Sapphire becomes the darling of Apple Watch, or will it usher in a "second spring"?

Apple has recently sent invitations to media members and is scheduled to hold a special press conference on March 9, Pacific time (1:00 a.m. on March 10, Beijing time) at Greenfield Park in San Francisco. The slogan of this invitation letter is "Spring Forward", and the Apple Watch, which has attracted much attention before, will arrive as scheduled, including the sales price and specific launch time.

Apple’s official website shows that the WATCH series/18 models and Edition series/6 models will be equipped with sapphire crystals. The Watch back shell has four sapphire lenses. Infrared, LED and photometric sensors can measure heartbeat. Using gyroscope, accelerometer and GPS on iPhone, Wifi, Watch can provide a comprehensive view of daily activities, which allows users to establish goals and obtain corresponding rewards. The rear case crystal inherits the unique charging solution Magsafe, which allows for completely seamless charging.

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According to analysts, 40% of Apple Watches will be equipped with sapphire covers, which are supplied by Bourne Optics. And if the yield rate of this cover increases and the price drops, it is not ruled out that the proportion of Apple Watch equipped with sapphire will further increase. Sapphire was once the abandoned child of iPhone 6, but now it has become the darling of Apple Watch. At the same time, Apple’s sapphire supplier Lens Technology recently received approval for listing. With the combination of multiple positive factors, has the second spring of the sapphire sector arrived?

Apple has frequently paid attention to sapphire and opened up the sapphire application space

The sapphire concept began to gain popularity last year when GTAT announced that it had signed a multi-year, US$578 million high-grade sapphire material supply agreement with Apple.

Even if the cooperation between Apple and GTAT ends, the news that continues to be exposed still shows that Apple is still carrying out sapphire patent reserves. In February this year, Apple was approved for a new sapphire display patent. This patent will help Apple become a pioneer in the field of new display materials. In the patent document, Apple describes in detail a variety of methods for applying sapphire crystals to electronic devices, such as using sapphire glass to cover the iPhone camera lens, or the entire mobile phone screen.

“The application of sapphire in consumer electronics opens up new space for the growth of sapphire.” An anonymous analyst from Orient Securities believes that if sapphire is used in mobile phone lenses, homes, and screen protection glass, then based on the 1.658 billion global smartphones in 2016, the number of mobile phones will be The sapphire application penetration rate for camera lenses reaches 80%, the home button sapphire application penetration rate reaches 25%, and the sapphire application penetration rate for mobile phone screens reaches 15%. The new sapphire application market space will be nearly 5 billion US dollars, which will be more than 5 times the space of LED substrate materials.

Industry insiders pointed out that while the demand for LEDs is growing, the demand for sapphire substrates in the smartphone market has also achieved strong growth, which has alleviated the troubles caused by oversupply in the past few years to the sapphire ingot market. It is expected that by 2014, the demand for sapphire ingots used to produce components for smartphones and other mobile devices will account for 20% of total demand, up from 5% last year.

The progress of sapphire of key domestic listed companies

Tiantong Co., Ltd.: The company has formed a production capacity of 250,000 pieces/month of 4-inch LED substrate materials. There are now a total of 220 90kg furnaces (80 in Yinchuan and 140 at the headquarters). One crystal grew out of the 200kg crystal furnace not long ago, and a second one is currently growing. If the quality of the grown crystals is OK, 200kg furnaces will be installed on a large scale. The 370 furnaces to be expanded in Yinchuan in the future are most likely to be for large-size crystals.

Luxiao Technology: Last year, the company invested 200 million yuan of its own monetary funds and Bern Optical (Huizhou) Co., Ltd. invested 300 million yuan to jointly establish Bern Luxiao Sapphire Co., Ltd. Bern Roxia Company will purchase 200 units of 80kg sapphire crystal growth furnace equipment from Zhejiang Lutong Mechanical and Electrical Co., Ltd., a wholly-owned subsidiary of the company, for use in Bourne Roxia Company's sapphire production.

Southwestern Pharmaceutical: In August last year, Harbin Orade and Southwest Pharmaceutical just completed a backdoor listing through capital replacement. Ored is mainly engaged in the research and development, production and sales of sapphire crystal materials and single crystal furnace equipment. Its product fields have expanded from "sapphire crystal ingots" to "sapphire wafers", "single crystal furnace equipment" and other fields. It can mass-produce sapphire crystal ingots and products of 2 inches, 4 inches, 6 inches and above. It is currently one of the world's major suppliers of sapphire crystal ingots above 4 inches, and supplies sapphire materials to Apple's traditional cover plate processing factories Lens Technology and Bourne Optics.

Han’s Laser: The company’s sapphire cutting equipment achieved large-scale sales in 2014. Sales of sapphire cutting equipment in the third quarter of last year mainly came from the purchase of Apple Watch screen manufacturing needs. Industry insiders speculate that with the increased volume of Apple Watch this year, Han's Laser's orders for sapphire cutting equipment are expected to reach about 400 units and contribute 1.2 billion in revenue.

Dongjing Electronics: With a total investment of 1.2 billion yuan, the company established two wholly-owned subsidiaries, Zhejiang Dongjing Optoelectronics and Huangshan Dongjing Optoelectronics, and established a holding subsidiary Dongjing Bolant in cooperation with South Korea. The three subsidiaries jointly implement LED projects in phases and projects. The company recently stated on the interactive platform that it is currently undergoing trial production and customer certification, and is gradually realizing mass production.

Crystal Optoelectronics: Benefiting from the strong demand for downstream LEDs, especially the tight supply in the PSS substrate industry, the company's PSS products have good profitability, and the overall sapphire substrate has shown rapid growth. The private placement plan was released on the evening of July 30 last year. The sapphire crystal growth and deep processing project with an investment of 586 million yuan is the key project of this private placement investment. The project will build a production line with an annual output of 1.2 million pieces of 4-inch patterned sapphire LED substrates (PSS), a production line with an annual output of 24 million pieces of sapphire window sheets, and an "80 kg" long crystal production base with an annual output of 2.5 million mm sapphire ingots (based on 2 inches).

Lens Technology: The company is about to be listed on the GEM. The company's prospectus shows that the company mass-produced sapphire fingerprint recognition protection lenses, sapphire camera protection lenses and sapphire fingerprint recognition protection lenses in 2013. Sales have been good after the launch. In 2013, the company's sapphire product sales revenue has reached 1.234 billion yuan. From 2012 to 2014, the company's sales to the top five brand customers accounted for 96.25%, 93.10% and 86.69% respectively, of which the total sales to Apple and Samsung accounted for 87.65%, 83.60% and 74.15% respectively.