Apple's product announcement today could have the effect of rapidly increasing the world supply of sapphire and lowering its price.
Apple is counting down to its announcement event -- one hour and 10 minutes to go as I write this. Rumors always swirl in advance of Apple's product announcements, and usually they have little or nothing to do with the world of LED lighting. Today's announcement could be different.
LEDs are already present in smartphones and tablets, of course, in the form of flash lighting for cameras. (This site's sponsor, Philips Lumileds, is a major player in that LED niche.) But today's announcement could result in a lot more sapphire being used in smartphones than the small quantities needed in LEDs and the coverings of the iPhone's Home button and the front-facing camera window.
Sapphire is widely used in the manufacture of LEDs for all purposes. Sapphire wafers, cut and polished from boules, form the substrate for the majority of LEDs produced worldwide, with the remainder being grown on silicon carbide, silicon, or GaN.
In order to maximize production yields, some of the major players manufacturing LEDs, including Lumileds and Osram, have been moving to 6-inch (150 mm) sapphire wafers, and experimenting with 8-inch wafers. Two-inch and 4-inch wafers are still in common use, for example in smaller-scale fabs in China.
Sapphire is not cheap. One of the reasons many LED makers are experimenting with or moving production to silicon substrates is the lower cost of that material. (Another claimed advantage is the opportunity to ride the coattails of the semiconductor industry as silicon fabs move to larger wafer sizes.)
So any development that promises to bring down the cost of bulk sapphire could to have a big impact on the world of LED manufacture, and ultimately on LED prices.
It's still the stuff of rumors -- with 40 minutes to go until Apple's press event -- but the rumors have been persistent that Apple could introduce sapphire cover plates on one or more phones, and/or could announce a wearable iWatch with a sapphire cover.
According to this video at Bloomberg, Yole Développement has estimated the parts cost of a sapphire front cover for a (putative) 4.7-inch iPhone at around $16 today, dropping towards $13 as production scales. This contrasts with about $3 for a Corning Gorilla Glass cover as has been used to date.
Sapphire would have some real advantages over Gorilla Glass as a cover on modern smartphones. It is essentially scratch-resistant. It is tougher and more fracture-resistant than Gorilla Glass as well. (One downside of using sapphire in this role is that when stressed too far, it doesn't crack the way Gorilla Glass does -- it shatters into a million pieces. Apple is rumored to have been working on ways to reduce this tendency.)
The large price differential suggests that a sapphire cover might be introduced as a luxury extra on an exclusive, up-market version of the iPhone. (The iWatch rumors are now settling down to a prediction that such a device, if announced today, wouldn't be shipping until next year.)
Here's another factor pointing to a limited role for sapphire in today's announcement, at least initially. Last November Apple invested $578 million in GT Advanced Technologies of Mesa, Ariz. GTAT today produces about enough sapphire in a year to cover 6.5 million iPhone screens. But Apple sells more than 35 million iPhones per quarter.
That manufacturing gap would push GTAT to increase its production as rapidly as possible, if sapphire is indeed going to play anything other than a walk-on role in the smartphone market. I saw one estimate that if GTAT could supply Apple's entire iPhone output with sapphire covers, it would be producing about one-third as much sapphire as the entire world's supply today.
The prospect of this much growth has bolstered GTAT's stock price since the Apple investment came to light last spring. GTAT's stock began 2014 below $10; by March it had climbed into the high teens and has been trading mostly in that all-time-high range since then.
Canaccord Genuity analyst Jed Dorsheimer is soft-pedaling any big impact on GTAT's stock valuation.
We will know the truth behind the rumors soon enough. Apple's event is just about to begin.
— Keith Dawson , Editor-in-Chief, All LED Lighting