NASHUA, N.H.--()--GT Advanced Technologies (NASDAQ: GTAT) today announced that it received a $29 million follow-on order for ASF™ units from an existing ASF customer in China. The company believes the units will be used to produce sapphire for the mobile device market. The order is scheduled for delivery by the end of CY12 and the expected revenue is included in the company’s CY12 revenue range of $925 million to $975 million that it reiterated today in a separate press release.
GT also indicated that it and several of its ASF customers have entered into evaluation agreements or are, in conjunction with fabrication partners, actively sampling ASF-grown sapphire screens for use in mobile and point of sale (POS) devices.
GT continues to believe the sapphire mobile device opportunity will contribute to a significant inflow of ASF orders in the second half of CY13.
The company noted that several factors have driven the recent interest in ASF-grown sapphire as a viable alternative to materials currently used in mobile and POS devices. These factors include sapphire’s superior strength, ruggedness and scratch-resistance as well as its ability to deliver a compelling brand differentiation by improving the user experience. GT’s ASF platform is well positioned to meet the quality and high-volume production requirements for crystal growth for these applications.
Cost is an important factor in the manufacturing of mobile devices, and the cost of sapphire is expected to be within an acceptable range given its compelling value proposition. The company expects that the cost for growing and fabricating sapphire for mobile devices will be considerably lower than for LED applications for several reasons, including:
- The ASF crystal growth process can be optimized to deliver higher yields of useable material resulting in lower costs when harvested for bricks/screens vs. cores/wafers;
- GT is actively working with consumable suppliers and expects significant cost reductions from a growing Asian supply chain;
- Tolerance requirements for the mobile device sapphire screens will be significantly lower than epi-ready surfaces in HB-LED manufacturing, further reducing cycle times and consumable costs;
- Fabrication costs have the potential to come down driven by equipment that can slice boules into bricks rather than cores;
- Several fabrication steps may be eliminated when fabricating sapphire for mobile devices including CMP (chemical mechanical polishing) as well as rough and fine lapping, with the latter being replaced by faster grinding processes; and
- Mobile screen fabrication may allow for the use of existing polishing and grinding equipment capacity at existing large volume subcontractors in Asia, removing the requirement for new fabrication equipment.
As a result, the company believes that sapphire screens for mobile devices, once commercialized, will have a cost of ownership that will be competitive with current solutions. More specifically, GT estimates that a fully fabricated sapphire smartphone screen will be $10 to $20 higher than the price OEMs pay for current screen solutions, with the differential dependent on the level of vertical integration by the OEMs or their manufacturing partners. Given the compelling overall value proposition of ASF sapphire screens, initial feedback from industry leaders suggests this cost differential for a superior product will be acceptable. Factors affecting this consideration are the exceptional strength and scratch resistance of ASF-grown sapphire which are expected to lower the rate of cracked or broken screens thereby providing a better overall user experience. In addition, the company noted that the expected price differential between ASF-grown sapphire and the current solutions is less than what consumers typically pay to replace a single cracked screen as well as being less than what consumers typically pay for screen protectors and protective cases.
The company expects that there will be significant potential to reduce the cost of producing sapphire smartphone screens over time as the industry matures, increases scale, vertically integrates and continues to advance technology innovations at both the crystal growth and fabrication stages.
About GT Advanced Technologies Inc.
GT Advanced Technologies Inc. is a global provider of polysilicon production technology and sapphire and silicon crystalline growth systems and materials for the solar, LED and other specialty markets. The company's products and services allow its customers to optimize their manufacturing environments and lower their cost of ownership. For additional information about GT Advanced Technologies, please visit www.gtat.com.
The information in this press release relates to the Company’s future expectations, plans and prospects for its business and industry that constitute "forward-looking statements" for the purposes of the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to: the Company’s revenue guidance for the calendar year ending December 31, 2012; the timing of delivery of ASF ™ units under a recently received follow-on order for ASF ™ units; the Company believes that the sapphire mobile device opportunity will contribute to a significant inflow of ASF orders in the second half of CY13; that sapphire may be a viable alternative to materials currently used in mobile and POS devices (and the specific factors that make it so); the cost of sapphire is expected to be within an acceptable range given its compelling value proposition; the expectation that the cost for growing and fabricating sapphire for mobile devices will be considerably lower than for LED applications; the reasons that such costs are expected to be considerably lower, including the information contained in each of the bullet points referenced in this press release; the Company believes that sapphire screens for mobile devices, once commercialized, will have a cost of ownership that will be competitive with current solutions; the Company’s cost estimates in connection with a fully fabricated sapphire smartphone screen in relation to the price OEMs pay for current screen solutions and the potential impact of the level of vertical integration by the OEMs or their manufacturing partners on this cost; the cost differential for a sapphire (superior) product will be acceptable (and each of the factors affecting this determination); the exceptional strength and scratch resistance of ASF-grown sapphire are expected to lower the rate of cracked or broken screens thereby providing a better overall user experience; the expected price differential between ASF-grown sapphire and the current solutions is less than what consumers typically pay to replace a single cracked screen as well as being less than what consumers typically pay for screen protectors and protective cases; the Company’s expectation that there will be significant potential to reduce the cost of producing sapphire smartphone screens over time as the industry matures, increases scale, vertically integrates and continues to advance technology innovations at both the crystal growth and fabrication stages.. These forward-looking statements are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside the Company's control, which could cause actual events to differ materially from those expressed or implied by the statements. These factors may include the possibility that the Company is unable to recognize revenue on contracts in its order backlog. We cannot guarantee that our bookings or order backlog will result in actual revenue in the originally anticipated period or at all, which could reduce our revenue, profitability and liquidity. Other factors that may cause actual events to differ materially from those expressed or implied by our forward-looking statements include the impact of continued decreased demand and/or excess capacity in the markets for the output of our solar and sapphire equipment, general economic conditions and the tightening credit market having an adverse impact on demand for the Company’s products, the possibility that changes in government incentives may reduce demand for solar products, which would, in turn, reduce demand for our equipment, technological changes could render existing products or technologies obsolete, the Company may be unable to protect its intellectual property rights, competition from other manufacturers may increase, exchange rate fluctuations and conditions in the credit markets and economy may reduce demand for the Company's products and various other risks as outlined in GT Advanced Technologies Inc.'s filings with the Securities and Exchange Commission, including the statements under the heading "Risk Factors" in the company's quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2012. Statements in this press release should be evaluated in light of these important factors. The statements in this press release represent GT Advanced Technologies Inc.'s expectations and beliefs as of the date of this press release. GT Advanced Technologies Inc. anticipates that subsequent events and developments may cause these expectations and beliefs to change. GT Advanced Technologies Inc. is under no obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.