GT has retrofitted and qualified several hundred ASF furnaces located in its Salem, MA facility. Additionally, GT has been growing sapphire for Apple since Q4 2013.
GT turned on 140 ASF furnaces at the Mesa, AZ facility on January 10, 2014, which aligns closely with the original”intended” date of January 6, 2013.
GT received and began installing ASF furnaces inside the Mesa, AZ facility by December 10, 2013.
The information outlined in the amended 10-Q further confirm my previous conviction that GT’s sapphire growing operations for Apple are on track and ready to deliver the goods to Apple
GTAT is selling sapphire boules (large block of sapphire 200+kg each)
They are shipped to two processors in Asia...where they are cut with diamond saws and lasers.
Than processed into a laminate sapphire on the top and bottom with treated glass in the middle.
Apple patent explains the process and the added strength that is gained thru this process.
Then they are polished and treated with a coating to avoid fingerprint oil smuges.
Potential next year is to use Hyperion to do the cutting and avoid kerf waist that happens with diamond saw processing ....the sapphire waist is recycled back to GTAT and remelted into new boules.
End result next year would lower total cost to Apple as well as raise revenue for GTAT for doing more of the total processing.
Apple also has a patent that with ion processing ( think Hyperion) they could etch a serial # or part number into the sapphire slices of sapphire.
Sentiment: Strong Buy
Thanks. This deal has been in the works since 2012 and began as a partnership with GT and AAPL working together. I find it hard to believe that AAPL and GT would start with 0 inventory in Jan 2014 before embarking on ramping up such a massive operation-I have not read any reports or seen any analysis taking this into account yet.
I have also tried to estimate potential output and I get about 15 million screens per month (all 4.7"). Matt has done the same and comes up with 17.4 million per month. As Matt, in my view, has the best insight (better than all the wall street analysts) I would trust his number over my own. I believe we can strong faith in the 17.4m per month number.
Looks like you forgot to add a 0 after the $4.
I for one, am sure they are going to be proven wrong to some degree, but remain open minded there may be some production issues during startup. It may not be the result of material quality and may not be an issue at all. Then again, with the enormous current draw from 2000 furnaces, i can see some electrical startup issues, especially if on a new solar plant.
There are all kinds of possibilities and I'm sure well all know more in a week, and be able to put all this behind us at that point, with the worst of issues fully resolved.
The only remaining question i have is, how badly are this past quarters financials going to be hurt. GTAT is going to have to bear the financial burden for any shortcomings, meaning, this years positive earnings estimate, barely positive on the estimate, will go negative and that is not exactly a morale booster for the average investor.
The CLSA report said that a sapphire expert reported that GTAT's yields are poor. if the sapphire expert is internal to GTAT, then that means s/he is violating the GTAT/AAPL non-disclosure agreement. if the sapphire expert is external, then s/he does not know anything and is misleading the CLSA analyst.
The Cannacord report states: "The financial service firm noted that GT has a contract to supply Apple (AAPL) with sapphire glass screens in the upcoming iPhone 6 and iWatch. Canaccord downgraded its rating on GT to hold from buy and said it is unclear how much of GT's product Apple will use, and how much it will add to GT's earnings potential." The problem with this is that Cannacord kept their price target the same (at $20), but then said that most of the price catalysts are already priced into the current valuation. So the stock should not drop if the PT was higher than the current valuation and Cannacord has confirmed that GTAT is going to work with AAPL.
The UBS downgrade was based on Stephen Chin's supply chain checks. The problem here is that GTAT has never told Chin how much they are shipping. And GTAT put out a press release saying that they re-aligned their manufacturing, engineering and supply chain resources (http://finance.yahoo.com/news/gt-announces-realignment-manufacturing-engineering-120000266.html), meaning that there should be a small slowdown in production in order to increase long-term production. So Chin was also wrong.
Oh yeah, I also spoke with GTAT IR. They said that they saw the reports that were published by the analysts, but they are not able to comment in response because of their relationship with AAPL (because of their relationship, GTAT also cannot tell anything to the analysts, so the analysts are all assuming this based on unverified, 3rd party information). however, IR said that they are excited to continue their relationship with AAPL - which tells me that AAPL is NOT dumping GTAT.
Sentiment: Strong Buy
Ive never seen an article on scrap sapphire. Imagine world record quantities becoming available soon. The excess being sawn off for making of camera lens, displays, etc is going to be record setting and that in itself could be an extremely valuable commodity. I have often wondered if heated back up to 3400 degrees could it be fabricated into new and larger boules again. Also, what about sandpaper, grinding wheels, saw blades, including sapphire tipped chain saw blades, and other tooling.
What do you think Apples vendors will do with all the tonnage left over from the worlds largest sapphire producer?
Agreed. Based on your numbers, seems like the options would be very thin pure 100% sapphire/laminate or could always throw out a fraction on the total sapphire required if you are in the sapphire-glass blend camp. Fun to think about. I too am heavily invested in GT-so much evidence that AAPL has big plans for sapphire in the next few years. Will no more after q2 earnings report. All about TGs guidance until we get legit news...
The most important news from the GLW call on Tuesday will be guidance. If guidance is strong, then most likely GG will be used on upcoming iPhones and/or iWatches. Even so, if GG is used, we will still not know if Sapphire will be implanted on it or not. Either way, given the tricks of Wall Street, I predict that GTAT will fall temporarily on strong guidance. THIS WILL BE THE BEST BUYING OPPORTUNITY for GTAT!
Conversely, if GLW guidance is below the street, I would look at that as a boost for GTAT as all indications would point to usage of sapphire in the iPhones and/or iWatches. I look for no news announcements from GTAT until they release earnings on 8/5. Aftrer that, I could see several positive releases relating not to sapphire, but Merlin and Hyperion. News is long overdue in those areas. Any sapphire news will be at the hands of APPL.
I was really doing this for my own interest as I have a decent chunk of change invested.
I believe the key to supplying the screens is to have these sliced very thin in the .001" range. Certainly do not take these numbers to the bank. I do not work in this industry, so had to make a few assumptions.
Good analysis. You do that in Matlab? What went into your assumptions to get your screen thickness? Another variable is your starting amount of sapphire. This deal has been in the works for some time now-seems reasonable to assume the amount of sapphire produced 0 on Jan 1, 2014.