GT Advanced Technologies (NASDAQ: GTAT) today announced that it received a $29 million follow-on order for ASF™ units from an existing ASF customer in China. The company believes the units will be used to produce sapphire for the mobile device market. The order is scheduled for delivery by the end of CY12 and the expected revenue is included in the company’s CY12 revenue range of $925 million to $975 million that it reiterated today in a separate press release.
GT also indicated that it and several of its ASF customers have entered into evaluation agreements or are, in conjunction with fabrication partners, actively sampling ASF-grown sapphire screens for use in mobile and point of sale (POS) devices.
GT continues to believe the sapphire mobile device opportunity will contribute to a significant inflow of ASF orders in the second half of CY13.
The company noted that several factors have driven the recent interest in ASF-grown sapphire as a viable alternative to materials currently used in mobile and POS devices. These factors include sapphire’s superior strength, ruggedness and scratch-resistance as well as its ability to deliver a compelling brand differentiation by improving the user experience. GT’s ASF platform is well positioned to meet the quality and high-volume production requirements for crystal growth for these applications.
Cost is an important factor in the manufacturing of mobile devices, and the cost of sapphire is expected to be within an acceptable range given its compelling value proposition. The company expects that the cost for growing and fabricating sapphire for mobile devices will be considerably lower than for LED applications for several reasons, including:
- The ASF crystal growth process can be optimized to deliver higher yields of useable material resulting in lower costs when harvested for bricks/screens vs. cores/wafers;
- GT is actively working with consumable suppliers and expects significant cost reductions from a growing Asian supply chain;
- Tolerance requirements for the mobile device sapphire screens will be significantly lower than epi-ready surfaces in HB-LED manufacturing, further reducing cycle times and consumable costs;
- Fabrication costs have the potential to come down driven by equipment that can slice boules into bricks rather than cores;
- Several fabrication steps may be eliminated when fabricating sapphire for mobile devices including CMP (chemical mechanical polishing) as well as rough and fine lapping, with the latter being replaced by faster grinding processes; and
- Mobile screen fabrication may allow for the use of existing polishing and grinding equipment capacity at existing large volume subcontractors in Asia, removing the requirement for new fabrication equipment.
As a result, the company believes that sapphire screens for mobile devices, once commercialized, will have a cost of ownership that will be competitive with current solutions. More specifically, GT estimates that a fully fabricated sapphire smartphone screen will be $10 to $20 higher than the price OEMs pay for current screen solutions, with the differential dependent on the level of vertical integration by the OEMs or their manufacturing partners. Given the compelling overall value proposition of ASF sapphire screens, initial feedback from industry leaders suggests this cost differential for a superior product will be acceptable. Factors affecting this consideration are the exceptional strength and scratch resistance of ASF-grown sapphire which are expected to lower the rate of cracked or broken screens thereby providing a better overall user experience. In addition, the company noted that the expected price differential between ASF-grown sapphire and the current solutions is less than what consumers typically pay to replace a single cracked screen as well as being less than what consumers typically pay for screen protectors and protective cases.