mobile sapphire touchscreen ag 17 jul 14

Mobile Sapphire Touchscreen

Andrew Gao, Project Manager

Private & Confidential

Two wise quotations from President Park for CEA as business principles with LG Siltron

o “To make friendship first, then to do business.”o “To go fast, go alone; to go far, go together.”

— Quotations of President Park Geun-hye, during her China visit speech in June 2013

July 17, 2014

Private & Confidential2

July 17, 2014


Part 1: Why sapphire touchscreen?

Part 2: iPhone 6 and GTAT

Part 3: Korean sapphire industries

Part 4: Our solution of low investment

Why sapphire touchscreen?

o Gorilla Glass from Corning is the most popular touchscreen glass solution for Samsung, LG, iPhone, HTC and Sony.

o Gorilla Glass cannot be scratched by knife, as silica glass is harder than stainless steel. But it can still be scratched by sand. The hardness of sapphire is only second to diamond and is 4 times tougher than Gorilla Glass.

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o Only diamond is harder than sapphire.

o The dielectric constant of sapphire is 30% more sensitive than glass, with higher touch sensitivity.

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o The current price of 5.5" Gorilla Glass is 3 USD, while sapphire alternative is 30 USD and iPhone is priced at 200~300 USD.

o With the development of sapphire industry, this cost can be reduced to 20 USD in several years.

o All the major mobile producer is considering the replacement of sapphire for glass touchscreen.

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iPhone 6 and GTAT

o Source in Nov 2013: Apple has invested 578m USD to accelerate the GT R&D.

o Source in Feb 2014: 518 pcs of GT sapphire grower has been purchased, and 420 pcs has been booked. 3 years' equipment capacity of GT has been bought out by Apple! For this order, the production capacity is 103m~116m pcs of sapphire touchscreen, plus 90m pcs of spare capacity. This means that Apple has total capacity of 100m~200m pcs of 5.5" sapphire touchscreen, while the total sales of iPhone in 2013 is 150m pcs.

July 17, 2014


iPhone 6 and GTAT

o Source in March 2014: GT got order of 188m~348m USD from Apple (9%~16% of Apple equipment budget) for 6.27m~11.6m pcs of 5.5" sapphire touchscreen. Apple plan to release 70m pcs of iPhone6 in 2014.

o Source in May 2014: Apple has paid 3/4 of sapphire funding to GT. 5.5" sapphire touchscreen will be produced in Arizona. From April 2014, Apple started to deliver sapphire to Foxconn in China. iPhone6 will be released in this Autumn.

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Market size of Phone 6

o 2014: 40m pcs of sapphire iPhone = current sapphire industry size

o 2015: 120m pcs of sapphire iPhone = 3 times of current sapphire industry size

o All iPhone with sapphire touchscreen = 5~7 times of current sapphire industry size

o In iPhone5s, sapphire has been applied onto the mobile camera window and "home" button. Such saphire is produced in Harbin Aurora.

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Sapphire screen on luxury mobile brand Vertu

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Product Size Year Price

Rococo 2.4" 2008 18k USD

Ayxta 2.4" 2009 20k USD

Constellation Quest 2.4” 2010 27k USD

Ti 3.7" 2013 20k USD

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Global smartphone vendor shipments growth from Q3 ‘12 to Q3 ‘13

14Private & Confidential

Source: Strategy Analytics

0

10

20

30

40

50

60

70

80

90

100

Samsung Apple Huawei LG Lenovo Others

Global smartphone vendor shipment growth

Shipment Q3 '12/m pcs Shipment YOY increase in Q3 ’13/m pcs

The big gap between sapphire touchscreen demand and the current capacity in Korea


The demand for 5.5” sapphire touchscreen from Samsung and LG will be 200~400m pcs/yr. For 5.5×5.5/2×2=7.6, 300/22.8= 13.2, and 7.6×13.2=100, Compared with the total Korean sapphire capacity, the demand is around 100 times!

Company Substrate size Capacity for 2” WebsiteHansol 2”, 4” 500k pcs/mth www.hansoltechnics.com

SSLM 4”, 6” 400k pcs/mth www.sslm.co.kr

ILJIN 4”, 6” 400k pcs/mth www.iljin.co.kr

STA 300k pcs/mth www.sapphiretek.com

SKC 300k pcs/mth www.skc.kr

Total 22.8m/yr

Strategy of Samsung and LG

o As many manufacturers have recognized its feasibility for sapphire touch screen, and Apple has aggressively invested of $578m in sapphire growth and cutting in US, the follow-up by Samsung and LG may be faster than we think.

o Samsung and LG are planning sapphire touch screen in their new mobile. These two companies are asking for sapphire touch screen samples from a Korean sapphire supplier, possibly SSLM.

o Samsung once thought about using this advanced material, but gave up due to high cost. Largely reducing the usage cost of sapphire has made Samsung re-think about this touch screen material.

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Difference for sapphire touchscreen manufacturing with no competition from China

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Solar wafer and LED sapphire Sapphire touch screen

Cost-driven Sales-channel-driven

Too many manufacturers Very few manufacturers

Too many clients Very few clients

Cost-effectiveness-based Quality/performance-based

Scaling up gradually One time of big investment

Million USD company Billion USD company

Vibrating price Stable price

Low margin High margin

SSLM (Samsung Sumitomo LED Materials) is getting ready, but its 80.1% share by Sumitomo Chemical is a concern.

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Squarer (NWSS-500D): With diamond wire, to saw ingot into blocks

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Spindle Disc Surface Grinding (NVG-750D)

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Double-sided parallel surface grinder (NSH-450)

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Lapping/polishing double-sided grinder (NK-22B-L/P)

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Multi touchscreen driller (NVG-432): accurate contouring and drilling for 10pcs/cycle

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Andrew and his Korean teammates in US


The information herein has been prepared by CEA solely forthe exclusive use of LG Siltron. No representation, warrantyor undertaking, express or implied, is made as to, and noreliance should be placed on, the fairness, accuracy,completeness or correctness of the information or theopinions contained herein. Neither CEA or any of its affiliates,advisors or representatives will be liable (in negligence orotherwise) for any loss howsoever arising from any use ofthis presentation.


mobile sapphire touchscreen ag 17 jul 14

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