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How Apple's billion dollar sapphire bet will pay off

John Cox | April 23, 2014
Apple is making a billion dollar bet on sapphire as a strategic material for mobile devices such as the iPhone, iPad and perhaps an iWatch. Though exactly what the company plans to do with the scratch-resistant crystal – and when – is still the subject of debate.

+ Warranty cost savings. "While broken displays are not systematically replaced, there are multiple anecdotal evidences that Apple stores do replace them on a case-by-case basis," says Yole's Eric Virey. "Estimates for the cost associated with those replacements vary from $500 million to $1 billion."

+ Improve the "user experience." A scratch-resistant, shatter-resistant cover has value to consumers, many of whom already routinely buy protective screens and cases for their iPhones, says Stone-Sunderberg. "I wear a watch with a sapphire face because I don't want it scratched," she says. "I have an iPhone and I spend $25 to buy a protective screen. That's the first thing a lot of us do. I'd be happy to have that built into the smartphone [via a sapphire cover glass] and would happily pay for it." (Aero-Gear offers its adhesive-backed Flight Glass SX Sapphire Crystal protective screen for the iPhone 4. 5 and 5S, priced at $69.)

There may be additional reasons. As noted by Ocular's Kothapally, sapphire's dielectric properties could lend themselves to improving the speed and accuracy of the iPhone's touch interface, and perhaps to supporting a wider array of gestures. And a sapphire cover glass eventually could be married with big changes to the underlying LCD technology, such as OLED or Quantum Dots, which are nanocrystals that can be used to create displays that are more accurate in rendering colors and use much less power than today's LCDs.~~

What will it all cost?

The biggest hurdle facing widespread use of sapphire in displays has been its high cost compared to the alumino-silicate "super glasses" such as Corning's Gorilla Glass. GTAT in fact got into the sapphire business with its 2010 acquisition of Crystal Solutions precisely to commercialize that furnace technology and make sapphire crystal more affordable, according to GTAT spokesman Jeff Nestel-Patt.

The company's mission in sapphire is to make it available more economically and in much larger quantities, he says. In 2013, GTAT began ramping up a new business: besides selling the furnaces, it's also using them to become a sapphire producer.

"They are very serious about trying to reduce the spot price of sapphire for five-inch or similar sized panels," says Vinita Jakhkanwal, director of mobile and emerging technologies for IHS, a business research firm. "That's the single most important factor for them to address."

"Most people who want sapphire are willing to pay a premium for it over other superglass options," says Paul Massey, senior vice president of sales and marketing at Ocular. "They'll pay a premium of 30% to 50% but not 200%. It's not a price point yet that will let it be taken to the mass market."

 

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