Thu, Jul 17, 2014 - Page 14 News List

Sapphire covers to be rare: JPMorgan

By Kevin Chen  /  Staff reporter

JPMorgan Securities Ltd does not think the initial launch of the iPhone 6, if Apple Inc introduces it this fall, will have sapphire crystal for its main display in any significant volume.

With the limited disclosure about the iPhone 6 by Apple and amid persistent speculation about the new phone’s cover glass adoption, JPMorgan believes the volume will be about 10 million covers this year in either 4.7-inch or a 5.5-inch models, according to the brokerage’s latest industry report, released on Tuesday.

That volume of sapphire cover adoption represents less than 1 percent of the entire smartphone market, JPMorgan said.

“Sapphire covers will also be restricted to high-end iPhones, possibly the 128GB [gigabyte] ones,” the brokerage said in the report.

However, the report, authored by analysts Narci Chang (張恆), J.J. Park and Jay Kwon, expects the adoption to rise severalfold next year.

“We believe this will mark only the beginning of sapphire smartphone cover adoption,” they wrote.

Speculation has arisen recently that sapphire crystal might become an alternative to Corning Inc’s damage-resistant Gorilla glass as smartphone cover material, and analysts say other brands, including HTC Corp (宏達電), Asustek Computer Inc (華碩) and Xiaomi Corp (小米), have shown interest in sapphire covers.

However, US-based Corning has responded by saying that sapphire covers for high-end watches are two or three times thicker than Gorilla glass, and that laboratory strength tests have shown sapphire breaks more easily than Gorilla glass.

JPMorgan said sapphire’s cost is also an issue in view of the low yield rates sapphire manufacturers are facing.

“Due to various challenges related to the new cover material, we believe the production output for sapphire covers will be low,” JPMorgan analysts said. “Sapphire ingot yield rates could be as low as below 50 percent for this size, and finished sapphire smartphone covers may cost as much as US$40 to US$45 versus below US$10 for finished Gorilla glass.”

Based on the brokerage’s recent checks with the sapphire supply chain — including GT Advanced Technologies Inc, headquartered in the US, South Korea’s Sapphire Technology Co (STC) and Procrystal Technology Co (佳晶) of Taiwan, JPMorgan said Apple’s iWatches may not all be equipped with sapphire covers.

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