No sapphire on your new iPhone? China's Huawei has you covered

Rubicon Technology

10/09/2014 07:09

By Se Young Lee and Michael Gold 
    SEOUL/TAIPEI, Sept 10 (Reuters) - Apple Inc  AAPL.O  may 
have disappointed many consumers by not putting sapphire glass 
covers on its new iPhone, but the scratch-resistant material is 
gradually making its way into mobile devices despite 
manufacturing challenges and high costs. 
    Speculation had been rife in the weeks leading up to 
Tuesday's unveiling of the iPhone 6 that some models would have 
the extra protection after Apple partnered in November with 
U.S.-based GT Advanced Technologies Inc  GTAT.O , a mineral 
crystal specialist, to make sapphire materials for its devices. 
 ID:nL1N0RA1Q6   ID:nL2N0IQ027  
    Apple said sapphire glass would be used on its first 
smartwatch. It also continues to use the durable material to 
cover the iPhone's camera lens and home button, but gave no 
hints as to if, or when, the glass would be used on iPhone 
screens. 
    China's Huawei Technologies Co Ltd  HWT.UL  last week became 
the first major handset maker to announce the use of sapphire 
screen covers, saying it would release a limited edition version 
of its high-end phone with such protection.  ID:nL1N0R604Z  
    Sapphire glass is the hardest material in nature after 
diamonds. It is used in LED lighting, high-end jewellery and 
military equipment such as submarine and rocket windows. 
    According to a recent survey by used phone marketplace 
www.uSell.com, the most wanted new iPhone 6 feature had been 
sapphire glass, which is also more sensitive to the touch than 
other screen protectors.  
    JP Morgan expects the adoption of sapphire faceplates for 
smartphones to rise several times next year, albeit from a very 
low base.  
    Some Asian handset makers have been talking with the world's 
two biggest suppliers of raw sapphire glass: U.S.-based Rubicon 
Technology  RBCN.O  and South Korea's Sapphire Technology 
 123260.KQ .  
    "All smartphone manufacturers have been meeting with all the 
major sapphire producers including Rubicon," William Weissman, 
chief financial officer of Rubicon, told Reuters by email. 
    Sapphire Technology said it had received inquiries from 
several handset manufacturers, although it declined to identify 
any prospective customers. Neither have secured big supply 
deals, company officials say. 
    Companies such as Rubicon and Sapphire Technology usually 
sell big chunks of glass to fabricators who then slice it into 
thin wafers before polishing it. 
    Apple locked in exclusive supply of the material from GT 
Advanced with a $578 million investment in a sapphire 
manufacturing facility in Arizona. 
         
    MORE EXPENSIVE THAN GORILLA GLASS 
    Many analysts expect sapphire glass to be limited initially 
to premium products due to high prices and the defect rates 
stemming from difficulties in configuring the glass into 
smartphone covers. 
    Finished sapphire covers could cost as much as $40-$45, 
compared with less than $10 for Gorilla Glass, the screen of 
choice for most smartphones, according to analysts.     
    Another Chinese company, Xiaomi Inc, has ordered sapphire 
covers for a limited edition premium smartphone, according to a 
recent report by South Korea's Electronic Times. Xiaomi declined 
to comment.  ID:nL4N0QS127  
    China's ZTE Corp  000063.SZ  would use sapphire glass on 
wearable devices it was on the verge of pushing out, an 
executive said, but did not have immediate plans to introduce 
such covers on smartphones.  
    "We believe it's not appropriate for large-scale use because 
the sapphire supply chain remains complicated, the volume is not 
high and production capacity is insufficient," said Qianhao Lv, 
global marketing director of ZTE's mobile business group. 
    LG Electronics Inc  066570.KS  spokesman Ken Hong said the 
South Korean company had looked at sapphire screen protection 
but did not believe the technology was ready yet.  
    Samsung Electronics Co  005930.KS  and Taiwan's HTC Corp 
 2498.TW  declined to comment. Shenzhen-based Coolpad  2369.HK  
was not immediately available to comment.         
    The sapphire industry has battled thin margins and falling 
prices for years due to weak demand from the LED lighting 
sector, the biggest driver of sapphire consumption. Prices of 
sapphire wafers for LED lights have dropped to a quarter of 
where they were a decade ago.     
    Sapphire crystals are created by applying high heat to 
purified aluminium oxide in a cylinder called a boule, which is 
then sliced into thin wafers and polished to form products. 
    "A major reason for the high cost is that sapphire has just 
begun to catch on so the defect-free rate is not very stable ... 
but recently players have been putting a lot of effort into 
solving this problem," said Hsu Ya-ling, chief financial officer 
at Tera Xtal Technology, a fabricator based in Taiwan. 
    Weissman said Rubicon was working on hybrid solutions that 
would provide many benefits of sapphire as well as a couple of 
processes that would eliminate the slicing and polishing steps. 
    Sapphire Technology is also making the boule in a 
rectangular shape, which allows more smartphone faceplate cuts 
than bar-type boules. 
        
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 
    Graphic: Sapphire suppliers: http://link.reuters.com/peh82w 
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>  
 
 (Additional reporting by Jeremy Wagstaff in SINGAPORE, Gerry 
Shih in BEIJING, J.R. Wu in TAIPEI and Christina Farr in SAN 
FRANCISCO; Writing by Miyoung Kim; Editing by Dean Yates) 
 ((miyoung.kim@thomsonreuters.com; 822 3704 5651; Reuters 
Messaging: miyoung.kim.thomsonreuters.com@reuters.net)) 
 
Keywords: APPLE/SAPPHIRE SCREENS