Apple Inc. (AAPL): Should Corning Incorporated (GLW) Be Scared of Sapphire?

Talk of this possibility began last year, with Sterne Agee supply checks finding prototype smartphones with sapphire displays in the works. Most of the sapphire industry sells into the LED industry, and incremental opportunities in smartphones could be enormous. Sterne Agee estimated that the smartphone industry translated into 9 billion square inches of material in 2012, which towers over the 150 million square inches used by the LED industry over the same time. If sapphire were able to penetrate just 2% of the smartphone market, the industry’s addressable market would double.

Crystalline winners
Sapphire suppliers like Rubicon Technology, Inc. (NASDAQ:RBCN) and GT Advanced Technologies Inc (NASDAQ:GTAT) could benefit in the same way that Corning did years ago.

Cover and touchscreen applications of sapphire. Source: GT Advanced Technologies.

Rubicon is a vertically integrated supplier that uses a proprietary technology for growing the crystals that it calls ES2. Rubicon believes its methods are more efficient than traditional growing methods used by rivals. GT Advanced is hoping to put thin layers of sapphire on top of the touchscreen displays found on mobile devices, which could be a cheaper alternative than an all-sapphire display. GT’s estimates of sapphire costs are less, and the company believes that they cost “only” three to four times as much as Gorilla Glass.

As sapphire makers progress down the cost curves, even as Corning Incorporated (NYSE:GLW) continues to strengthen Gorilla Glass at lower price points, someday soon Corning may need to fear this crystalline transition materializing.

The article Should Corning Be Scared of Sapphire? originally appeared on Fool.com and is written by Evan Niu, CFA.

Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends Apple, Corning, and Google. The Motley Fool owns shares of Apple, Corning, and Google.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.