Is Apple Giving Corning the Cold Shoulder?

Earlier this week, Apple  (NASDAQ: AAPL  ) and GT Advanced Technologies  (NASDAQOTH: GTATQ  ) announced a major deal in which GT would supply sapphire to Apple. The Mac maker is building a new facility in Arizona, where GT will own and operate equipment. Apple has made a hefty prepayment to GT, which GT will in turn repay to Apple (probably in the form of credits toward sapphire purchases).

Sapphire is one of the hardest materials on Earth, giving it obvious applications in mobile devices that are prone to damage. This is a big bet on Apple's part on the material, and it seems to clearly indicate its intentions to broaden its usage of sapphire. That could potentially be negative for Corning  (NYSE: GLW  ) , as its Gorilla Glass could be displaced. For now, Gorilla Glass enjoys considerable cost advantages, but Apple is quite a large customer to potentially lose eventually.

In this segment of Tech Teardown, Erin Kennedy discusses Apple's eye for sapphire with Evan Niu, CFA, our tech and telecom bureau chief. 

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Read/Post Comments (4) | Recommend This Article (2)

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  • Report this Comment On November 07, 2013, at 7:06 AM, GirlsUnder30 wrote:

    Here's some more information on the Apple GTAT deal:

    http://caps.fool.com/Blogs/about-the-apple-gtat-deal/887120

  • Report this Comment On November 07, 2013, at 8:37 AM, bugnuts wrote:

    Evan missed an opportunity to connect a few dots: In October Samsung announced it has taking a 7.4% equity stake in Corning and signing a long-term supply deal. Once again, Samsung attempted to infiltrate an Apple supplier only to find Apple is moving to next generation materials. The sapphire announcement immediately cut the value of Samsung's investment.

  • Report this Comment On November 07, 2013, at 3:56 PM, jameskatt wrote:

    Any of Apple's suppliers need to keep up with Apple and continually improve their product.

    They should realize that Apple wants to continually improve its products.

    Sapphire is an amazing jewel-class material that that is harder than Gorilla Glass yet has the same or better properties. Why should not Apple want Sapphire for its products? A Sapphire screen glass is a natural for Apple's high end luxury products. The only limitation is its cost.

    With Apple's GTAT work, Apple just may get the low cost Sapphire it craves.

    Since Sapphire is man-made, the obvious question for Corning - a much larger company than GTAT - is why can't Corning make Sapphire??? After all, it is a glass-like material made from Aluminum-Silica. It should be a no-brainer for Corning to make Sapphire. But it hasn't. Thus it is not keeping up with Apple.

  • Report this Comment On November 08, 2013, at 10:49 AM, GirlsUnder30 wrote:

    Yes, sapphire is harder but not as flexible so the jury is still out if it will make a better cell phone face. My stomach turns when I think what will happen to GTAT if customers start cracking their $500 plus devices during normal use.

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