Hyperion is not part of GTAT’s Exclusivity with Apple – Now What? – by Matt Margolis
I’ve been seeing some recent chatter regarding comments TG made during the technology conference on held on 3/14/14. TG indicated that Mesa, AZ was an Apple plant and that “Hyperion was not part of our exclusivity with Apple”. So what does this mean? In order to answer this question and chatter I always look to the past for specific comments made from TG to help understand his recent message. For this one I turned back the clock to the Q4 2012 conference call.
Q4 2012 Conference Call TG Comments
We believe that current sapphire fabrication techniques, excluding Hyperion, will support the adoption of sapphire in several applications including smartphones and point-of-sale systems.
(Sapphire Laminates are) a broader application than what we would not consider to be the true smartphone area, where a pure sapphire solution is more likely, okay?
The comments from TG above definitely indicate that pure sapphire cover screens will support adoption for smartphones. Apple wants sapphire for more than just the scratch proof strength and they will not settle for anything less than pure sapphire. Also, if you take a look at Apple’s sapphire patents, it is quite clear that Apple has much bigger plans with pure sapphire versus just adding sapphire laminates to their devices.
Sapphire Laminate Marketplace
Since Apple does not appear to limit GT’s application of sapphire laminates layered on poly carbonate or glass substrates, the question is what market’s will they go after with this new technology? One answer looks like the broader mobile phone market and tablet market place. They could also supply Hyperion tools to an aftermarket player that wants to supply sapphire laminates for mobile or tablet marketplaces. Other potential targets for sapphire laminates include navigation systems, music players, point-of-sale and touchscreen markets. I came across a research report last week from Barclays who covers TPK. The Barclays report gave confidence that TPK’s TOL (Touch on Lens) business related to sapphire laminates was anticipated to grow. The report also indicated Apple was likely to introduce an iPad with sapphire laminates at some point down the road. Needless to say there seems to be a lot of buzz in the sapphire laminate market outside of Apple’s pure sapphire solution. Below are TG’s comments from Q4 2012 related to the potential sapphire laminate marketplace.
Q4 2012 Conference Call TG Comments
We also believe that there could be an incremental future market opportunity using Hyperion to create lower-cost sapphire laminates for broader mobile phone and aftermarket applications.
The objective (is) to build another end to the business other than the high-end smartphone, the broader smartphone part of the marketplace.
Sapphire laminates are expected to have some, but not all, of the attributes of a pure sapphire solution and are expected to have a cost structure that rivals current cover glass products on the market today.
It’s really expanding into the lower part of the market that wouldn’t normally consider using a sapphire (solution) because the technique that we’re developing would get you a sapphire surface on a polycarbonate or glass substrate.
An aftermarket, if you think of the laminates and the substrate that are out in the marketplace that you put on your phone on an after-market basis to protect it, there’s a potential for creating an after-market laminate business here as well.
To make it clear, we’re not going to make laminates. We make Hyperion cleaving tools that we will sell to people that let them do that.
Full Disclosure I am long GTAT and have no plans to buy and sell any holdings in the next 72 hours