Sapphire Won’t Replace Gorilla Glass, Touch ID Looms Large
Apple has purchased a factory ($100 million) and partnered with GT Advanced ($587 million) to produce sapphire crystal. That’s a big investment in a big facility, which has led to big speculation, though at least one obvious application isn’t being considered.
Without Gorilla Glass, the smartphone revolution would have been a lot less revolutionary and you can give Apple a lot of the credit for that — Gorilla Glass maker Corning had shelved the technology until Apple came calling.
We do not expect sapphire to replace Corning’s Gorilla Glass on the iPhone or iPad in the coming quarters; however, we believe sapphire could gain traction in new small form factor applications or high-end devices with Apple in the future.
For informed Apple watchers, this should come as no surprise. Fundamentally, although sapphire delivers a harder, more durable surface, it’s too expensive for larger displays and there are technical issues preventing adoption, as well.
Sapphire is great for smartphone and tablet camera lens covers, as well as a protective cover for the Touch ID fingerprint sensor in the iPhone 5S. Additionally, some high-end wristwatches also use sapphire crystal.
Sapphire: Clearly the Future?
That said, so far this year, Apple’s partner GT Advanced has generated $28.9 million in revenue from its sapphire products. After the new Arizona factory gets up to speed sometime in 2014, GT expects to increase sapphire crystal revenues by 15 to 16 times.
Moreover, Apple and GT have signed an exclusivity deal covering the plant’s output.
So, Apple’s going to be buying and using orders of magnitude more sapphire in its products. While some speculate that means the iWatch, which is certainly a possibility, I’ve speculated that Apple intends to roll out Touch ID in many more products in 2014.
Interestingly enough, that’s also an idea being touted by noted Apple analyst Katy Huberty, who sees services and Touch ID as key potential growth areas for Apple.
Services a meaningful opportunity. As we highlighted in our June 4, 2013 note, iOS usage stats far exceeds Android. Combining 575M+ high-end consumer accounts (most linked to credit cards or ACH) with investments Apple is making in cutting edge hardware, like the fingerprint sensor, and upgrading its installed base to the latest versions of iOS and OS X sets up for new services revenue streams, in our view. — Katy Huberty via MacRumors
How do you think Apple will use all of that sapphire? Touch ID for everyone? iPhone screens? iWatch? Or, all of the above…