It's no secret that Apple (AAPL) has been mulling over a major design change in its forthcoming iPhone 6, which is expected to be introduced in September, by equipping the device with a sapphire glass front.
Now the tech giant is giving the strongest signal yet that it's set to move away from "Gorilla Glass," the material currently used in iPhones, in favor of sapphire. The Wall Street Journal reports that Apple is investing $700 million in a new production line built in collaboration with materials manufacturer GT Advanced Technologies (GTAT), which makes sapphire glass.
That would give Apple access to twice the current global production of the material, which as tests show seems virtually destructible.
Apple's shift to sapphire would be bad news for Corning (GLW), which makes Gorilla Glass and which in recent years has worked hard to retool its brand so that the company is known more for the parts it makes for mobile devices than its signature casserole dishes. Apple is a trendsetter in design. The danger to Corning is that others could follow its lead in embracing sapphire, cutting down the market for the company's highest margin product line.
Apple is a leading user of Gorilla Glass, a tough and scratch-resistant material. These days, it's used by dozens of major brands in thousands of product models and 1.5 billion devices sold globally, according to Corning. Gorilla Glass has become the go-to choice for mobile devices because of its excellent strength-to-thickness ratios and ability to withstand daily handling.
Still, there's room for improvement. Tests by gadget protection plan company SquareTrade showed that the iPhone 5c and 5s, in particular, were more likely to break if dropped than previous iPhones. The company has also reportedly estimated that more than 1 in 10 iPhones have damaged screens.
Sapphire glass is attractive because it's made of material second only to diamond in hardness, which means it should be extremely scratch-resistant. It is also allegedly four times tougher than Gorilla Glass in resistance to fractures. The material is already in use in high-end watches, armored vehicle windows and military body armor visors. By contrast, it is two-thirds heavier than Gorilla Glass.
Corning claims that sapphire glass breaks more easily than Gorilla Glass, and also says it is more costly to produce and is worse for the environment.
The company's concern is understandable. Gorilla Glass is a big driver of Corning's profitability. Revenue for its specialty materials division was lower than expected last quarter. Gross margins for the company as a whole were also off for the same reason. During its most recent conference call, CFO James Flaws blamed the drops largely on lower Gorilla Glass sales stemming from a decline in purchases of smartphones and, especially, tablet computers.
Apple and Corning did not immediately respond to requests for comment.
It's not that Apple is the sole market for Corning's material. Although the iPhone is a major product line in the U.S. and Western Europe, Android dominates the global market. That leaves many phones that could use Gorilla Glass.
Gorilla Glass also has other characteristics that make it valuable in a number of applications, including waveguides in optical communications and health care sensors. Health care is a big target market for Apple.
According to J.P. Morgan analysts, a broader industry shift to sapphire glass doesn't seem to have driven the drop in Gorilla Glass sales. But Apple sets the design bar for smartphones. If it does largely switch to sapphire and has success, other vendors could switch as well, putting economic pressure on Corning and shareholders.