Alternative competition
GT Advanced Technologies Inc (NASDAQ:GTAT) is taking an alternative approach by developing a method for making sapphire sheets thinner than a human hair. By laminating an ultrathin layer of sapphire with cheaper transparent material, the performance advantage of sapphire can be maintained at a cost comparable to that of the glass used in mobile-phone displays. GT Advanced is much more optimistic about prices than the analyst, Eric Virey, and believes that sapphire displays could cost only 3-4 times as much as those made from Gorilla Glass. As GT improves its furnaces, and as the manufacturing becomes streamlined, the price could fall further. Logically, GT Advanced had acquired Thermal Technology, valued around $14.7 million, in mid-May. By acquiring Thermal Technology, GT Advance now has the annealing technology, which the company believes will be important in the manufacturing of sapphire cover screens. GT Advance is moving aggressively into new markets, including smartphones. However, could GT Advanced Technologies Inc (NASDAQ:GTAT) catch up with Corning’s speed of innovation, while its Gorilla Glass continues to generate strong cash flow and is used by more than 33 major brands and featured on more than 1.5 billion devices internationally? Cost will remain a key issue going forward, as smartphone providers continue to compete head-to-head.
What now?
Although sapphire glass appears to be a viable alternative, Corning Incorporated (NYSE:GLW)’s Gorilla Glass will continue to dominate the mass market with its cost and production advantages. Corning continues to innovate aggressively and has also recently launched Corning Lotus XT Glass, a second-generation glass substrate formulated for high-performance displays. Lotus XT Glass is designed to have improved thermal and dimensional stability over higher temperatures, generating higher yields for Corning’s customers. Corning Incorporated (NYSE:GLW) also has ultra-slim, flexible glass, called Willow Glass, which is rumored to be deployed for Apple Inc. (NASDAQ:AAPL)’s smart watch. Most importantly, as Gorilla Glass continues to evolve, more features can be expected, such as reflection reduction and native antimicrobial technology to attack and eliminate bacteria and germs on surfaces.
Bottom line
Sapphire glass is a possibility, yet it is still not cost-effective for mass production of smartphones. Corning’s innovation will continue to help the company maintain its leadership position in the mass smartphone market. However, as the innovation continues to evolve, investors should definitely keep an eye on the new technology developed by companies, such as GT Advanced Technologies Inc (NASDAQ:GTAT), whose share price increased nearly 50%, while Corning Incorporated (NYSE:GLW) only advanced 25% YTD.
Nick Chiu has no position in any stocks mentioned. The Motley Fool recommends Apple Inc. (NASDAQ:AAPL) and Corning Incorporated (NYSE:GLW). The Motley Fool owns shares of Apple and Corning.
The article Can Gorilla Beat Sapphire? originally appeared on Fool.com.
Nick is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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