According to this morning’s earnings call transcript from GT Advanced Technologies (GTAT), the firm recently catapulted into the spotlight by its alliance with Apple Inc. (NASDAQ:AAPL), over 80% of 2014’s revenue is expected to derive from sapphire orders placed by the California-based electronics firm. Destined for use as iPhone 6 displays according to rumor, the sapphire expansion has increased the smaller company’s workforce to 1,000 people and already netted $440 million in prepayments, according to Thomas Gutierrez, GT’s president.
During the earnings call, Mr. Gutierrez noted that demand for sapphire is spiking sharply, perhaps partly in the knowledge that the material will now be available in unheard of quantities. There was little point in developing additional uses for the crystal when its global production was extremely limited, but innovation can now proceed in the knowledge that it is now practicable to mass produce new products based around sapphire glass.
With an immense fund of cash available, GT Advanced Technologies is rapidly rolling out ASF165 sapphire production technology. This process, Mr. Gutierrez states, will boost production by 40% and thus cause a notable drop in price. Furthermore, it is relatively easy for older ASF115 furnaces to be upgraded to the new ASF165 type, which should enable broad-based increases in production capacity by Q3 or Q4, 2014, at the latest.
The Mesa, Arizona sapphire facility is an interesting example of Apple Inc. (AAPL) acting as a technology leader and catalyst. Though not purely altruistic by any stretch of the imagination, and aiming foremost at winning immense profits for itself, the Cupertino enterprise is nevertheless funding a project likely to have a lasting effect on the overall technological manufacturing capabilities of humanity.
In effect, Apple (AAPL) placed a vast order for sapphire with GT Advanced Technologies, paying enough in advance for the smaller company to build a huge production facility with record-breaking speed. Once its orders are completed, GT will be free to take additional contracts from other firms as well as Apple itself.
By spending huge amounts of cash, Apple managed to boost sapphire production from a rare, expensive process of limited size into the realm of highly efficient industrial mass production. Though it (and GT Advanced Technologies) are the first two firms which will reap the rewards of this materials technology breakthrough, the overall market availability of sapphire crystal has been increased by an order of magnitude, laying the groundwork for widespread use of this advanced material in the future.
