Sapphire-UBS-research-01

Apple for the first time started shipping sapphire from its new plant in Arizona to its suppliers in China ahead of ramping up the operation with more furnaces capable of supplying larger quantities. The news comes from UBS Research’s Q1 preview on GT Advanced Technologies, the company that Apple has partnered with to open a sapphire plant producing the material expected to replace Corning’s Gorilla Glass on the next-generation iPhone display.

Checks find GT’s Arizona factory likely stared producing sapphire last month. Our own checks found that for the first time GT shipped some small quantities of sapphire made in its Arizona fab to one of Apple’s partners in China who is in charge of making sapphire covers. Our checks find the amount of ingots it sold into China last month was only about 2,200kg which would be in line with our estimate of about 100 sapphire furnaces turned on and running (our checks find 100 furnaces were targeted for installation in 4Q13). We believe GT is still on schedule in Arizona, where we estimate GT was to install another 400-500 sapphire furnaces in 1Q14 and 900-1,000 in 2Q14. GT confirmed last week that it received a 3rd prepayment from Apple recently (we estimate the 4th and last prepayment will be made in May) which also gives us confidence that its Arizona sapphire factory for Apple is tracking on schedule.

We previously reported that, based on research into shipping documents, we expected Apple and GT-Advanced were developing sapphire crystal display covers— not sapphire for the home button and camera used in current models— for a next-generation iPhone. 

Analyst Matt Margolis estimated today that “approximately 100,000 to 115,000 sapphire screens could be produced from 2,200 kg of sapphire ingots” quoted by UBS, and using their info estimated GT would sell the sapphire screens for between $8.50 and $10. The first small shipment sent from GT Advanced to Apple suppliers was worth around $1 million. He also estimated that the facility will be at full capacity sooner than UBS noted above in its report, noting that most furnaces were delivered between December and February.

In its report, UBS noted “GT’s sales of sapphire to this partner in China last month was priced about 25% lower than sapphire sold by Apple’s other sapphire suppliers for covering the home button and the camera.” It estimated GT Advanced could set its guidance for 2014 at $600M-$800M with approximately 80% sales from sapphire to Apple and partners.

Earlier this year we reported that GT Advanced and Apple had acquired enough equipment to produce as many as 100 million or more displays a year for the rumored approximately 5-inch next-generation iPhone.

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

9 Responses to “Apple begins shipping sapphire from Arizona plant to China ahead of iPhone 6 launch”

  1. rahhbriley says:

    AWESOME! So glad I purchased a few grand of GTAT in January. One of the more useful things that has come from reading 9to5 so long.

    Like

  2. Kinda sucks for Corning. Reminds me of that amusing defensive statement they made as the Sapphire rumor mill heated up.

    Like

    • jekelr says:

      Corning will do very well indeed supplying Gorilla Glass to HDTV and laptop manufacturers because those large sizes not only preclude the use of sapphire but don’t really need it since they are far less portable. Apple is already pushing out the envelope in growing sapphire ingots large enough to create covers for their future smartphones and body devices.

      Like

  3. PMZanetti says:

    Surely this is for an iPod touch, not an iPhone, as all these rumors have been actually referring an iPod all along.

    /sarcasm

    Like

  4. dadzboyz says:

    They currently have over 500 furnaces up and running. They have between 2,000 plus that will be running in the next couple of months.

    Like

  5. Can anyone say prep for iPhone 6?

    Like

  6. jpatel330 says:

    this is not for the iphone 6, its for the iwatch.. take it to the bank.

    Like

  7. markroder says:

    Shipping documents for sapphire testing equipment noted, but are we sure that expanding the use of Touch ID to include all new iPads, the iPhone 5s (presuming it stays on in some form, maybe as the internals of a 5c type body), and the iPhone 6, won’t use up the increased production of sapphire glass? Is this accounted for in the “enough sapphire for 100 million or more displays” figure?

    Like