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.
Erin Kennedy and Evan Niu, CFA, both own shares of Apple. The Motley Fool recommends and owns shares of Apple and Corning. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.