Rumor: Apple Supplier Foxconn Testing Production of Sapphire iPhone

Source: Apple.comApple (NASDAQ:AAPL) supplier Foxconn — also known as Hon Hai Precision Industry — has successfully completed a trial production run of about 100 iPhone prototypes with sapphire displays, according to sources cited by the Taiwan-based Apple Daily via Apple Insider. Sapphire is stronger and more scratch-resistant than the Corning (NYSE:GLW) Gorilla Glass currently used by Apple for its devices. However, sapphire is also more expensive to produce, more difficult to polish and harder to cut.

According to Apple Daily’s sources, Apple’s two major suppliers of sapphire — Synopsys (NASDAQ:SNPS) and Bern Optics – have recently expanded their operations with a “massive purchase of new equipment.” Although Apple currently only uses sapphire as a protective cover for the Touch ID fingerprint scanner and the iPhone’s camera lens, it already consumes 10 percent of the world’s sapphire supply, reports Apple Daily.  However, as noted by Apple Daily, the sapphire suppliers’ recent investment in new equipment seems to suggest that Apple’s demand for sapphire is about to increase.

Last year, Apple’s announcement of a partnership with sapphire manufacturer GT Advanced Technologies (or, GTAT) sparked speculation that the iPhone maker would soon begin using sapphire as the primary material for its mobile device touchscreens. According to GT Advanced Technologies, Apple’s $578 million investment “accelerated the development of its next generation, large capacity ASF [Advanced Sapphire Furnaces] furnaces to deliver low cost, high volume manufacturing of sapphire material.” Although some industry watchers believe Apple is preparing to replace Gorilla Glass with sapphire, others speculate that the sapphire production may be intended for a new product, such as an iWatch.

One issue with replacing Gorilla Glass with sapphire is the higher cost. According to Corning, Gorilla Glass costs “less than a tenth of sapphire.” However, last year Apple published a patent that outlined new methods for manufacturing and fusing sapphire sheets together that may allow the iPhone maker to overcome the cost issue.

Foxconn is best known as the biggest manufacturer of Apple’s iPad and iPhone products. However, the Taiwan-based company also makes electronics components for many other U.S. companies, including Hewlett-Packard (NYSE:HPQ) and Amazon (NASDAQ:AMZN). Foxconn also recently secured a five-year deal with BlackBerry (NASDAQ:BBRY) to jointly develop and manufacture some of Canadian smartphone maker’s new devices.

A series of suicides at Foxconn facilities over the last several years drew attention to Apple’s overseas labor practices and led to the company joining the Fair Labor Association in 2012. The FLA’s latest inspection of several of Foxconn’s facilities found that the Apple supplier was complying with most of the organization’s labor codes. Although Foxconn appears to have resolved its most serious labor violations, some of the company’s executives were recently embroiled in a bribery scandal that involved taking kickbacks from other Apple component suppliers.

Here’s how Apple traded on Friday.


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