. More expensive. Higher quality.
Sounds like apple
post #10 of 54
This is a great move by Tim Cook with Apple's dollars! Tim has peered into the future and has seen possible bottlenecks in his supply chain that could cause problems for Apple. Sharp is no longer independent. Neither is Corning. Both companies have the same Apple competitor as a partner. With this five-year exclusive supply investment, Apple can chart a glass path that does not require Gorilla glass from Corning. If we learn Apple has invested in an LCD company, Sharp will be cut out of the supply chain. And with 4K displays needed for the upcoming Mac Pro, I think there will be more announcements made in the coming weeks. Stay tuned folks!!!!!
post #11 of 54
This capital investment value >> icahn's buy back value ( not talking about absolute dollars)
post #12 of 54
Should Apple just buy them?

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Citing unnamed sources with limited but direct knowledge of a rumoured device - Comedy Insider (Feb 2014)
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post #13 of 54
Tim Cook is kicking Icahn's butt.

This is the best way to spend Apple's billions - to spend on the supply and manufacturing chain so that Apple can make even more billions. This is textbook Tim Cook.
post #14 of 54
Quote:
Originally Posted by cnocbui View Post

I doubt this is for home buttons and camera windows - not at that price.  Apple must have something else in mind.  The watch?

Definitely not. Apple wouldn't pour half a billion dollars into something with no proven market. This must be for the various "i" device cameras and home buttons. IMO, this alone indicates the strength of Apples product pipeline.

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post #15 of 54

In one move, Apple has put its competitors into a supply chain vise.  Sounds to me like Apple wants to transform sapphire from a low volume, high margin material into a higher volume, lower margin material that competitors will not be able to match in the short-term without substantial investments of their own.  The rumors of sapphire glass replacing Gorilla Glass have been stirring for at least the past year, and with their camera lenses and Touch ID buttons already using sapphire glass, adding the material to the touchscreen would be the logical next step for Apple. 

 

Apple is both willing and able to push the envelope with the use of materials to differentiate their products (and support higher margins).  And they have a big enough cash reserve available to build significant manufacturing capacity without depressing margins or taking on debt in the process.  Do any Android OEMs seem willing to go in this direction, given the significant upfront capital outlay required and the low margins for most Android OEMs? 

post #16 of 54
Sapphire crystal screen + Liquid Metal back is going to make a hell of a iPhone 6. Virtually indestructible. Stay tuned folks. And read this:

http://acceptingpayments.quora.com/Apple-Partners-With-Sapphire-Manufacturer-To-Build-A-Joint-US-Plant-In-Arizona
post #17 of 54
Quote:
Originally Posted by SpamSandwich View Post

Definitely not. Apple wouldn't pour half a billion dollars into something with no proven market. This must be for the various "i" device cameras and home buttons. IMO, this alone indicates the strength of Apples product pipeline.

I disagree. There's nothing unproven about this product. I'd say people's instincts are correct and this investment is for something besides the correct uses. Apple should seriously considering buying this company. If possible I'd love to longer require screen protection as a rule.
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Citing unnamed sources with limited but direct knowledge of a rumoured device - Comedy Insider (Feb 2014)
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post #18 of 54
Samsung will either fight to have Sapphire 1st or right after iPhone. *Not a joke!

Also I hope sapphire can finally be more impact friendly since that is the biggest caveat of iPhone/iPad.
post #19 of 54
Quote:
Originally Posted by TylerD View Post

Sapphire crystal screen + Liquid Metal back is going to make a hell of a iPhone 6. Virtually indestructible. Stay tuned folks. And read this:

http://acceptingpayments.quora.com/Apple-Partners-With-Sapphire-Manufacturer-To-Build-A-Joint-US-Plant-In-Arizona

That phone design is so badly thought out and has zero advantages over physical volume buttons and a few negatives. And laser cutting a block of sapphire crystal doesn't sound plausible either given that you can't laser cut to a particular depth like that in any material that I know of.

The guy mentions that he is a shareholder, but that doesn't automatically tell me he is a legit person.

Quote:
Apple will deploy Sapphire as the full screen in iPhone 6. In fact one could say that the iPhone 6 will be basically a laser carved Sapphire rectangle with a liquid metal backing perhaps with some Graphene in use. It will be the most durable smartphone ever made. Being made of pure Sapphire gem and liquid metal the entire iPhone will be reinvented and reconcieved.

What in the name of God is he talking about? I'm going to go out on a limb and predict that none of that will come through. Not one bit. A sapphire screened iPhone makes sense, but wouldn't that have happened by now? And a liquid metal machined chassis makes way more sense than a sapphire body. And that would be cost prohibitive compared to aluminium.
Edited by Ireland - 11/4/13 at 5:19pm
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post #20 of 54
If you watch the video, one black of sapphire is going to make at most 500 iPhone screens. Probably less. Apple would need 1000 machines to meet production needs. Probably more. The current plant has only 60 machines. So very unlikely for iPhone screens. What would completely lose performance or easily scratch? Camera lenses. Touch ID sensors. A watch crystal that could bang into walls.
post #21 of 54

Yeah, as cool as a Sapphire iPhone screen would be, I just can't see the production reaching the needed scale anytime soon.  Apple sells 10s of millions of iPhones per quarter!  Either they figure out a way to make this stuff much more quickly and easily, or we're still a ways away from Sapphire screens.

 

Either that, or I completely misunderstand how this is all working.

 

I can easily see this being used for TouchID and the possible watch.  As has been talked about a great deal here in other threads, in the modern world a watch is really a fashion accessory more than anything.  And these "smart watches" are just hideous, so far.  So, IF -- and I still think that's a big if -- Apple chose to make some sort of smart watch, it would also have to look damned good, and not like a reject from a TNG episode.

 

Maybe this could help with that.

post #22 of 54
Speaking of exotic materials, did anyone else notice that the SIM slot ejection tool has made a reappearance in the iPad Air packaging? But I am guessing it is no longer made out of the "bouncy" metal. It no longer has the flattened surfaces and sharp edges that characterized it—now more like paper clip metal.
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post #23 of 54
Another use is in LED's as lighting for the spaceship campus, cutting its energy use down substantially.
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post #24 of 54
So many great comments in this thread.
post #25 of 54
maestro64 - This isn't the first time. I'm sure other companies do this too, but it helps to have a lot of cash. It is great to see Apple is using their capital to push new areas forward. This seems to be lacking in much of the industry. Probably too much bottom feeding outside of Apple.
post #26 of 54
Quote:
Originally Posted by Woochifer View Post

In one move, Apple has put its competitors into a supply chain vise.  Sounds to me like Apple wants to transform sapphire from a low volume, high margin material into a higher volume, lower margin material that competitors will not be able to match in the short-term without substantial investments of their own.  The rumors of sapphire glass replacing Gorilla Glass have been stirring for at least the past year, and with their camera lenses and Touch ID buttons already using sapphire glass, adding the material to the touchscreen would be the logical next step for Apple. 

Apple is both willing and able to push the envelope with the use of materials to differentiate their products (and support higher margins).  And they have a big enough cash reserve available to build significant manufacturing capacity without depressing margins or taking on debt in the process.  Do any Android OEMs seem willing to go in this direction, given the significant upfront capital outlay required and the low margins for most Android OEMs? 

Only Samsung could possibly do it, but the Android phone business is much lower margin business and the end users are too unsophicated to care if it's a glass screen or a sapphire screen...or even a plastic screen for that matter. The rest of the Android smart phone manufacturers just don't have the volume of production or the ready cash to throw their weight around.

Apple keeps raising the bar; 64 bit CPUs, motion processing M7 chips, finger print ID, high quality camera lenses, top customer service, huge ecosystem... they are building a formidable strong case for their products, and their products have a caché halo... something that the customer bestows on a product.

With the USPO giving Apple's multi-touch patents the blessing, and Rockstar's seven patent infringement suit's files, the Android platform will be in it's own world of hurt in the near future.
post #27 of 54
Quote:
Originally Posted by Robin Huber View Post

Speaking of exotic materials, did anyone else notice that the SIM slot ejection tool has made a reappearance in the iPad Air packaging? But I am guessing it is no longer made out of the "bouncy" metal. It no longer has the flattened surfaces and sharp edges that characterized it—now more like paper clip metal.

Truly, but how many tablet buyers even know what that object is for, or even care, for that matter. As long as the Apple employee at the genius bar has the tool, it's all good.
post #28 of 54
Quote:
Originally Posted by AaronJ View Post

Yeah, as cool as a Sapphire iPhone screen would be, I just can't see the production reaching the needed scale anytime soon.  Apple sells 10s of millions of iPhones per quarter!  Either they figure out a way to make this stuff much more quickly and easily, or we're still a ways away from Sapphire screens.

Apple plans years in advance so they are the market drivers and everyone else are reactive to Apple's moves. This plant will provide for 2014's or 2015's devices needs.
post #29 of 54
Quote:
Originally Posted by Minnesota_Steve View Post

If you watch the video, one black (sic) of sapphire is going to make at most 500 iPhone screens. Probably less. Apple would need 1000 machines to meet production needs. Probably more. The current plant has only 60 machines. So very unlikely for iPhone screens. What would completely lose performance or easily scratch? Camera lenses. Touch ID sensors. A watch crystal that could bang into walls.

I think you underestimate the yield by at least 20x... and those solid sapphire cylinders you saw are called "boules" not blocks.
post #30 of 54
Quote:
Originally Posted by Macky the Macky View Post


Apple plans years in advance so they are the market drivers and everyone else are reactive to Apple's moves. This plant will provide for 2014's or 2015's devices needs.

 

Now that I can completely believe.

post #31 of 54
Synthetic sapphire + Liquidmetal iPhone Air in 2014?
Thinner with an OLED screen maybe?
Sign me up.

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post #32 of 54
Who else thought of the book The Diamond Age, by Neil Stephenson when you read this story? I think odds are very high that it will be Apple who eventually brings to market the first nano-assembled consumer electronics computing devices.

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post #33 of 54
Quote:
Originally Posted by mdriftmeyer View Post

Sapphire glass has no elasticity of any measure without fracturing. This is the sensor interfaces for all future hardware that most certainly will include the Mac Mini, Mac Pro, iMac, iPad, iPhone, iPod Touch, AppleTV, etc.

 

Correct. I doubt sapphire will replace gorilla glass for the main screen of large devices because it will be very brittle.  Though strong, sapphire is substantially heavier than glass (just as titanium is heaver than aluminum). To make a light enough screen the sapphire would need to be too thin to be durable.  On the other hand, sapphire IS very scratch resistant due to its hardness, and it  transmits a greater range of the electromagnetic spectrum (UV) than glass, thus making it a superb lens material.

post #34 of 54
Quote:
Originally Posted by TylerD View Post

Sapphire crystal screen + Liquid Metal back is going to make a hell of a iPhone 6. Virtually indestructible. Stay tuned folks. And read this:

http://acceptingpayments.quora.com/Apple-Partners-With-Sapphire-Manufacturer-To-Build-A-Joint-US-Plant-In-Arizona


Whatever use Apple had in mind for liquidmetal has long since been shelved in favour of an alternative design that doesn't require it.

post #35 of 54
Quote:
Originally Posted by TeaEarleGreyHot View Post
 

 

Correct. I doubt sapphire will replace gorilla glass for the main screen of large devices because it will be very brittle.  Though strong, sapphire is substantially heavier than glass (just as titanium is heaver than aluminum). To make a light enough screen the sapphire would need to be too thin to be durable.  On the other hand, sapphire IS very scratch resistant due to its hardness, and it  transmits a greater range of the electromagnetic spectrum (UV) than glass, thus making it a superb lens material.

 

No, saphire has significantly less light transmission than good optical glass and cameras systems usually go to some trouble to exclude IR and UV as it isn't helpful for taking normal photos.  Every lens element would have to be saphire if you wanted to pass invisible wave lengths and those would be uneconomical to manufacture.

post #36 of 54
Quote:
Originally Posted by Ireland View Post


That phone design is so badly thought out and has zero advantages over physical volume buttons and a few negatives. And laser cutting a block of sapphire crystal doesn't sound plausible either given that you can't laser cut to a particular depth like that in any material that I know of.

Actually you can with a pulsed Yag laser. To my knowledge, it was only used for carving carbon electrodes for electroerosion but it was a few years ago ( nearly 15 in fact) and this probably evolved. Very slow but capable to do very fine engraving.

 

Now, wether it is possible in an optically near transparent material is another question.

 

It is called laser milling : http://www.manufacturelink.com.au/processes/laser-machining-3d-laser-milling.aspx

post #37 of 54
Quote:
Originally Posted by lukefrench View Post
 

Actually you can with a pulsed Yag laser. To my knowledge, it was only used for carving carbon electrodes for electroerosion but it was a few years ago ( nearly 15 in fact) and this probably evolved. Very slow but capable to do very fine engraving.

 

Now, wether it is possible in an optically near transparent material is another question.

 

It is called laser milling : http://www.manufacturelink.com.au/processes/laser-machining-3d-laser-milling.aspx

 

Interesting. What next? I'd imagine it's too slow however.

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post #38 of 54
Quote:
Originally Posted by mdriftmeyer View Post

Sapphire glass has no elasticity of any measure without fracturing. This is the sensor interfaces for all future hardware that most certainly will include the Mac Mini, Mac Pro, iMac, iPad, iPhone, iPod Touch, AppleTV, etc.

Yes, but you're not likely to drop your watch.  And you rarely bang it very hard against anything.  The scratchproof aspect is very good, though, so I think this very well could be for the watch face.

 

Thompson

post #39 of 54
What about resistance to impact? Is it more or less resistant than Gorilla Glass?
Diamond, for example, is very fragile to impacts.
post #40 of 54
Quote:
Originally Posted by Ireland View Post

Should Apple just buy them?


Blasphemy! Why didn't you just use stocks? :P

 

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