Apple Inc. (NASDAQ:AAPL), which will use a new crystal sapphire production plant in Arizona to make display covers for its upcoming iPhone 6, has begun shipping sapphire from the plant to Chinese suppliers in preparation for mass production of the new handset later this year.
Apple partnered with GT Advanced Technologies to open the Arizona sapphire plant and make the material that will be used in the iPhone 6’s display, According to a report Wednesday in 9to5Mac that cited UBS Research’s first-quarter preview of GT Advanced Technologies (NASDAQ:GTAT). If true, it means that Apple will not use Corning’s Gorilla Glass found on the existing iPhone models.
UBS analyst Stephen Chin said sapphire production likely started last month, adding that GT Advanced Technologies confirmed last week that it received a third prepayment from Apple.
Chin estimated that GT had shipped only about $1 million worth of sapphire to China in March, while that number could increase to about $50 million every month once the Arizona plant is fully functional, AppleInsider reported, adding that the Chinese partner is expected to be utilizing the limited shipment of the sapphire to make scratch-resistant covers.
Apple holds many patents for the manufacture and use of sapphire in products like the iPhone. The company currently uses sapphire glass, which provides better durability and scratch resistance than other forms of glass, in camera lenses and on the Touch ID-equipped home button on the iPhone 5s.
According to reports in February, GT Advanced had received 518 fully assembled furnaces, which can produce enough sapphire for 103 million to 116 million 5-inch iPhone displays. There were an additional 420 unassembled machines that could boost the production numbers to about 200 million units.
Meanwhile, Morgan Stanley analyst Katy Huberty said Apple could add as much as 30 percent to its U.S. iPhone sales if the company were to release a new iPhone with a larger 5-inch display.
According to a report by Huberty, Apple could sell 66 million 5-inch iPhone 6 units in the U.S. next year versus 51 million if the product lineup remains the same. She also estimated that eight out of 10 iPhones in 2015 would be sold to existing iPhone owners, AppleInsider reported.
"Current iPhone owners value the software, brand, ability to synchronize to other Apple devices, and the App Store's quality and size more than the average user, which drives Apple's high loyalty rating," Huberty’s report said.