Synthetic sapphire glass is incredibly hard, making it very difficult to scratch. Apple has already been using the material to protect the iPhone's cameras and the Touch ID sensor on the iPhone 5S because of its durability, and also because it's so clear it offers very little viewing distortion.
Sapphire sounds like a great option for smartphone displays, but hasn't found widespread adoption because it's expensive and available in limited quantities. Apple has been working to overcome both of those issues by partnering with GTAT — a company with a solid history in synthetic sapphire production.
The company had 120 furnaces making sapphire in January and ramped up to 2,600, which allows for a much higher production volume. That's only part of the equation, because Apple is expected to make upwards of 80 million iPhones this year, and that means even more sapphire.
If analysts don't think GTAT is making enough sapphire to meet Apple's additional needs, and there aren't any signs that the company has turned elsewhere for more, then the question is: Where is the extra sapphire coming from? PTT Research analyst Matt Margolis thinks he solved the mystery, and the clues have been hiding in the company's quarterly financial reports.
GTAT has been racking up a lot of deferred revenue over the past several quarters with about $154 million that looks to be unaccounted for unless it's sapphire the company has been sitting on. In other words, GTAT has been hoarding sapphire for about two years to make sure there's enough to meet Apple's needs.
Forbes reports Mr. Margolis saying,
What this means is GT is already sitting on enough sapphire to satisfy Apple's needs for the iPhone 6 launch in September. This deal was in the making for 2 years. They've been preparing this for quite some time.
With the stashed inventory, plus its current production, GTAT should be able to meet Apple's needs.
Apple is expected to hold a special media event on September 9 to introduce the new iPhone models. Rumors point to 4.7-inch and 5.5-inch models with redesigned bodies that match the iPad Air and iPad mini, improved cameras, longer battery life, and more. With that big stash of sapphire GTAT has been making for Apple, the new iPhones will probably have much more durable screens, too.
We're only a few weeks away from the rumored media event, so it shouldn't be too long before we know if Mr. Margolis interpreted GTAT's financial figures correctly. Odds are he's right, which means your next iPhone screen is about to get a lot stronger.