But Apple and GTAT seem set on doing exactly that.
The most extensive cost and price projections that are public seem to have been done by Yole Developpement, based on its own sapphire manufacturing cost model. According to Virey, and assuming a display size of 2.75 x 5.39 inches (larger than the current iPhone), the Yole model estimates that the initial cost is $6.40 per unit at the slab level, before the raw material is cut, polished, and processed.
If that turns out to be true, it's a huge achievement in cost reduction for the raw material. It ultimately hinges on squeezing the maximum number of high-quality wafers from each boule, and preserving them through the finishing process to assembly.
"We modeled a $17 cost initially for the finished part," Virey says. Adding in margins for the various supply chain partners, "we expect Apple to initially pay around $20 per part," he says. "That's a significant increase compared to an equivalent part made of Gorilla Glass, which should cost around $3."~~
If Apple releases sapphire for only the high-end iPhone model, and not for the c' variant, it could possibly pass the cost to the buyer in the form of a higher price. Or Apple could absorb the costs itself, reducing the iPhone's margin and hence its profitability at least temporarily. Virey notes that some of the added costs could be offset by savings in warranty costs due to fewer cracked iPhone screens.
In any case, Apple may be perfectly willing to absorb the extra cost. "We believe that when Apple introduced the first iPhone with a Gorilla Glass display cover, the cover cost was then over $10 per unit," Virey says. "It shows that when Apple believes in a new technology or material, they're willing to take a hit on the bill of materials costs. Of course, to commit for the long term, there needs to be a convincing cost reduction roadmap somewhere."
Apart from the economies of scale being realized by the Mesa factory, Apple may be looking to a GTAT technology, acquired in 2012 from Twin Creeks, which will emerge in 2015: Hyperion, an ion-deposition system that embeds a layer of ions just under the surface of a material like sapphire, and then "splits off" (or exfoliates, in GTAT jargon) an ultra-thin slice, which can then be laminated to a much less costly substrate of glass or other material.
Some bloggers and analysts speculated that Hyperion is already, or will be soon, part of the Mesa factory. But GTAT President and CEO Tom Gutierrez was explicit during the February 2014 earnings call that it was not. "Hyperion is not a major contributor to revenues in 2014," he said. In response to an analyst's question about Hyperion and the Mesa factory, Gutierrez said, "You're making a connection of Hyperion to the Arizona project. That's not a good connection."~~
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