Posts Tagged ‘Sapphire Growth’

By Matt Margolis

sapphire screen

Apple and GT Advanced Technologies signed their statement of work (SOW) on October 31st ,2013.   The agreement between the two companies does not identify what “sapphire materials” GT will be providing Apple, but I can assure you that the answer is sapphire cover screens.  The only question that remains open is how fast will Apple adopt sapphire cover screens across their portfolio of iDevices.  Apple has purchased, updated and retrofitted a 1.3 million square foot facility in Mesa, AZ for GT to occupy and grow sapphire boules.   Based on a recent report by UBS, GT is growing sapphire boules, coring the boules into a predefined ‘form factor” and shipping the sapphire cores to China to be processed into sapphire cover screens.

During the Q2 2012 conference call (see comments below) on August 2nd 2012,  GT  indicated that they were actively working with several customers and major end market players to qualify and certify sapphire produced from their ASF systems for use of sapphire in handheld mobile devices.  Just 3 weeks later GT signed a confidentially agreement and 14 months later the two companies agreed to a SOW for to produce sapphire materials in Mesa, AZ.  I expect Apple to introduce the iPhone 6 covered in sapphire between June and September, which approximately 2 to 2.5 years after GT indicated their sapphire for mobile devices was being qualified and certified.

One of the most promising opportunities in the consumer market is the broader adoption of Sapphire and handheld mobile devices. GT’s ASF grown Sapphire is particularly well suited for these applications, and we’re actively working with several of our customers and major end market players that have approached us to qualify and certify sapphire produced on our ASF systems as a more cost-effective, scratch-resistant and optically superior alternative to other materials currently in use.

We believe that GT is the only sapphire equipment company capable of quickly scaling to support the quick ramp of quality, cost and sizable volumes that the mobile device market could require as sapphire gains wider market adoption. (GTAT Q2 2012 Prepared Remarks)

I wanted to spend some time focusing on Apple and GTAT relationship in the past just to show how long it took to go from sample testing to market introduction for sapphire cover screens on a mobile device.  The infrastructure and equipment ramp up would have been much less if GT did not engage with Apple but in genera it takes a good 18 to 24 months to go from sampling product to market introduction on a mobile device.

Rubicon’s Acknowledgement that GT will be providing Sapphire Cover Screens to Apple

Rubicon is equipment maker and sapphire producer. Unlike GT, they do not sell their equipment and they are truly a one trick pony.  Rubicon is primarily a sapphire producer for the LED market but as indicated by its management they are growing selling small sapphire cores to its polishing partners.  Rubicon’s smaller diameter cores of sapphire that are being sold for mobile devices are related to  the production of sapphire lens covers, which have been adopted by several phone manufacturers since Apple led the way in 2012.

Rubicon made some very telling comments regarding the sapphire use in mobile devices, specifically the use of sapphire for cover screens during their Q1 2014 conference call (Courtesy of Seeking Alpha).

The use of sapphire in mobile devices is a relatively new application and has a normal potential for growth. Smartphone manufacturers are looking to incorporate sapphire on the exterior of their devices due to the strength and optical characteristics it provides.

Thus far, most of the demand for these applications had come from one manufacturer. However, we believe we will begin to see greater adoption of sapphire in mobile devices. We participate in this market, primarily by selling a significant amount of smaller diameter core to our polishing partners. We are also well positioned to sell larger diameter bulk crystal in a variety of shades and dimension into the market as additional applications develop.

We also believe that we are in the very early days of the use of sapphire in the exterior mobile devices for applications like camera lens covers and home buttons. Based on our knowledge of the marketplace with the exception of one competitor who is building out capacity for a specific customer, none of the existing sapphire producers are planning to add capacity in the current environment and some competition is now leaving the market.

First of all, I think it’s very interesting that Rubicon even tried to cryptically cover up (no pun intended) the sapphire cover screen build out, “one competitor,” who is building out capacity for a “specific customer”.  The translation is GTAT is building out capacity in Mesa, AZ to cover Apple’s devices with sapphire screens.  The other very interesting point is that, “none of the existing sapphire producers are planning to add capacity in the current environment and some competition is now leaving the market”.  This is the clearest indication yet that GT’s build out in Mesa is on track and there has not and will not be a “Mayday Mayday Mayday” call to another sapphire producer to step in and help GT will Apple’s needs anytime soon.   Spare sapphire industry capacity outside of Mesa, AZ is absorbing mobile sapphire growth as well as players leaving the competition all together.

Conclusion

At this point GTAT is on target to supply sapphire screens for Apple devices by the middle of 2014, starting with the iPhone 6 and iWatch and followed later by the refreshed iPod.  It is still too early for me to assess the likelihood that GTAT will supply sapphire cover screens for the iPad, iPad mini and the rumored 12.9″ over sized iPad.  I can tell you Apple’s plans for sapphire do not begin and end with the iPhone and the iWatch but they will extend in some fashion across all of Apple devices, current and future.  Furthermore, it is also clear to me that even Rubicon knows that GT will be supplying sapphire screens to Apple.  Additionally, Rubicon indicated that, “none of the existing sapphire producers are planning to add capacity,” which is a clear indication that Apple and GT have built a moat around sapphire cover screens for at least the next few years.

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Sapphire Cover Screens: As Apple and GTAT lead the charge others will follow! 

Apple led the way in 2012 with sapphire camera lens covers and the rest followed.  Apple led the way with a sapphire home button in 2013 for biometric scanning and the rest are slowly following.  Apple will lead the way with sapphire cover screens in 2014 and the rest follow, but it might will them a few years or even longer.

If you don’t believe the Obscure Analyst just take a look at what Rubicon said 3 months ago during their Q4 2013 conference call and last week during their Q1 2014 conference call.

 

Rubicon Q4 2013 Conference Call

Apple was the first company to adopt a sapphire camera lens cover and now other smartphone manufacturers are also including sapphire lens covers for their newer models. Apple’s latest iPhone model, the 5S incorporated a sapphire home button.

The switch to sapphire for their home button in the 5S was because sapphire is virtually scratch proof and offers improved touch capacitance, which are important characteristics to ensure the effectiveness of the fingerprint recognition security they have built into the phone. It is our expectation that other mobile device manufacturers will also add similar functionality soon.

Rubicon Q1 2014 Conference Call

The use of sapphire in mobile devices is a relatively new application and has a normal potential for growth. Smartphone manufacturers are looking to incorporate sapphire on the exterior of their devices due to the strength and optical characteristics it provides.

 

Full Disclosure: I am long GTAT and I can’t wait to pre-order my sapphire covered iPhone 6

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by Matt Margolis

An Apple patent for continuous sapphire growth was brought to light earlier today and believe it or not Apple is not done improving the economic cost of making high volume sapphire.  Apple was granted a heat exchangers in sapphire processing patent on March 20, 2014.  The patent allows for sequentially arranging one sapphire growth furnace to heat a second furnace to process aluminum oxide.  Additionally, the invention allows for the creation of a heating system composed of a heat battery and a “plurality” of furnaces.  The heating system further includes an insulated network of piping in communication with the heat battery and each of the plurality of furnaces. Heat is transferred within the system between the heat battery and the plurality of furnaces via the network of piping and the heat exchangers.   Apple has patented the ability to create large network of sapphire growth furnaces that are fully integrated from a central heat battery and heat source.  Apple’s contractors have likely been retrofitting the facility with a matrix of integrated piping that will travel from the heater to the “heat battery” and flow to each individual furnace assembled and installed within the facility.  I recently reported that the Mesa facility has 9 distinct phases and it now appears clearer that each phase will be designed and assembled to custom fit the sapphire growth needs for each section.  What is even more interesting is the new patent for heat exchangers can be applied to each of the various sapphire growth processes.   Some highlights and images provided within the heat exchangers in sapphire processing patent are listed below:

 

Systems and methods are presented for efficient heating during production of corundum. One embodiment may take the form of a system for processing corundum including a first furnace and a second furnace. The first and second furnaces are sequentially arranged and heat from the first furnace is subsequently used to heat the second furnace.

 

Another embodiment may take the form of a method of operating multiple furnaces in sapphire processing. The method includes operating a first furnace and routing heat from the first furnace to a second furnace. The heat from the first furnace preheats the second furnace. The method also includes operating the second furnace subsequent to the operation of the first furnace.

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One embodiment may include linking all heating and cooling systems of the growers and furnaces together so that much less heat is wasted and greater efficiencies could be realized. Specifically, furnaces (either or both annealing and growth furnaces) could have their heating and cooling systems linked to other systems through heat exchanges. By staggering the processing schedules among groups of machines, heat that is removed from one furnace could be fed directly into another furnace to reduce the energy input requirement of its heating step. This could be achieved using some thermal fluid (water/pressurized steam, alcohol, solutions, molten salts, and so on) and an insulated network of piping within a cell of linked machines. As used herein, the term “furnace” may generally refer to a heating system or device which facilitates achieving temperatures for either growth or annealing of sapphire. As such, the furnaces referred to herein may include heat sources (e.g., heating elements), insulation, crucibles, and so forth.

 

Yet another embodiment may take the form of a heating system for sapphire production. The heating system includes a heat battery and a plurality of furnaces. Each furnace includes a heat exchanger. The heating system further includes an insulated network of piping in communication with the heat battery and each of the plurality of furnaces. Heat is transferred within the system between the heat battery and the plurality of furnaces via the network of piping and the heat exchangers.

 

Some common and distinct growth methods include Kyropoulos, Verneuil , Czochralski, flux, heat exchange method (“HEM”), hydrothermal, vertical horizontal gradient freezing (“VHGF”), Stepanov (i.e., edge-defined film-fed growth (“EFG”)), and Bridgman (i.e., horizontal moving growth). The Kryopoulos, Verneuil, Czochralski, flux, and hydrothermal processes generate a sapphire boule, whereas the EFG, VHGF and horizontal moving growth processes generate sapphire members having continuous cross-sections. It should be appreciated that although specific examples described herein may refer to a particular process for sapphire growth the examples are not intended to be limiting. As such, the present techniques, systems and methods may be used in conjunction with each of the various sapphire growth processes.

 

Figure 8 below shows how the Mesa facility is likely laid out with a continuous flow of piping and interconnected sapphire growth furnaces and annealing furnaces with equipment closely lined up in an organized matrix to form the most impressive sapphire production facility in the world.

 

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Figure 9 below exhibits how Apple can automate the process to take heat from the first furnace and heat a second first and then taking the heat from the second furnace to heat a new first furnace.  You need to think of the the mathematical constant known as Pi because this invention allows for a limitless amount of heat to be transferred from one furnace to the next furnace

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Mosaic Theory

I’m going to apologize in advance on this one but I cannot stay inside the box whatsoever.  Some of you have commented on the Mosaic theory and I’m going to attempt to push the limits in my next few items.

Apple has patented a process to use a “heat battery,” what is a heat battery?  According to a 2011 report researchers have found a way to turn the sun’s energy, geo-thermal energy or even fuel cell energy by using the thermochemical approach.  The thermochemical approach takes energy that is captured in the configuration of certain molecules which can then release energy on demand to produce usable heat.  And unlike conventional solar-thermal systems, which require very effective insulation and even then gradually let the heat leak away, the heat-storing chemicals could remain stable for years.  Some details from the 2011 report are below:

In effect, explained Grossman, this discovery makes it possible to produce a “rechargeable heat battery” that can repeatedly store and release heat gathered from sunlight or other sources. In principle, Grossman said, a fuel made from fulvalene diruthenium, when its stored heat is released, “can get as hot as 200 degrees C, plenty hot enough to heat your home, or even to run an engine to produce electricity.”

Compared to other approaches to solar energy, he said, “it takes many of the advantages of solar-thermal energy, but stores the heat in the form of a fuel. It’s reversible, and it’s stable over a long term. You can use it where you want, on demand. You could put the fuel in the sun, charge it up, then use the heat, and place the same fuel back in the sun to recharge.”

 

Apple is reportedly using solar power and geo-thermal energy to help power the Mesa Facility.  According to the contract document Apple will be using fuel cells, roof solar arrays, a solar basin and an Electrical Substation to manage the power supply to the Mesa sapphire facility.

Landlord further reserves a right of entry as reasonably necessary to maintain, repair, operate and monitor (or to cause the applicable utility provider to do the same) the Roof Solar Array, the Solar Basin, the Fuel Cell, and the Electrical Substation

 

GT Advanced recently posted an Electrical Engineer / PLC Controls position (see image below) on their website to focus on “Electrical design for power control and power distribution” and to “Provide support for customers as they configure their plant control systems to interface with our equipment.”  This new position also requires “Experience with industrial power systems including transformers, power controllers, and distribution equipment”.  Apple appears to have invented a new heat exchangers process that will rely on using a centralized “heat battery” can hold energy and would need to be distributed and interfaced with GT’s sapphire growth equipment inside Mesa.

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Conclusion

Apple and GT Advanced Technology have in my opinion designed and developed the most integrated and comprehensive sapphire growth facility in the world.  Apple’s recent patents, specifically the  continuous sapphire growth and the heat exchangers in sapphire processing patent are game changers in terms of yield per furnace and cost per sapphire cover screens.   I want everyone to picture the Mesa Matrix with me.  You are envisioning miles of large piping installed within the facility that will carry heat from a heater to the “heat battery,” where the energy and power can be managed by a switch.  The heat battery will carry the heat necessary to grow the sapphire and operate the annealing furnaces.

On top of the matrix of integrated piping to carry the heat to the furnaces to grow the sapphire crystal each furnace has a continuous supply of raw ingredients and heat to grow sapphire around the clock 24/7 and produce beautiful ribbons or sheets of sapphire crystals.  We need to remember that the heat exchangers patent can be applied to various sapphire growth methods including EFG and VHGF.  Per the Cradley Crystals website, “EFG method for growing sapphire is used for growing sapphire of any given shape, including tubes, rods, sheets, and fibers. EFG technology makes it possible to get unique shapes and sealed assemblies”.   Yes, I repeat any shape including sheets or tubes.

Figure 8 depicts the continuous growth process to load alumina into the crucible that will produce sapphire growth ribbons (sheets).

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Figure 6 depicts cutting the sapphire ribbons (sheets) that have been grown outside of the growth chamber.

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Apple has managed to take an independent ASF sapphire growth furnace that produces 200 kg+ boule every 25 days and turn their Mesa sapphire factory into a sapphire growth matrix.  Apple has patented a way to create an integrated heating process taking energy provided by mother earth, store it, manage the power and send the energy in the form of heat through miles of piping within the Mesa, AZ sapphire facility to power thousands of furnaces in a way no one ever thought possible.  In addition to the game changing method to provide heat to a sapphire growth furnace, Apple has patented a process that can continuously grow sheets of sapphire crystal in ANY shape their hearts desire.  Apple’s Mesa facility production design will significantly lower the cost of growing sapphire crystals due to the continuous sapphire growth method.  The patently process will result in less waste, easier fabrication process as well as a significant increase in sapphire crystal yield per sapphire furnace.  The continuous sapphire growth patent eliminates the need to start and stop up batch runs to produce sapphire boules, which dramatically increase the sapphire yield per furnace.  The sapphire sheets will significantly reduce the fabrication costs versus the cost to harvest a sapphire cover screen from a sapphire boule.  The amount of sapphire produced from a ASF furnace will also increase due to the unique shape and form of the sapphire sheets that are produced.

This invention is like going from a bread maker in the year 1700 to a bread maker in the year 2014.  The bread maker in 1700, mixed the ingredients by hand, used an open flame and made bread in a crucible.  After each loaf of bread was baked the bread maker had to clean out the crucible, restart the fire and bake each loaf one by one.  Conversely, the 2014 bread maker has an assembly line that takes the raw ingredients and mixes them in a massive storage container.  The container has automated process to express the mixed ingredients into crucibles that are shaped any which way.  The crucibles carrying the ingredients are carried along an automated belt to a very large oven that transforms the raw ingredients into bread as the crucibles pass through the oven.

The key point here is you can throw out any previous calculation on cost of sapphire screens, because the method being used by every other sapphire growth manufacturer is still stuck in the year 1700.  Apple and GT have advanced the design and method to grow sapphire by hundreds of years so to speak.   The sapphire that will be produced at the Mesa sapphire facility owned by Apple and operated by GT will be mind-blowing.   These new patent developments open up the door that Apple can cover any iDevice they want with sapphire crystal in 2014.  Apple and GT have revolutionized the sapphire crystal growth process and it’s time for me to take off my cap and give both companies a standing ovation for their innovation, vision and ability to deliver game changing technology at an affordable price!

 

I hope you have all enjoyed the journey through the Mesa Sapphire Matrix and that each and every one of you now has a full vision of what it will look inside Apple’s 1.3 million square foot sapphire manufacturing facility.

 

 

 

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

 

 

 

 

 

 

 

 

 

 

China Sets $164B LED Production Value by 2020

Posted: February 17, 2014 by mattmargolis24 in LED Industry News
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Digitimes reports that China’s government has set a 2020 target production value of all types of LED products of $164B this is double China’s plan of $82B from 2011 to 2015.   Mobile device manufacturers increasing their consumption of sapphire a key component in LED lighting.  China’s is increasing their appetite for expanding LED lighting.  My takeaway,  it seems very clear that sapphire manufacturers and sapphire equipment makers will be very busy building out new infrastructure to support the sapphire growth that lies ahead.

The China government has set a 2020 target production value of CNY1 trillion (US$164 billion) for all types of LED products, with 70% of the value to come from LED lighting, according to Digitimes Research.

The target production value for 2020 is double the CNY500 billion set for 2015 in China’s 12th Five-year Plan (2011-2015), and the corresponding proportion for LED lighting is 40ppt higher than the 30% set in the plan, Digitimes Research indicated.

Two main factors will account for the large growth in LED lighting: one is that China’s urbanized population as a percentage of total is forecast to keep rising from 52.4% in 2012 to 60% in 2020 and this is conducive to growth in demand for outdoor and indoor LED lighting; the other is that the total length of intercity freeways, railways and subways in China will increase to 4.5 million km, 120,000km and 3,000km respectively in 2015 and this will lead to demand for LED lighting.

In addition, there is fast growing demand for LED street lamps in China, and in 2014 particularly, the demand is estimated at 1.68 million lamps.