GT Advanced bankruptcy will not affect Apple Watch production, but brings iPhone into question

Posted:
in General Discussion edited November 2014
According to one well-connected analyst, GT Advanced Technologies' filing for Chapter 11 bankruptcy protection raises doubts as to whether sapphire will be used as a protective cover for a next-generation iPhone, as the tech giant is unlikely to source the material from another supplier.



In a research note obtained by AppleInsider, KGI analyst Ming-Chi Kuo said GT's bankruptcy filing will have little impact on Apple Watch manufacturing, but the development may affect future iPhones as Apple's main investment in the supplier was for iPhone touch panels.

Kuo notes that increasingly large iPhone screen sizes require a 6-inch sapphire ingot. Apple is said to prefer sapphire coming out of GT's advanced sapphire furnace (ASF) due to its resilience and superior drop test performance compared to material from other suppliers. As such, the company is unlikely to use sapphire from suppliers outside of GT Advanced for future projects, Kuo says.

"While GTAT's ASF sapphire isn't the only sapphire ingot source for iPhone sapphire cover lens that is being tested by Apple, we don't think Apple will turn to other suppliers given the notionally superior drop-test performance of GTAT's sapphire ingot," Kuo writes. "We believe Apple is still very interested in using sapphire as a material for iPhone cover lens."

The analyst warns that GT's bankruptcy mean ASF sapphire is facing technology bottlenecks in production, which raises uncertainty as to its use in future iPhone models.

Kuo sees a better outlook for the Apple Watch, however. As the device's screen is much smaller than that of an iPhone, drop test requirements are less stringent, so ingot manufacturing processes from other suppliers will likely suffice. Aside from GT Advanced, Apple may source sapphire from Hansol and Harbin Aurora Optoelectronics, which use less advanced sapphire growing processes.

Despite a huge $440 million investment from Apple, GT Advanced filed for bankruptcy on Monday. It was later reported that Apple withheld a $139 million payment for unknown reasons. It has been speculated that the move was triggered by GT's low cash on hand, which fell to well below a $125 million threshold that contractually allowed Apple to recoup the upfront investment.
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Comments

  • Reply 1 of 27
    Apple has the cash to pay off any creditors and just purchase the company outright, especially if it's for a song.

    While I don't think it was intentional, if that does end up happening it would be very Tramiel-esque...especially in light of the report that Apple didn't make their last supplier payment.

    Still not convinced sapphire is needed for an iPhone though.
  • Reply 2 of 27
    slurpyslurpy Posts: 5,362member
    Picked up a shitload of GT stock yesterday. Blows my mind that noone was recommending that. I could have sold today and made a few thousand profit (it hit $2). But I'm gonna hold.
  • Reply 3 of 27

    Slashgear has an article on this, and it looks pretty damn good for Apple.

     

    http://www.slashgear.com/gt-bankruptcy-puts-apple-in-control-of-sapphire-07349593/

  • Reply 4 of 27
    According to one well-connected analyst, GT Advanced Technologies' filing for Chapter 11 bankruptcy protection raises doubts as to whether sapphire will be used as a protective cover for a next-generation iPhone, as the tech giant is unlikely to source the material from another supplier.

    In a research note obtained by <em>AppleInsider</em>, KGI analyst Ming-Chi Kuo said GT's bankruptcy filing will have little impact on Apple Watch manufacturing, but the development may affect future iPhones as Apple's main investment in the supplier was for iPhone touch panels.

    So a Sapphire Covered iPhone - which has not been confirmed - has now been brought into question.

    And we are now able to confirm that Apple's main investment in the supplier was for iPhone touch panels? I must have missed that announcement from Tim... /s


    I know that Ming-Chi Kuo has made some accurate predictions in the past however I'm not about to believe anything in this report if Kuo is speculating about a sapphire covered iPhone that hasn't been announced. Kuo also goes on to say that Apple will be able to source Sapphire from other suppliers however there has been no factual information released to contradict GT Advanced Technologies' statement that they will continue manufacturing Sapphire for their client during chapter 11.
  • Reply 5 of 27
    shardshard Posts: 96member
    There is almost no way they can produce enough panels for the number of iPhone 6 and 6 plus being sold without a long period of stockpiling based on their existing output.
  • Reply 6 of 27
    sockrolidsockrolid Posts: 2,789member
    Really? People think that Apple is messing with GTAT just to lower their valuation and buy them out cheaply?

    Kinda makes sense. Like how Microsoft messed with Nokia by installing Elop, who lowered their valuation and allowed Microsoft to spend less on the acqusition. Of course, that acquisition hasn't worked out nearly as well as Apple acquiring GTAT would work out.
  • Reply 7 of 27
    charlitunacharlituna Posts: 7,217member
    Kuo is an idiot. Sapphire is not suitable for a full screen because a piece that size would be super fragile. One drop and it could shatter to pieces. And Apple has likely tested this and knows this. Which is why they aren't using it for the screens.
  • Reply 8 of 27
    tyler82tyler82 Posts: 1,029member
    Enough with the aluminum and outdated Gorilla Glass Apple, give us a Liquid Metal and Sapphire iPhone 7!
  • Reply 9 of 27
    charlituna wrote: »
    Kuo is an idiot. Sapphire is not suitable for a full screen because a piece that size would be super fragile. One drop and it could shatter to pieces. And Apple has likely tested this and knows this. Which is why they aren't using it for the screens.

    GTAT's technology is all around creating a singular crystalline sheet that would be applied on top of gorilla glass. (Atleast for now)
    Which would mean it would still have the structural rigidity of existing iPhones, but much harder scratch resistanct surface.
  • Reply 10 of 27
    solipsismxsolipsismx Posts: 19,566member
    charlituna wrote: »
    Kuo is an idiot. Sapphire is not suitable for a full screen because a piece that size would be super fragile. One drop and it could shatter to pieces. And Apple has likely tested this and knows this. Which is why they aren't using it for the screens.

    I wouldn't be so quick to jump to that conclusion. There are already sapphire displays on smartphones and I believe Apple has patents that use various lamination processes to make it both strong and hard.
  • Reply 11 of 27
    chabigchabig Posts: 641member
    Quote:

    Originally Posted by Slurpy View Post



    Picked up a shitload of GT stock yesterday. Blows my mind that noone was recommending that. I could have sold today and made a few thousand profit (it hit $2). But I'm gonna hold.



    Nobody ever recommends that because the shares will likely become worthless when the company exits chapter 11.

  • Reply 12 of 27
    charlituna wrote: »
    Kuo is an idiot. Sapphire is not suitable for a full screen because a piece that size would be super fragile. One drop and it could shatter to pieces. And Apple has likely tested this and knows this. Which is why they aren't using it for the screens.

    I, for one, am looking forward to shattergate 2015. And the 6S, the "S" is for shatter, sapphire, speed.
  • Reply 13 of 27
    MacProMacPro Posts: 19,523member
    slurpy wrote: »
    Picked up a shitload of GT stock yesterday. Blows my mind that noone was recommending that. I could have sold today and made a few thousand profit (it hit $2). But I'm gonna hold.

    Buy Low ... Man you have some big ones! Congrats. I did that with GM and got totally screwed. Then again I did it with Apple too and have no regrets there ... :D You win some you lose some.
  • Reply 14 of 27
    MacProMacPro Posts: 19,523member
    mazecookie wrote: »
    GTAT's technology is all around creating a singular crystalline sheet that would be applied on top of gorilla glass. (Atleast for now)
    Which would mean it would still have the structural rigidity of existing iPhones, but much harder scratch resistanct surface.

    I have not read that was possible before. So a sapphire lamination on Gorilla Glass eh?
  • Reply 15 of 27
    slurpy wrote: »
    Picked up a shitload of GT stock yesterday. Blows my mind that noone was recommending that. I could have sold today and made a few thousand profit (it hit $2). But I'm gonna hold.

    Very glad the volatility worked out in your favor, but best not to confuse luck with skill. :D
  • Reply 16 of 27
    hodarhodar Posts: 351member
    The piece that people are missing, is that using Hyperion (ion implanting technology), the Sapphire is exfoliated - not cut - it peels off the ingot in thicknesses of about 10 microns. A single sapphire crysal thick sheet - not a full screen thickness - just 10 microns thick. This is then bonded with a Gorilla Glass type substrate. Benefits? Sapphire sheet is pretty much impervious, but as it's only 10 microns thick and flexable - it's not going to shatter when dropped. The Gorilla Glass type product will flex, just like the sapphire sheet.
  • Reply 17 of 27

    The analyst has no clue what he is talking about. He is a moron. 

     

    Yes, sapphire glass is hard, but on a larger surface it will shatter way quicker then normal glass.

     

    Yes, the screen would not scratch, but just shatter instead.

     

    The main problem is that sapphire glass is not very flexible. It cannot absorb shocks very good. Even normal glass absorbs shocks better then sapphire glass because it's more flexible. 

     

    The missing flexibility is the issue why sapphire glass is not used to cover smart phones.

     

    There are more issues with it why you don't use it for smart phone covers. Price is not the main issue...

     

    Apple has uses for it in smaller parts (e.g. lens cover) and especially the Apple Watch where scratch resistance is the top priority. But for larger surfaces you need other transparent protection. But even with the smaller parts and now the watch, Apple needs a lot of high quality sapphire glass.

     

    Why is sapphire glass used in watches? Because watches are more exposed and scratch resistance is more important then drop protection. 

     

    The kicker with smart watches is that you cannot just put a normal sapphire glass on it. Here it gets complicated. You need to layer it, put multitouch, pressure sensitive stuff and all others stuff in between. And you need to mass produce it. That's what GTAT promised and couldn't deliver in time.

     

    See some of the patents Apple filed the last 24 months in regards to layering of smartphone surfaces. Even though they show the iPhone in these, they are Apple Watch related patents. It's not about laminating Gorilla Glass with a Sapphire Glass as you often read in the last month, which will not work as some imagine it would. 

     

    Apple never planned to cover an iPhone in sapphire glass, because it makes no sense for such a device.

     

    Anyway, the future will be in other transparent materials anyway if they are ever ready for mass production...

  • Reply 18 of 27
    maestro64maestro64 Posts: 5,039member

    There is so many stupid theory going around with this who GTAT thing.

     

    First people have to stop thinking an iphone with sapphire is coming anytime in the near future. Why, you see the test Apple puts phones through bending and twisting sapphire will shatter under those condition and Apple know this because already tested it. Crystal structures are brittle by nature this why it never good to make things which need flexibility out of material with a ridge crystal structure. This is why metals are not made from pure iron, or Aluminum, they put specific impurities into them to give them flexibility,

     

    Next Apple did not do this to get them cheap, plus they are already the large credit holder with the company So they could get screwed out of the money they all ready loan them. Also the company was having credit and cash flow issues prior to Apple involvement. Apple helped bail them out, and if they wanted them cheap they could have done it over a year ago.

     

    This company just screwed themselves they made promises to Apple and could not live up to them. You can bet Apple is not happy about this and was not what they wanted.

  • Reply 19 of 27
    And the man in moon may someday have an effect on Apple phones too. This "analyst" purports to know what Apple is doing with several different projects, non of which Apple has ever discussed publicly. He knows squat. I wouldn't give this guy a dime for his "research".
  • Reply 20 of 27
    radarthekatradarthekat Posts: 3,569moderator
    mazecookie wrote: »
    GTAT's technology is all around creating a singular crystalline sheet that would be applied on top of gorilla glass. (Atleast for now)
    Which would mean it would still have the structural rigidity of existing iPhones, but much harder scratch resistanct surface.

    It's exactly the opposite. The process Apple patented is a sapphire layer, with a very thin layer of gorilla-type glass on top. My speculation is that the gorilla glass layer would be laid down via chemical vapor deposition, to create a layer only a few molecules thick. The result would be a very tough, scratch-resistant sapphire screen that, because of the Gorilla glass top coating, would accept the oleophobic coating that resists fingerprint smudges. You see, that's the problem with sapphire being the top layer; the oleophobic coatings don't adhere to sapphire. And so what's the point of covering a super scratch resistant sapphire layer with a less scratch resistant Gorilla glass layer, you may ask? Why not just use Gorilla glass for the whole thing? Well, the idea is that the few molecules thick layer of Gorilla glass, needed to accept the oleophobic coating, is so shallow that scratches to it, which would go only as deep as the underlying sapphire layer, would be invisible to the human eye. Clever, eh? But, of course, the whole plan depends upon having sufficient supplies of sapphire, which doesn't seem to be the case this year.
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