Speculators drive up Asian sapphire stocks amid questionable rumors about Apple's 2015 iPhone

Posted:
in iPhone edited November 2014
Several Taiwanese sapphire manufacturers have seen their stock price increase sharply in recent days as Chinese media continues to push reports of the material making its way to a next-generation Apple handset.



Three Taiwan-based firms -- Crystalwise Technology Inc., Acme Electronics Corp., and Highlight Tech Corp. -- booked gains of seven percent on Tuesday, according to Focus Taiwan. The Taiwan Stock Exchange limits price fluctuations to within seven percent of a stock's opening reference price each day.

The gains reinforce Apple's role as one of the most important customers in the global supply chain, capable of making or breaking smaller companies.

For instance, shares of GT Advanced Technologies --?a sapphire equipment supplier that partnered with Apple on a deal worth hundreds of millions of dollars --?surged from a low of $2.65 in 2013 to $19.77 in July of this year, as the rumor waters frothed with reports that Apple would use the material in the iPhone 6 series.

That eventually turned out to be untrue, and GTAT shares plummeted to just $0.44 before the company filed for bankruptcy in October, severing the agreement with Apple in the process. The fall was so harsh that analyst Matt Margolis, one of GTAT's leading proponents, was forced to issue an apology.

"I want to apologize to the PTT subscribers who put their hard-earned money on the line by investing in GT Advanced Technologies," Margolis wrote. "I made a call on GTAT. I was 100% wrong and as a result some of you lost a great deal of your wealth."

Asia Securities Investment Consultant analyst Chang Chih-cheng told Focus that a similar issue could affect investors in the Taiwanese firms, warning that a pullback was possible.

"But I think the media reports on the iPhone 7 seem to be a little premature as Apple has just unveiled the two iPhone 6 models. I prefer to say the current gains are simply technical in nature," Chang said.
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Comments

  • Reply 1 of 23

    Apple went with GTAT and an advanced, experimental manufacturing process for a reason. Something tells me that if they do go to sapphire screens, it's likely not to be until the iPhone 7S or so. Seems like they need a few more years to work out the kinks. I'd be shocked if they had it ready for the 6S.

  • Reply 2 of 23
    apple ][apple ][ Posts: 8,360member
    Quote:

    Originally Posted by AppleInsider View Post



    "I made a call on GTAT. I was 100% wrong and as a result some of you lost a great deal of your wealth."

     

    At the end of the day, people are responsible for their own money and investments. If they choose to listen to analysts or whoever, then that is their prerogative, but the ultimate responsibility lies with themselves.

  • Reply 3 of 23
    Quote:

    Originally Posted by Apple ][ View Post

     

     

    At the end of the day, people are responsible for their own money and investments. If they choose to listen to analysts or whoever, then that is their prerogative, but the ultimate responsibility lies with themselves.




    It also goes back to my point that any worthwhile investment advice would never be shared with the general public. Good advice costs money.

  • Reply 4 of 23
    Quote:

    Originally Posted by Apple ][ View Post

     

     

    At the end of the day, people are responsible for their own money and investments. If they choose to listen to analysts or whoever, then that is their prerogative, but the ultimate responsibility lies with themselves.


    Yes, and maybe the easiest way to put it into perspective is to view the stock market as legalized gambling. Higher risk comes the potential of higher reward - or big losses (like people losing their life savings and that of their families by investing every dollar they had saved up into an Apple supplier in Arizona...

  • Reply 5 of 23

    Calling them 'speculators' makes it sound like they're up to something shady, and like engaging in illegal gambling.

     

    This sounds to me like a perfectly rational, smart group of folks who are, based on an evolving news story, looking for the possibility of getting a higher return by taking on higher risk.

  • Reply 6 of 23
    Quote:

    Originally Posted by pfisher View Post

     

    Yes, and maybe the easiest way to put it into perspective is to view the stock market as legalized gambling. 


    Sorry, but that's BS. If you truly think that's the case, you understand nothing about diversification, dollar-cost averaging, and investing for the long haul.

     

    Good luck with finding the resources for things such as your retirement and your child's college education.

  • Reply 7 of 23
    Quote:
    Originally Posted by anantksundaram View Post

     

    Calling them 'speculators' makes it sound like they're up to something shady, and like engaging in illegal gambling.


    Market speculation is not shady. And it doesn't sound shady, except to the ill-informed. So I'm not sure why you think it sounds shady, as you don't appear ill-informed.

  • Reply 8 of 23
    apple ][apple ][ Posts: 8,360member
    Quote:

    Originally Posted by anantksundaram View Post

     

    Sorry, but that's BS. If you truly think that's the case, you understand nothing about diversification, dollar-cost averaging, and investing for the long haul.

     

    Good luck with finding the resources for things such as your retirement and your child's college education.




    I agree with him and I agree with you too!

     

    Yes, there are smart ways to invest, but there is also a bit of gambling happening. All of those people playing those weekly options and so on, that is gambling in my opinion.

     

    I used to play a bit of poker online before, and I see that as less gambling than some of the stuff that takes place in the stock market.

  • Reply 9 of 23
    Calling them 'speculators' makes it sound like they're up to something shady, and like engaging in illegal gambling.

    This sounds to me like a perfectly rational, smart group of folks who are, based on an evolving news story, looking for the possibility of getting a higher return by taking on higher risk.

    There may be a rationale for every decision, but not all decisions are rational. ????
  • Reply 10 of 23
    Quote:

    Originally Posted by TheWhiteFalcon View Post

     

    Apple went with GTAT and an advanced, experimental manufacturing process for a reason. Something tells me that if they do go to sapphire screens, it's likely not to be until the iPhone 7S or so. Seems like they need a few more years to work out the kinks. I'd be shocked if they had it ready for the 6S.


    Agree with the part of being doubtful that the sapphire screens will arrive for next year's iPhones.  At the very least we'll have to wait till iPhone 7.

  • Reply 11 of 23
    Quote:

    Originally Posted by Apple ][ View Post

     

     

    At the end of the day, people are responsible for their own money and investments. If they choose to listen to analysts or whoever, then that is their prerogative, but the ultimate responsibility lies with themselves.




    Agree, and love the apology.  Are those worth anything?  I have tried to buy a coffee at Starbucks with them, turns out you can't.

  • Reply 12 of 23
    normmnormm Posts: 513member
    Sorry, but that's BS. If you truly think that's the case, you understand nothing about diversification, dollar-cost averaging, and investing for the long haul.

    Good luck with finding the resources for things such as your retirement and your child's college education.

    All investment involves some level of risk. The big difference between the stock market and a casino is that, historically, the overall odds have been significantly in favor of the investor. But remember that after the crash in 1929, it took the Dow 25 years to get back to pre crash levels. Your greater rewards are payment for risk.
  • Reply 13 of 23
    Quote:
    Originally Posted by anantksundaram View Post

     

    Sorry, but that's BS. If you truly think that's the case, you understand nothing about diversification, dollar-cost averaging, and investing for the long haul.

     

    Good luck with finding the resources for things such as your retirement and your child's college education.


    I think there is a misunderstanding. I think my point was missed my point on higher risk, higher reward. You don't dump a lot of money into one stock or new technology unless you are willing to gamble.

     

    For the record, I am well-diversified in low-cost Vanguard Admiral index funds and I do dollar-cost average every two weeks from my paycheck with employer match and we have benefited from the stock market very well the last several years, after being hammered in 2008 like everyone else. Also, my kids learned well enough about saving money and doing well in school to apply for scholarships and both mostly self-funded their educations and came out of college with money in the bank, including one who is finishing up grad school (at a private university in Europe, mind you) without any debt.

     

    I feel that one of the best things that you can do for your kids is spend time with them and teach them about hard work, being resourceful, frugality, staying out of debt, delayed gratification, the value of savings, and other things to make them successful - in money and other matters. And kids should find their own way through college, for the most part, so they have some skin in the game. Often people don't appreciate what's handed to them.

     

    I personally hold the view that the stock market is legal gambling. It's a healthy way to view the world when you go to invest and increase your risk exposure. And when the market drops 30% in a month, you don't freak out (too much).

     

    I assume, even based on historical returns, that when you even buy index funds, you are creating risk. I do believe that when you do buy an index fund or other fund (at least with Vanguard) that they say there are no guarantees on fund performance. And, to some people, you really are gambling when you are vested in stocks in retirement. Just saying. Lots of opinions out there. Everyone is entitled to one and is subject to change - day to day and hour to hour.

     

    Funny, when that Arizona plant doing work with Apple became public, I was thinking, hmmm, seems like a slam dunk to buy their stock. It can only go up and stay up, right? Then I thought it over and remembered that I will only (now) buy index funds. 

  • Reply 14 of 23
    Apple went with GTAT and an advanced, experimental manufacturing process for a reason. Something tells me that if they do go to sapphire screens, it's likely not to be until the iPhone 7S or so. Seems like they need a few more years to work out the kinks. I'd be shocked if they had it ready for the 6S.

    Was it experimental?
    I thought I had read that GTAT originally manufactured large sapphire furnaces, but it's original business model was to sell furnaces. Apple wanted someone to supply sapphire, so the deal was for GTAT to use those same furnaces to produce said sapphire.
  • Reply 15 of 23
    Quote:

    Originally Posted by pfisher View Post

     

    I think there is a misunderstanding. I think my point was missed my point on higher risk, higher reward. You don't dump a lot of money into one stock or new technology unless you are willing to gamble.

     

    For the record, I am well-diversified in low-cost Vanguard Admiral index funds and I do dollar-cost average every two weeks from my paycheck with employer match and we have benefited from the stock market very well the last several years, after being hammered in 2008 like everyone else. Also, my kids learned well enough about saving money and doing well in school to apply for scholarships and both mostly self-funded their educations and came out of college with money in the bank, including one who is finishing up grad school (at a private university in Europe, mind you) without any debt.

     

    I feel that one of the best things that you can do for your kids is spend time with them and teach them about hard work, being resourceful, frugality, staying out of debt, delayed gratification, the value of savings, and other things to make them successful - in money and other matters. And kids should find their own way through college, for the most part, so they have some skin in the game. Often people don't appreciate what's handed to them.

     

    I personally hold the view that the stock market is legal gambling. It's a healthy way to view the world when you go to invest and increase your risk exposure. And when the market drops 30% in a month, you don't freak out (too much).

     

    I assume, even based on historical returns, that when you even buy index funds, you are creating risk. I do believe that when you do buy an index fund or other fund (at least with Vanguard) that they say there are no guarantees on fund performance. And, to some people, you really are gambling when you are vested in stocks in retirement. Just saying. Lots of opinions out there. Everyone is entitled to one and is subject to change - day to day and hour to hour.

     

    Funny, when that Arizona plant doing work with Apple became public, I was thinking, hmmm, seems like a slam dunk to buy their stock. It can only go up and stay up, right? Then I thought it over and remembered that I will only (now) buy index funds. 


    I was going to say, "fair enough", but going to also point out that you said: "...maybe the easiest way to put it into perspective is to view the stock market as legalized gambling." This is, in my view, is an incredible overgeneralization about a phenomenon (the stock market) whose value is driven primarily by fundamentals. Fads and momentum can certainly matter in the short run, but there is an intrinsic value to the assets that constitute the stock market.

     

    Then, above, you repeated the same thing.

     

    Tell me: how do you diversify, dollar-cost average, and have a long horizon with "gambling" (legal or illegal is not particularly relevant)?

  • Reply 16 of 23
    Quote:

    Originally Posted by TheWhiteFalcon View Post

     

    Apple went with GTAT and an advanced, experimental manufacturing process for a reason. Something tells me that if they do go to sapphire screens, it's likely not to be until the iPhone 7S or so. Seems like they need a few more years to work out the kinks. I'd be shocked if they had it ready for the 6S.




    I don't think you put that level of output volume into the 'experimental' category. Apple was ramping up for something big, and something soon. That has now been pushed back as Apple probably could not replace orders at such a late date. 

     

    I am surprised that Apple has not purchased GTAT outright, but they probably will have that clause in all forward contracts :) 

  • Reply 17 of 23
    Quote:

    Originally Posted by Suddenly Newton View Post





    Was it experimental?

    I thought I had read that GTAT originally manufactured large sapphire furnaces, but it's original business model was to sell furnaces. Apple wanted someone to supply sapphire, so the deal was for GTAT to use those same furnaces to produce said sapphire.



    Someone else correct me if I'm wrong; I believe that what got GTAT into trouble was not just that they tried to become sapphire manufacturers, but that they promised that they would be able to increase the sapphire boule size significantly - something like 2x the normal size of such things.

  • Reply 18 of 23

    Someone else correct me if I'm wrong; I believe that what got GTAT into trouble was not just that they tried to become sapphire manufacturers, but that they promised that they would be able to increase the sapphire boule size significantly - something like 2x the normal size of such things.

    Larger size, yes. But I thought the reason Apple approached GTAT in the first place was because they had produced furnaces capable of making the larger boules, and GTAT wanted to sell these furnaces to Apple, but Apple didn't want to be a sapphire manufacturer, it wanted someone to supply them with the large sapphire boules (or finished sapphire cut from those boules). So it's supposed to be GTAT's furnaces that made the larger boules possible.
  • Reply 19 of 23
    Quote:

    Originally Posted by Apple ][ View Post

     



    I agree with him and I agree with you too!

     

    Yes, there are smart ways to invest, but there is also a bit of gambling happening. All of those people playing those weekly options and so on, that is gambling in my opinion.

     

    I used to play a bit of poker online before, and I see that as less gambling than some of the stuff that takes place in the stock market.


    It's only gambling if you don't know what you are doing, or don't know about the company you are investing in. Which admittedly is about 90% of all traders! But my point is, it doesn't have to be a 'gamble'.

  • Reply 20 of 23
    I am surprised that Apple has not purchased GTAT outright, but they probably will have that clause in all forward contracts :) 

    And do what with it? Apple doesn't want to own parts of its supply chain. I understand Apple buying strategic technology companies like NeXT, Anobit, Siri, AuthenTEC, and PrimeSense. But supply chain companies? When have they ever done that? The supply-chain business theoretically operates on leveraging economies of scale (and cheap labor). Running its own supply chain company--if it only served Apple--would drive up costs for Apple.
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