Mikey Campbell
According to one well-connected analyst, GT Advanced Technologies' filing for Chapter 11 bankruptcy protection raises doubts as to whether sapphire will be used as a protective cover for a next-generation iPhone, as the tech giant is unlikely to source the material from another supplier.
In a research note obtained by AppleInsider, KGI analyst Ming-Chi Kuo said GT's bankruptcy filing will have little impact on Apple Watch manufacturing, but the development may affect future iPhones as Apple's main investment in the supplier was for iPhone touch panels.
Kuo notes that increasingly large iPhone screen sizes require a 6-inch sapphire ingot. Apple is said to prefer sapphire coming out of GT's advanced sapphire furnace (ASF) due to its resilience and superior drop test performance compared to material from other suppliers. As such, the company is unlikely to use sapphire from suppliers outside of GT Advanced for future projects, Kuo says.
"While GTAT's ASF sapphire isn't the only sapphire ingot source for iPhone sapphire cover lens that is being tested by Apple, we don't think Apple will turn to other suppliers given the notionally superior drop-test performance of GTAT's sapphire ingot," Kuo writes. "We believe Apple is still very interested in using sapphire as a material for iPhone cover lens."
The analyst warns that GT's bankruptcy mean ASF sapphire is facing technology bottlenecks in production, which raises uncertainty as to its use in future iPhone models.
Kuo sees a better outlook for the Apple Watch, however. As the device's screen is much smaller than that of an iPhone, drop test requirements are less stringent, so ingot manufacturing processes from other suppliers will likely suffice. Aside from GT Advanced, Apple may source sapphire from Hansol and Harbin Aurora Optoelectronics, which use less advanced sapphire growing processes.
Despite a huge $440 million investment from Apple, GT Advanced filed for bankruptcy on Monday. It was later reported that Apple withheld a $139 million payment for unknown reasons. It has been speculated that the move was triggered by GT's low cash on hand, which fell to well below a $125 million threshold that contractually allowed Apple to recoup the upfront investment.
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27 Comments
Apple has the cash to pay off any creditors and just purchase the company outright, especially if it's for a song. While I don't think it was intentional, if that does end up happening it would be very Tramiel-esque...especially in light of the report that Apple didn't make their last supplier payment. Still not convinced sapphire is needed for an iPhone though.
Picked up a shitload of GT stock yesterday. Blows my mind that noone was recommending that. I could have sold today and made a few thousand profit (it hit $2). But I'm gonna hold.
Slashgear has an article on this, and it looks pretty damn good for Apple.
http://www.slashgear.com/gt-bankruptcy-puts-apple-in-control-of-sapphire-07349593/
[quote name="AppleInsider" url="/t/182702/gt-advanced-bankruptcy-will-not-affect-apple-watch-production-but-brings-iphone-into-question#post_2614621"]According to one well-connected analyst, GT Advanced Technologies' filing for Chapter 11 bankruptcy protection raises doubts as to whether sapphire will be used as a protective cover for a next-generation iPhone, as the tech giant is unlikely to source the material from another supplier. In a research note obtained by AppleInsider, KGI analyst Ming-Chi Kuo said GT's bankruptcy filing will have little impact on Apple Watch manufacturing, but the development may affect future iPhones as Apple's main investment in the supplier was for iPhone touch panels. [/quote] So a Sapphire Covered iPhone - which has not been confirmed - has now been brought into question. And we are now able to confirm that Apple's main investment in the supplier was for iPhone touch panels? I must have missed that announcement from Tim... /s I know that Ming-Chi Kuo has made some accurate predictions in the past however I'm not about to believe anything in this report if Kuo is speculating about a sapphire covered iPhone that hasn't been announced. Kuo also goes on to say that Apple will be able to source Sapphire from other suppliers however there has been no factual information released to contradict GT Advanced Technologies' statement that they will continue manufacturing Sapphire for their client during chapter 11.
There is almost no way they can produce enough panels for the number of iPhone 6 and 6 plus being sold without a long period of stockpiling based on their existing output.