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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.

The question of "when?"

Rumored 2014 announcement dates for the "iPhone 6" have included April, May, June, "summer", September, October, November and December. Historically, there is usually about 12 months between iPhone announcements, which points to September-October if Apple sticks to that pattern.

It is widely predicted, and for many, even expected that at least one 2014 iPhone will be fitted with a sapphire screen that's larger than the current 4-inch display for the iPhone 5s and 5c. Yole's Virey is one that believes Apple does plan to introduce this on a new iPhone in the fall of 2014.

But none of the evidence cited for such a belief is conclusive. Virey forecasts 42 million finished sapphire screens by the end of 2014, based on the furnace capacity being installed at the Arizona plant. In the October-December 2013 quarter Apple sold 51 million iPhones. Based on one estimate, about 12 million of those were 5c models, and about 36-38 million were 5s (the rest were 4s and 4 models). [For more on the 5c sales, see "The great 'iPhone 5c is a failure' freakout"] 

Even if the sapphire screens are just for the high-end flagship iPhone, Apple isn't leaving much wiggle room for inventory adjustments. Ocular's Massey and Kothapally are skeptical that a sapphire-screened iPhone will appear in 2014.

Apple's sapphire ambition is immense but realizing that ambition means more than firing up a bunch of new furnaces. It means building a new strategic supply chain from scratch. The raw material requires major upstream investments and adjustments in order to be processed to the quality and yields that Apple needs to make its billion dollar bet payoff.

Everything that points to a 2014 sapphire iPhone can just as easily point to a 2015 sapphire iPhone.

 

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