Posts Tagged ‘GTAT Sapphire Screens’

by Matt Margolis

News broke Friday that Apple acquired Luxvue Technology Corporation for an undisclosed amount of money.  Luxvue  Technology was unknown to nearly everyone until their acquisition by Apple put them in the spot light.   I think the biggest question you want to know is, how can I make money from this?

According to Crunchbase Luxvue Technology was incorporated in 2009, based in Santa Clara, California and they develop low-power, micronLED based displays for consumer electronics applications.

LuxVue Technology Corporation develops low-power, microLED-based displays for consumer electronics applications. LuxVue Technology Corporation was formerly known as Papierlos Corporation. The company was incorporated in 2009 and is based in Santa Clara, California.

LuxVue Technology Corporation develops low-power, microLED-based displays for consumer electronics applications. LuxVue Technology Corporation was formerly known as Papierlos Corporation. The company was incorporated in 2009 and is based in Santa Clara, California. – See more at: http://www.crunchbase.com/organization/luxvue-technology#sthash.iBHexiMz.dpuf
LuxVue Technology Corporation develops low-power, microLED-based displays for consumer electronics applications. LuxVue Technology Corporation was formerly known as Papierlos Corporation. The company was incorporated in 2009 and is based in Santa Clara, California. – See more at: http://www.crunchbase.com/organization/luxvue-technology#sthash.iBHexiMz.dpuf

LED is very interesting topic, first of all LED is more efficient than fluorescent lights.  Second of all, LED is becoming the standard light bulb all around the world, one bulb at a time.  One of the most vital ingredients in LED lighting is sapphire. What makes sapphire so special?

Synthetic single-crystal sapphire is a single crystal form of corundum, Al2O3, also known as alpha-alumina, alumina, and single crystal Al2O3. Sapphire is aluminum oxide in the purest form with no porosity or grain boundaries, making it theoretically dense. The combination of favorable chemical, electrical, mechanical, optical, surface, thermal, and durability properties make sapphire a preferred material for high performance system and component designs.

One of the biggest issues with battery life are displays that drain your battery just from emitting light.  LED lights are known for their durability, low energy consumption and long-lasting life span.  What if an electronic device display shared was also composed of LED?  How much many hours would be added to your battery per charge?

Apple’s sapphire partner GT Advanced Technologies is currently producing sapphire for consumer electronics as well as the LED industry (LED customers currently exclude Apple).  GT is an expert in producing sapphire for LED as well as sapphire for consumer electronics.  The sapphire used for LED lighting does not need to be as perfect because it’s not the same as a sapphire cover screen that you look through to see your display.  The sapphire layer is the body (bottom) layer that the LED display would be stacked on.

Apple acquired LuxVue Technology along with its long list of patents.  One of the patents that sparked my interest was Luxvue’s (now Apple’s) LED Array patent.  What is interesting about this patent is that the bottom layer that makes up the LED display includes not only sapphire as an option but also SiC (Silicon Carbide).  According to the patent both materials can be transparent, but currently sapphire is drastically less expensive of the two options but SiC has a significant performance benefit over sapphire.   SiC most likely won’t reach consumer electronic products for several years (5?, 10?, 15? years) at the earliest, but the switch from Si (Silicon) to SiC (Silicon Carbide) is currently underway in Power Electronics.

Conclusion

  • In 2014 Apple is going to be the first high volume consumer electronics manufacturer to cover its devices with sapphire.
  • Apple is going to adopt LED displays within the next 12 to 18 months across its portfolio of iDevices
  • GT Advanced Technologies will produce and process hundreds of millions of sapphire substrates annually that will end up below Apple’s LED displays before the end of 2015.
  • Apple’s adoption of LED displays will add a “new significant layer” of reoccurring revenue to GT’s top line before the end of 2015
  • The relationship between GT Advanced Technologies and Apple goes much deeper than just sapphire cover screens

 

For your reading pleasure Luxvue’s (now Apple’s) LED Array patent is highlighted below.

A micro light emitting diode (LED) and a method of forming an array of micro LEDs for transfer to a receiving substrate are described. For example, the receiving substrate may be, but is not limited to, a display substrate, a lighting substrate, a substrate with functional devices such as transistors or integrated circuits (ICs), or a substrate with metal redistribution lines. In an embodiment, a micro LED structure includes a micro p-n diode, a reflective metallization stack below a bottom surface of the micro p-n diode, and an electrically insulating spacer spanning a portion of sidewalls of the reflective metallization stack and laterally surrounding the reflective metallization stack, where the reflective metallization stack is between the micro p-n diode and a bonding layer formed on a substrate. In an embodiment, the bonding layer has a liquidus temperature of approximately 350° C. or lower, and more specifically approximately 200° C. or lower. In an embodiment, the bonding layer is an alloy bonding layer. For example, the bonding layer may be an indium-silver (InAg) alloy. Depending upon the manner of formation, the bonding layer can have a uniform concentration, or a gradient concentration.

In a particular embodiment, growth substrate 101 is sapphire, and the p-n diode layer 110 is formed of GaN. Despite the fact that sapphire has a larger lattice constant and thermal expansion coefficient mismatch with respect to GaN, sapphire is reasonably low cost, widely available and its transparency is compatible with excimer laser-based lift-off (LLO) techniques. In another embodiment, another material such as SiC may be used as the growth substrate 101 for a GaN p-n diode layer 110. Like sapphire, SiC substrates may be transparent. Several growth techniques may be used for growth of p-n diode layer 110 such as metalorganic chemical vapor deposition (MOCVD). GaN, for example, can be grown by simultaneously introducing trimethylgallium (TMGa) and ammonia (NH3) precursors into a reaction chamber with the sapphire growth substrate 101 being heated to an elevated temperature such as 800° C. to 1,000° C. In the particular embodiment illustrated in FIG. 1A, p-n diode layer 110 may include a bulk GaN layer 112, an n-doped layer 114, a quantum well 116 and p-doped layer 118. The bulk GaN layer 112 may be n-doped due to silicon or oxygen contamination, or intentionally doped with a donor such as silicon. N-doped GaN layer 114 may likewise be doped with a donor such as silicon, while p-doped layer 118 may be doped with an acceptor such as magnesium. A variety of alternative p-n diode configurations may be utilized to form p-n diode layer 110. Likewise, a variety of single quantum well (SQW) or multiple quantum well (MQW) configurations may be utilized to form quantum well 116. In addition, various buffer layers may be included as appropriate. In one embodiment, the sapphire growth substrate 101 has a thickness of approximately 200 μm, bulk GaN layer 112 has a thickness of approximately 0.5 μm-5 μm, n-doped layer 114 has a thickness of approximately 0.1 μm-3 μm, quantum well layer 116 has a thickness less than approximately 0.3 μm and p-doped layer 118 has a thickness of approximately 0.1 μm-1 μm.

In the Figure below a layer of Sapphire and or SiC is represented by “101”

LED Display

 

Full Disclosure: I am long GTAT and Apple’s newest acquisition will result in a “new significant layer” of reoccurring sapphire revenue from Apple, which is likely to begin before the end of 2015.

 

 

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According to GTAT’s latest SEC filing on 4/22/14, GT has received the 3rd prepayment from Apple, which leaves just one prepayment remaining. The final prepayment from Apple is expected to be received based on the agreed upon date in the prepayment agreement, which is not currently available to the public.

The Company and Apple entered into a Master Development and Supply Agreement and related Statement of Work (or the “MDSA”), pursuant to which we will supply sapphire material to Apple. In connection with this supply arrangement, we also entered into a Prepayment Agreement with Apple pursuant to which we will receive $578 million (the “Prepayment Amount”), in four separate installments, as payment in advance for the purchase of sapphire goods, of which $225 million was received in Fiscal 2013 and the second and third installment were received in 2014.

The expanded sapphire material operations are expected to generate a more stable revenue stream than the capital equipment business. This factor is expected to be beneficial to the long-term prospects and long-term value of the Company.

In order to prepare to meet the sapphire material supply obligations under the MDSA, management made a strategic decision to allocate much of its sapphire and other resources to the establishment of our expanded sapphire material operations. These decisions had a negative impact on the financial results for Fiscal 2013 as short-term revenue opportunities from equipment sales for the second-half of Fiscal 2013 had to be delayed in order to prepare to meet the sapphire material obligations to Apple. The Company’s Board of Directors supported this strategic decision of management and believes it will result in a more sustainable and value generating company.

The details available regarding the timing of prepayments between GTAT and Apple are below:

2. Prepayment.

(a) Subject to Sections 2(c) and (d) below, and provided that, at the time for each payment (i) no Trigger Event (as defined below) has occurred and (ii) there are no ongoing disputes under the Facility Lease Agreement which have a material impact on the use of the manufacturing facility to be located in Mesa, AZ that Apple is purchasing and developing (the “Mesa Facility”) for its intended purpose, Apple will make the Prepayment by remitting funds to an account designated by GTAT as follows (the “Milestone Payments”):

· $[***] within [***] Business Days after execution of all of the Transaction Documents;
· $[***] by close of business on [***];

[***] Portions of this exhibit have been redacted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission

· $[***] by close of business on [***];
· $[***] by close of business on [***].

(b) The Prepayment proceeds shall be used exclusively to [***].

by Matt Margolis

I pride myself in my research and attempting to sift through the noise, the rumors and stuff that just doesn’t make any sense.  Reuters published a story nearly a work ago titled: New iPhone 6 screens to enter production as early as May, citing supply chain sources for their information.  Furthermore the report clearly indicates this production is related to display panel screens and has nothing to do with sapphire cover screens for the upcoming iPhone 6 launch. Below are some of the key points made from the Reuters story:

Apple Inc suppliers will begin mass producing displays as early as May for the next iPhone, expected to be launched this autumn, with a 4.7-inch screen likely to be produced first while a 5.5-inch version could be delayed, supply chain sources said.

Both iPhone 6 screens are expected to use in-cell touch panel technology – built into the screen and allowing for thinner construction than with standard touch panel films – that was introduced with the iPhone 5, the sources said.

But due to difficulties with in-cell production technology for the larger 5.5-inch size, one of the sources said, a decision was made to begin mass production with the 4.7-inch version alone.

Production of 5.5-inch screens is expected to start several months later, with the possibility of a shift to a film sensor instead of in-cell technology for that size, the source said.

Japan Display will be the first supplier to start production, at its flagship plant at Mobara, east of Tokyo, as early as May, the sources said. The others are due to begin output around June.

Below is an image of the front of an iPhone 5 that breaks down the different layers including a Display Panel, Touch Panel and lastly the cover screen.  Reuters is claiming the iPhone 6 display panels will be made by Japan Display Inc, Sharp Corp and South Korea’s LG Display Co Ltd.  According to International Business Times, the 4.7″ and 5.5″ iPhone 6 models are expected to use in-cell touch panel technology, which is built into the screen to allow for thinner construction versus standard touch panel films.  GT Advanced Technologies is on target to deliver sapphire cover screens for both the 4.7″ and 5.5″ models replacing Corning’s Gorilla Glass, which has covered the iPhone since it first came off the assembly line in 2007.

Screenshot - 4_6_2014 , 9_56_55 PM

Most of Today’s Media Coverage Doesn’t Pass the Sniff Test

For clarity, none of the points above provided by Reuters have anything to do with sapphire cover screens but everything to do with display panels.  This leads me into the latest rumor that just doesn’t make any sense.  The latest iPhone 6 sapphire rumor claims that sapphire will not be in the iPhone 6  for either the 4.7″ or 5.5″ models.   The rumor seems focused on the same JDI yield issue I detailed out above from Reuters as well as chattering among the supply chain.  The JDI display yield issues are related to the iPhone 6 integrated touch/display panel and have nothing to do with sapphire cover screens.

So where does the media confusion begin?  Well, as you can see from the Reuters summary they were discussing touch panel screen delays.  If we follow the bouncing the ball and look at an article Business Insider, you will notice that the author talks about the delays in the production of the 5.5″ phone but only refers to the delay as screens.  Ut oh? Screens, does that mean sapphire cover screens or touch panel screens?  This is how rumors start and confusions sets but I’m here to set the record straight.  Below is some of the wording from Business Insider’s coverage of the Reuters breaking report on touch panel screen delays:

Apple is also exploring a 5.5-inch iPhone, says Reuters, but it’s having trouble making those screens. As a result, Apple has reportedly delayed production of the 5.5-inch screen. We’re not sure what this means for the release time line of the 5.5-inch iPhone.

Another media post that was made baseless claims was a report from Gforgames, who cited low yield and the high cost of a sapphire screen would cause the price of the iPhone to skyrocket.  Some wording from Gforgames is below:

The problem is not necessarily due to low yield (which still is a problem, at least until Apple’s Arizona plant will be fully operational), but mainly because fitting a sapphire screen on the next iPhone would make its price skyrocket.

Putting the Rumors, the Noise and the Stuff that just doesn’t make any sense to bed

I’ve been very due diligent over the past few years researching sapphire screens, the cost and who might be the first to put them on their device by the millions., etc.  I posted an article a few days ago titled: GTAT’s Sapphire Screens: Unscratchable, Unbreakable and coming Soon!  In this article, I provided excellent media coverage of the Mobile World Congress including an interview with GT’s COO Jeff Squiller.  My article covers a Digitaltrends article from 2013 written by Jeff Van Camp.  GT’s Dan Squiller provided cost estimates as of February 2013  for cover screens  (see quote below) and they certainly would not cause the iPhone price to skyrocket like Gforgames is reporting.

“Based on the conversations we’ve had with OEMS [Original Equipment Manufacturers], they’re willing to pay up to $15 or $20 for a better screen,” explained Squiller. “This will be $10 to $15 more expensive than Gorilla Glass. I think that [Gorilla Glass] display – that display that you just ruined – I think that was about $5 or $6 and we’re going to be at about $15 or so.”

Apple’s continuous sapphire growth patent coupled with Apple’s heat exchangers in sapphire processing patent are game changing inventions.  The inventions should lead to improved yield, 24/7 growth, sapphire yield and easier processing due to less cuts to name a few.  The biggest advantage to the continuous sapphire growth invention will be the elimination of unloading the completed sapphire boule, prepping and adding the raw materials and restarting the furnace.  If you are picturing a pit crew at a NASCAR race waiting to ready the ASF equipment for the next boule run then you are greatly mistaken.  The current process takes time and needs to be done right over and over again.  Additionally, I recently learned that Apple has been hiring Sapphire experts left and right over the last few years, which likely explains why Apple has been granted an array of sapphire patents over the last 6 months, including the two above.

If you are still having doubts on whether or not GT can make sapphire screens for the iPhone 6,  then you need to head over to my Secret Design of the Mesa Matrix article,  for my most detailed overview of Apple’s sapphire plant operations located in Mesa, AZ.  This article is my most informative one yet related to the Mesa sapphire operations and contains everything I have decided to share with you so far related to the Mesa facility operations.

If you are interesting in following my tweets, asking me a question or just want to give feedback or say hello you can follow me @sapphirecover24 on Twitter.

 

Full Disclosure: I am long GTAT and have no plans to buy or sell any holdings over the next 72 hours