by Matt Margolis

GT mentioned during the Q4 2013 prepared remarks that their Merlin technology, “comes out a research operation we established in the Bay Area, over a year ago, to focus on advancing the state of the art in the design and assembly of solar cells and modules”.  GT referred to a “research operation,” which immediately set off my alarm that the Merlin product was not inside a San Francisco PV module warehouse but a state-of-the-art R&D facility located in the Bay Area that focuses on PV module performance and durability.  GT does not have a R&D facility or even an office in the Bay Area, which only leaves one option; a research lab that is run by a PV module maker.  GT typically goes after strategic deals with the best and the biggest companies in their target market (Sapphire – Apple), so it only makes sense that GT would reach out and try to work with one of the top 3 or 4 PV module makers.  According to Solarbuzz 2013 rankings the top 3 PV module makers were

  1. Yingli Green Energy
  2. JA Solar
  3. Trina Solar


If I was to develop a game changing technology with a PV module maker I would not only want to the biggest fish but I would want someone I trust.  Someone that I have worked with years!  As it turns out Yingli Green Energy not only was ranked #1 for producing solar cells but their relationship with GT Advanced Technologies (formerly GT Solar) goes back to 2002, when Yingli became GT’s first customer in China.  Also, if you look at the various orders placed over time by Yingli the press releases contain language that translates to “hey scratch my back and I’ll scratch your back.”  If you don’t believe me, read these comments between GT and Yingli’s within this order announcement from 2010 to that is focused on celebrating GT Solar’s 1000th DSS450 Crystalline Ingot Growth Furnace shipment as well as the very close relationship between the companies.

GT Solar International, Inc. (NASDAQ: SOLR), a leading global provider of polysilicon production technology, crystalline ingot growth systems and related PV manufacturing services for the solar industry, today announced that it has achieved the milestone shipment of its 1,000th DSS450TM crystalline ingot growth furnace. The recipient of the system is long-time Chinese customer Yingli Green Energy Holding Company Limited.


“GT Solar is a trusted and valued partner for Yingli,” said Mr. Liansheng Miao, chairman and chief executive officer of Yingli Green Energy. “Their ingot growth furnaces consistently produce high quality material which helps to reinforce our company’s reputation for delivering reliable products to our customers.”


“We are pleased that Yingli continues to express confidence in our ingot growth technology,” said Tom Gutierrez, president and chief executive officer of GT Solar.


Yingli Green Energy became GT Solar’s first customer in China in 2002 when they set up the first ingot, wafer and cell production lines at their Baoding headquarters. These production lines launched Yingli into the PV manufacturing industry and today they are one of the world’s leading fully vertically integrated PV manufacturers. Yingli has continued to invest in GT Solar’s multicrystalline ingot growth furnaces including the DSS240, which was introduced in 2003, and the current DSS450, which was introduced in 2007. Today, GT Solar has shipped over 1300 crystalline growth furnaces to customers around the world.

It’s very clear that Yingli and GT have a mutually beneficial relationship and both have admiration and appreciation of the benefits that have resulted from their long partnership.  GT has enabled Yingli to continue to be a leader in the PV module space while Yingli’s investment in GT equipment has allowed GT to expand their business and invest money in their R&D to support the next generation of equipment that will benefit Yingli even more.

Yingli announced on July 12, 2011 that they were opening up a R&D facility in the San Francisco Bay Area for comprehensive product testing and evaluation.  Furthermore, the announcement indicates that the new research and development lab will accelerate our understanding of module performance and reliability. Additionally, R&D facility lab will allow them to evaluate new technologies and deliver next generation products.

Yingli Americas also announces the opening of a new research and development facility in South San Francisco for comprehensive product testing and evaluation.

“Our new research and development lab will accelerate our understanding of module performance and reliability,” said Brian Grenko, Director of Operations for Yingli Americas. “This investment will enable us to more quickly evaluate new technologies, deliver next generation products, and better serve our customers throughout all stages of a project’s life cycle.”

“We now have the ability to offer product testing and development support within the U.S. for our customers here,” added Mr. Petrina. “We plan to use this new facility to proactively address market opportunities and trends to better support our pre- and post-sales efforts – a sign of our continued dedication to technical leadership.”



Image from Yingli


Image from Yingli


Additional Images of Yingli’s PVTL obtained from Greentechmedia


Yingli is very interested in reducing the cost of PV modules evidenced by their strategic agreement with Dupont that was signed in February 2012 for $100 million.  Yingli reupped on the contract and extended it another year for an additional $100m last June.  Under the terms of the terms of the agreement, Yingli China will purchase materials including DuPont™ Solamet® photovoltaic metallization pastes that help boost the power output of solar cells and DuPont™ Tedlar® polyvinyl fluoride film that has been proven to protect solar panels even in the harshest environmental conditions.  I have some bad news to report for Dupont, the silver paste sales to Yingli may shrink up to 80% from the previous levels.

PV expert Mark Osborne, from PVTech summarizes this one very simply, “GT Advanced Technologies has launched a c-Si solar cell metallisation and interconnect technology that it claims will boost conversion efficiencies while lowering production costs via significantly reduced silver paste consumption”.  In another article about Merlin, Osborne points out that “GTAT ‘Merlin’ metallisation and interconnect technology reduces silver paste needs by 80%“.  It appears that one of the biggest losers from Merlin’s entry into the PV module world will be Dupont, who will likely see most, if not all of their $100 million materials contract centered on silver paste evaporate and shift over to GTAT before the summer is up.

GT mentioned that Merlin came out of a research operation that was established over a year ago.  I was able to retrieve a copy of GTAT’s Investing in Continued Growth and Diversification presentation, that was discussed in August 2012 during Canaccord Genuity Growth Conference.  What is interesting on this presentation is that GTAT actually spills the beans that they “are considering opportunities to move downstream solar equipment market to support next generation solar cell and module manufacturing.”  As it turns out it took GT less than 2 years to mention an opportunity and to bring it to the market.  This is exactly the same broadcasting GT has been doing over the last 2 years with sapphire cover screens.  It will come as no surprise to the long-term GT followers when Apple releases sapphire cover screens across their upcoming iPhone 6 line-up.  When GT’s management says they are confident and all that is left is execution, the message is clear,  they are going to get it done!  Merlin technology is “discussed”  in the second bullet point on the image below from the August 2012 conference presentation.


If you are wondering what else GT brought up during the August 2012 conference especially relating to sapphire cover screens, please see the image is below.  BTW does Apple make LCD TV’s?



Clearly GT’s Merlin PV module technology fits like a “T” within Yingli’s PV Testing Lab’s primary focus area and the facility is located in the Bay Area and it was established more than a year ago.   The contract announcement in 2010 between GT Solar (renamed to GT Advanced Technologies) clearly exhibits the GT co-dependencies, trust as well as a high level of engagement between both companies.   Additionally, Yingli has been ranked near the top of the PV Solar Cell Producing charts for the last several years and they are well positioned in the solar industry to keep growing the top line and improve their bottom line with the help of GT’s Merlin Technology.  I don’t know about you but I think Yingli was the “secret” partner that helped GT perfect the Merlin technology and I fully expect Yingli to be the first customer of GT’s Merlin Technology.  Furthermore, I’m expecting Yingli and GTAT to once again celebrate their long tenured relationship and continued partnership within Merlin’s inaugural order announcement before the end of this summer.

Full Disclosure: I am long GTAT and have no plans to buy or sell anything holdings in the next 72 hours

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As the iPhone 6 inches closer to its release date the volume of leaked photos will continue to rise. The latest edition of leaked photos from appear to show the front panel of the upcoming iPhone without a cover screen. The front panel appears to be longer and slightly wider than the iPhone 5 that is pictured next to it.

The leaked images align closely with news reports that various suppliers will begin ramping up production of various key components in Q2. If components are coming off the production press by late May then a late June release for the 4.7″ cannot be ruled out. Foxconn reportedly was producing 500k iPhone 5s models a day by late 2013 and I expect the addition of Pegatron to lift total capacity closer to 1 million phones per day. In March it was reported that Pegatron was going on a hiring spree to be ready to assemble units during Q2. The iPhone 6 manufactures could conceivable produce enough units of inventory to in just 30 days to support a iPhone 6 launch in late June or early July. Stay tuned as this could be a surprise to everyone.

Taiwan Semiconductor Manufacturing Company (TSMC) reported began production on the A8 chip in March.

Micron Technology announced that they begun ramping up production of their DRAM memory LPDDR4 which is also consistent with company comments made in January that they would land in mobile handsets later in 2014.

Reuters indicated that Japan Display Inc, Sharp Corp and South Korea’s LG Display Co Ltd will begin mass producing display touch panel screens as early as May.

Sapphire cover screen supplier GT Advanced Technologies, who is growing sapphire inside Apple’s Mesa, AZ sapphire plant has also begun to ramp up its production as well. 9to5Mac released information in January indicating that Apple wanted to go-live with the Mesa sapphire operations by February. Additional records pulled from the city of Mesa website and FTZ indicate that the facility has indeed begun production and the first line or 140 tools (ASF sapphire growth furnaces) went live on January 10th and was followed by another significant ramp up in Tools by the middle of February.



Full Disclosure: I am long shares of GTAT and have no plans to buy or sell any holdings

by Matt Margolis

On Monday, Jefferies analyst Peter Misek, who covers Apple, indicated that Apple has been working with carriers to charge an additional $100 for the upcoming iPhone 6.  Wireless carriers typically charge consumers $199 (with a new 2 year contract) for Apple’s flagship phone and any price increase would be a change from Apple’s standards.  Various media outlets are crying foul on the reported price increase, but I think this one requires a little more investigation versus a knee jerk media reaction that I have grown accustomed to reading.

I’ve captured a few quotes from Misek price increase news that are very interesting and may shed some light on Apple’s plans.

While the initial response has been “no”, there seems to be an admission among the carriers that there is no other game-changing device this year and the analyst thinks Apple can get at least some of the increase. (

“But we think this general lack of differentiation could be the reason why Apple may be able to get a price increase. Carriers realize that the iPhone 6 will likely be the only headline-worthy high-end phone launched this year and that they will lose subs if they do not offer it.” (

I imagine Apple has been working closely with the wireless carriers for several months and has filled them in with every juicy detail and upgrade that they will be adding to the iPhone 6 lineup.  I’m not familiar with Misek’s coverage of Apple and have no idea if he is very reputable or not.  I can say that based on the choice of words above it does sound like he spoke to at least one wireless carrier that spilled enough news to create a headline for Misek.  As a consumer I will be happy to pay an extra $50 to $100 for a new iPhone 6 if Apple can indeed deliver the “only headline-worthy high-end phone launched this year” as well a “game-changing device”.   My game-changing list is at the very bottom of this article!

Consumer Expectations

As a consumer that is driven by value and I believe the price of goods is important but I have learned that sustained value is at the top of my shopping list.  For instance, I have learned that I will never buy a non-Apple laptop computer ever again.  Our family currently owns an iPad 2 along with a pair of iPhone 4s models and besides my iPhone 4s getting run over by a car and shattering my Gorilla Glass screen, I have no complaints related to the durability of any of my iDevices.  My iPad 2 is almost 3.5 years old and still functions like the day we bought it.  My daily frustration occurs when I log into my non-Apple laptop to write my next Obscure Analyst post and each and every night I’m crossing my fingers that my laptop will live another day.

Apple took some heat for not introducing a “cheap” iPhone model to sell in China, the main reason for their decision not to introduce a “cheap” iPhone is because they have standards and they don’t introduce junk (unlike Samsung) to sell at low prices.  Apple believes that they should receive fair value for their products and any decision on the final pricing of the iPhone 6 will not be influenced by the fact Apple ended 2013 with $159 billion dollars in cash/investments.

A Forbes article last fall still resonates with me all the time.  In this article the author pointed out the issue with  smartphones is the short life cycle, which average 18 months.  The author also points out that, “flexible, unbreakable displays on phones present a serious design challenge to companies like Samsung because they will last”.  Below are some interesting call-outs from the article:

The other major problem with the smartphone though is its short life.  According to the Environmental Literacy Council the average lifespan of a smartphone is about 18 months. This year Samsung launched dozens of new phones, 4 in the S4 category alone.


Mark Ragoswsky offered the opinion a week or so back that the flexible screen is not yet a viable technology. I’m not so sure of that. I think it presents a non-viable business model. Flexible, unbreakable displays on phones present a serious design challenge to companies like Samsung simply because they will last.

I’m a math, numbers, personal finance as well as a corporate finance/budget guy.  Dollars and cents are what comes naturally to me.  If Apple can create unbreakable cover screens, that protect the displays of their iPhones it will result in a serious blow to Samsung’s smartphone market share over time.  When I buy a phone, car, house, etc I am always looking at the total cost of ownership as well as my next purchase. These costs may include maintenance, repair, resale, trade-in value or just outright consumer to consumer sale.  Just for fun I went into my Sprint account to see how much Sprint would pay me in cash for Samsung devices versus Apple devices.  The results are not surprising, Apple products hold superior value (like an investment) and will be worth something (because they still work) far after your contract is up. I don’t advise selling your used iPhone to your wireless carrier because you can get a better return on your investment  by selling it elsewhere, but I used my carrier to drive down Apple’s durability and value proposition.



The economic impact if Apple raised their price by $100 would have a one-time economic charge to consumer wallets.  After consulting with a financially savvy friend or emailing the Obscure Analyst, consumers would realize that paying an extra $100 for the iPhone 6 will be paid back to you the next time you upgrade your device.  I paid $199 for my for my iPhone 4s at the time knowing full well I would be able to sell it for close for $150 to $200 when it was time to trade it in.  The $150-$200 that my iPhone 4s would fetch would be deposited directly against my $199 out-of-pocket expense for my next iPhone.  My first iPhone cost me $199, my second iPhone will cost me $0 to $49 out of pocket, which would continue to be my out of pocket cost for my third, fourth, fifth iPhone.

Now the real question for Apple is can they deliver a game-changing and head-line worthy iPhone 6 later this year?  Not only does Apple need to consider consumer willingness to fork out the dough but also the value the phone will have in the secondary market (2nd owner/trade-in market).  Apple realizes that if they made an unbreakable screen made of sapphire they could actually generate up $1000 of net profit over the lifetime of the device.   Think about it, your carrier buys the device from Apple for $600 and Apple collects a nice profit of roughly 36% or $212.  After two years you trade in that device and collect $150 but Apple turns around and sells it for another $400 to a carrier in the US and collects another $250 of profit.  Two years later Apple buys the same device back for $50 and turns around and sells it again for $200 and collects an additional profit of $150.  At this point over 6 years in this example Apple would have generated $612 of profit ($212 1st sale, $250 second sale, $150 third sale) just from introducing and selling one new iPhone.  The proof of this concept is evidenced by Apple’s announcement in January to sell the iPhone 4 (2010 initial release date) in India.  It is not clear whether Apple was making new iPhone 4′s for sale in India but you can bet they are trying to unload millions of iPhone 4′s that they bought back from previous customers and selling them at a premium once again.

As a consumer I expect every new iPhone I buy to be better than the previous version.  I expect it to be faster, thinner, lighter and have a longer battery life and allow me to perform more of my daily tasks via my mobile device.  A major selling point of Apple’s iPhone 6 will be the increased size of the phone.  I have spoken to a variety of different people and the consensus from different age groups as well as Samsung owners versus current Apple iPhone owners and bottom line is size matters.  A larger screen size is very important to consumers as more and more video streaming and video calling/conferencing is performed on a daily basis.

I know my mom enjoys seeing her grandchildren when we call her on Facetime, but a larger screen will make the user experience better for everyone.  The only issue I have with letting my kids Facetime with “Mema” is that I fear they will drop my phone and shatter my iPhone 4s screen.  Apple’s sapphire materials contract with GT Advanced Technology will provide a cure for shattered cover screens, GTAT is set to cover the 4.7″ and 5.5″ iPhone 6 models when they are released later in 2014 .  A bigger iPhone and sapphire cover screens would save me $50 on a screen protector, but I would rather split that savings with Apple and only pay $25 more for the iPhone 6.  Now if Apple wants to open my wallet further, they need to introduce solar charging (while you are outside or inside under lights) as well as Wi-Fi wireless charging.   After my kids Facetime with “Mema” my battery life is at 50% after only 15 minutes, however wireless charging would charge my battery while we Facetime and could extend the length of our video calls by hours not just minutes.  The Wi-Fi charging works well in my house or at Starbucks but it won’t help me when I’m outside.  My parents don’t live nearby and it would be a game-changer if Apple introduced solar charging, which would allow me to Facetime with “Mema” and enable her to watch her grand children’s first tee-ball game or any other event without having to run back and forth to the car to charge my iPhone.

I would pay $100 for Game-Changing & Headline Worthy Technology if Apple includes: 

  • Best in class chips (A8)
  • Best in class DRAM (Micron – LPDDR4)
  • Sapphire Cover Screens (GT Advanced Technologies – Pure Sapphire)
  • Solar Charging
  • Wi-Fi Charging
  • Improved Battery Life
  • Larger Device 4.7″ and 5.5″
  • Thinner Device
  • No more screen protectors (Sapphire Cover Screens cure this)



Full Disclosure: I am long GTAT and have no plans to buy or sell any holdings in the next 72 hours



by Matt Margolis

GTAT is expected to announce the date of their Q1 2014 earnings release and conference within the next week.  I’m expecting GT to announce their Q1 2014 results and host their earnings conference call on Monday May 5th.  The consensus estimates I’ve gathered from the analyst community is for GT to post Q1 sales of $31 million and a loss per share of $0.24.  My Q1 2014 estimate is aligned with the analyst community, I am projecting sales of  $28 million and a loss per share of $0.24.  I’m going to be laser focused on the capital spending that GT reports for Q1 2014 as well as to see if additional PP&E was deployed, most if not all this capital is related to the ramp up occurring in Mesa, AZ.  Another line item I am curious about is the headcount, as GT expected its global headcount to reach 1,000 employees by the middle of 2014, up from 541 employees as of 12/31/13.    Most of these new employees will be located in Mesa, AZ so the headcount will shed some light into the equipment ramp and overall status of the Mesa sapphire facility through March 2014.   I have shared information on several occasions that the Mesa sapphire plant went live with 140 tools (sapphire growth furnaces) on 1/10/14 and significantly increased the number of active tools by the middle of February as evidenced by their building permit request to make changes to the MV (medium voltage) fuse to accommodate the tool load.


Q1 2014 Analyst Revenue and EPS Estimates

As I stated above the consensus estimates for Q1 2014 across the board are very much aligned.  Listed below is the chart of the Q1 2014 revenue and earning estimates by analyst.

Q1 2014 Analyst Average


2014 Analyst Revenue and EPS Estimates


The 2014 analyst revenue consensus is $714 million and positive EPS of $0.12.   Revenue estimates range from $671 million (Stifel) to $797m (UBS) and EPS estimates range from $0.04 to $0.17.   It’s interesting that not one analyst decided to “think outside the box,”  because every single one of them stayed within GT managements 2014 guidance “box” of $600 to $800 million of revenue and EPS of $0.02 to $0.18.

My  2014 revenue estimate was based on a bottom’s up approach including  focus on Apple’s iPhone 6, iWatch and iPod 2014 unit volume sales plus two additional months of inventory build.  I am firmly in the camp that Apple will introduce sapphire cover screens on both iPhone 6 models (4.7″ and 5.5″ models), the iWatch as well as the redesigned iPod touch.  My estimated Apple revenue is $1,180 million or 89% of my FY 2014 revenue.  I’m currently estimating 2014 revenue of $1,331 million and EPS of $0.62, this would represent $534 million in revenue and $0.44 of EPS above street high analyst estimates.

2014 Analyst Estimates


2015 Analyst Revenue and EPS Estimates

The 2015 analyst revenue consensus is $1,258 million and positive EPS of $0.90.   Revenue estimates range from $1,086 million (Stifel) to $1,643 million (Credit Suisse) and EPS estimates range from $0.45 to $1.49.   Stifel, Canaccord and Bank of America might be 3 sport athletes but they clearly do not know which sport GTAT is playing.   At a minimum I would have thought those 3 firms could have at least a minimum taken their 2014 estimates, calculated the impact of a full year for GT’s Apple business and simply added a simple unit growth estimate that is consistent with industry smartphone trend.  I know this financial modeling exercise could take a good analyst a few minutes but I figured the “Wall Street” heavyweights could at least put in a few hours to come up with something that resembles a coherent thought to support their 2015 estimates.  I fully expect GT’s 2015 analyst consensus for revenue to trend north of $2,000 million and EPS estimates to be at or above $2.00 per share driven largely by what is actually going on inside the Mesa, AZ sapphire facility.  GT’s management has guided 2015 of over $1,000 million and they have not provided an updated EPS estimate for 2015.

My  2015 revenue estimate was based on a bottom’s up approach including Apple unit sales and expected market adoption across GT’s diversified product portfolio.  The chart below breaks my 2015 revenue into key revenue category so you can  see my expected revenue contribution by each line of business.  My estimated Apple revenue for 2015 is $2,027 million or 64% of my 2015 FY revenue estimate, which is down from 89% of total revenue in 2014.   I’m currently estimating 2015 revenue of $3,177 million and EPS of $2.84, this would represent $1,534 million in revenue and $1.35 of EPS above street high analyst estimates.

2015 Analyst Estimates


2016 Analyst Revenue and EPS Estimates

Before I get into the 2016 estimates I first want to blast every analyst but Credit Suisse.  Three out of six dropped out of GTAT’s analyst class before they finished their 2015 EPS estimates.  Only one analyst actually completed their 2016 revenue and EPS homework assignment for GTAT.  The remaining 5 analysts need tighten up the belt, focus and listen to Pooh and just, “think, think, think!”

The 2016 analyst revenue consensus is $1,923 million and positive EPS of $1.83.   Revenue estimates range from $1,637 million (Stifel) to $2,748 million (Credit Suisse) and EPS estimates range from $1.25 to $3.00.  Credit Suisse revenue and EPS estimates are actually 50% higher than the rest of the peer group.  Now it’s clear to you as well that the analysts outside of Credit Suisse dropped out of GTAT’s analyst class and failed to do their home for 2016!  I fully expect GT’s 2016 analyst consensus for revenue to trend north of $3,000 million and EPS estimates to be at or above $3.00 per share driven largely by GT’s Hyperion, HicZ and Merlin technologies, which will all see tremendous growth and adoption by 2016.   GT’s managements guidance for 2016 is EPS in excess of $1.50 per share, however GT has not provided a revenue estimate for 2016.

My  2016 revenue estimate was based on a bottom’s up approach including Apple unit sales and expected market adoption across GT’s diversified product portfolio including a significant pickup in Hyperion, HicZ and Merlin technology sales.  The chart below breaks my 2016 revenue into key revenue category so you can see my expected revenue contribution by each line of business.  My estimated Apple revenue for 2016 is $2,216 million or 47% of my 2016 FY revenue estimate, which is down from 89% and 64% of total revenue in 2014 and 2015.   It should be noted that the Apple % of GT’s total sales in my model are expected to decrease year over year as GT’s diversified growth strategy continues to bear fruit from the seedlings that were planted over the last few years.  I’m currently estimating 2016 revenue of $4,736 million and EPS of $5.26, this would represent $1,988 million in revenue and $2.26 of EPS above street high analyst estimates.

2016 Analyst Estimates

 2014 to 2016 Revenue and EPS Estimates, Price Targets and Key Ratios

The chart below has all of the goodies you want to know.  The average analyst Price Target is $21.89 and it ranges from $26 (Credit Suisse) to $13.75 (Stifel).  The average analyst Price Target yields a 2016 forward PE of 12 based on an average 2016 EPS estimate of $1.83.  My price target is currently $85 based, which actually only represents a forward PE of 17 based on my 2016 EPS estimate of $5.26.



Analyst 2014 to 2016 Summary



Most of the Wall Street analysts are deadbeat analysts when it comes to GT Advanced Technologies.  Credit Suisse has clearly put in the time and done all of their homework assignments for 2015 and 2016.  The rest of the Wall Street analyst community decided to drop out of the GTAT analyst class because they didn’t want to “think, think, think”.

I’ve done more than my fair share of thinking in regards to GT Advanced Technologies and the company’s future prospects.  My estimates are clearly much higher than Wall Street but so is the time I’ve dedicated to my craft.  Wall Street will continue to lag my estimates by 6 to 9 months and that should be expected.  I also want to be very clear that yes, GT needs to deliver on a lot of fronts to hit my revenue and EPS forecasts for 2014 through 2016 and there is certainly some risks that should be discounted.  However, at the same time, I believe Apple will likely introduce sapphire cover screens on the Apple iPad before the end of 2015.     A sapphire covered iPad could contribute an additional $1,000 million of annual revenue above and beyond my already street high estimates in the year following its initial release.  Additionally, Hyperion and Merlin technologies are game changers in their respective marketplaces and may generate an additional $1,000 million or more of additional sales that have not been included in my estimates.    Even Goldman Sachs is modeling 2018 Hyperion sales at over $2,000 million a year with a EPS contribution of $1.58, which assumes a 60% conversion of the market opportunity and a gross margin of 35%.  A slight shift Hyperion’s expected  adoption cycle to the left and GT’s sales could rise by billions sooner rather than later.    Lastly, GT has new products are waiting in the wings for the market to develop and although we have no clear line of sight to these new products and technologies today, it would be prudent to expect up to another $500m of new product revenue that will be moved over from R&D and introduced into the marketplace by 2016.

My price target is currently $85 based, which actually only represents a forward PE of 17 based on my 2016 EPS estimate of $5.26.  I try to stay away from PE ratios but GT’s expected rapid growth over the next several years could certainly support a PE of 30 to 50, once the world see’s how they can deliver the goods to Apple.  I will also let you do the math and take my 2016 EPS estimate and multiply it by a justified PE of 30 to 50 to see where I think GT’s share price could be headed over the next few years.  Yes I am fully aware that the math works out to a share price well into the triple digits and a market cap that exceeds $20 billion and to be honest that may just be the beginning for GT Advanced Technologies.


Full Disclosure: I am long GTAT and have no plans to buy or sell any holdings in the next 72 hours.







by Matt Margolis

Last week various Apple blog sites brought to light KGI Securities analyst Ming Chi Kuo report, who is known for supplying “more” reliable information on Apple’s product lineup compared to other Apple analysts.  The KGI report also included Apple’s 2014 product roadmap which forecasts the release of Apple’s all-new designed iPhone 6 featuring 2 sizes and 2 separate release dates.  Kuo is anticipating the 4.7″ iPhone 6 to be released in September and the 5.5″ iPhone 6 to be released in December.  I’m going to defer comment on the other products listed on the launch and focus squarely on sapphire cover screens and the iPhone 6.




Kuo on Sapphire Cover Screens (courtesy of Yahoo)


The analyst claims that Apple will switch from Gorilla Glass to sapphire crystal to cover the iPhone’s displays, but possibly only on the high-end models with 64GB of memory. This is due to supply constraints, Kuo said, though ultimately Apple will supposedly move all of its iPhone models to sapphire.

Part of the reason for the shift to sapphire, Kuo said, is that Touch ID may soon be embedded in iPhone display panels rather than home buttons, and sapphire is needed to ensure fingerprint reading accuracy.


Kuo on Sapphire Cover Screens (courtesy of 9to5Mac)

Other iPhone 6 predictions state that only the 64 GB version of the 5.5-inch model will include a sapphire Touch ID cover due to supply issues.


Kuo’s Sapphire Takeaway

Kuo believes sapphire cover screens will only be used on the high-end 64 GB version of the 5.5 inch iPhone 6 model due to supply constraints.  According to CNET, Kuo is estimate the more popular 4.7″ iPhone 6 will sell an estimated 60 million units in 2014.  If the 4.7″ iPhone 6 is estimated to sell 60 million units the December The estimated release date of December suggests that he is only forecasting 8 to 10 million units sold of the 5.5″ iPhone 6.  If sapphire is going to be only used on the 64GB version of the 5.5″ it would translate into maybe 2-3 million iPhones sold with sapphire screens in 2014.  iWatch sales are expected to be up to 10 million units in 2014 and those are expected to feature a sapphire display.  It takes approximately 3-4 iWatch screens to make 1 sapphire cover screen, if you convert 10 million iWatches to cover screens it would be 2-3 million sapphire cover screens.  Kuo is estimated that GT Advanced Technologies can only supply Apple the equivalent of 4 to 6 million sapphire cover screens worth of material in 2014.

Does Kuo’s sapphire cover screen estimates stack up?  Also, how does information like “supply restraints” become public knowledge since Apple and GT Advanced Technologies are performing the biggest cover up since the US governments close lips regarding Area 51.

Kuo’s Sapphire Estimate does not Stack up to GTAT’s 2014 Guidance

GT’s CEO Tom Gutierrez  along with Apple’s CEO Tim Cook have both been grilled by various news agencies and stock analysts and neither one has said a word regarding the specifics of the project.  GT gave out financial projections during their Q4 2013 conference call including expectations that 15% of total revenue will occur in the 2nd half of 2014 and sapphire will account for more than 80% of total revenue in 2014.  If you take Kuo’s 6 million dollar sapphire cover screen equivalent and multiply it by $10 or even $20 per screen it only comes out to $60 to $120m in revenue, to put this simply Kuo’s sapphire prediction just doesn’t add up.  GT’s guidance is below:

We expect that our revenue and profitability will be very back end loaded this year given that our sapphire materials business will be in ramp up mode. As we indicated on our last call, we expect revenues in 2014 to range from $600 million to $800 million, with approximately 15% of the total revenues occurring in the first half of the year. We expect our sapphire segment to account for more than 80% of total revenue in 2014. The sapphire segment includes the company’s ASF equipment and materials businesses in the LED, industrial and consumer electronics markets.

Furnace Deliveries are Estimated at over 1,500 through 3/10/14

Kuo is estimating that the equivalent of 6 million sapphire cover screens, just for kicks I wanted to know how many active ASF furnaces it would take to produce 6 million sapphire cover screens.  The answer is roughly 50 ASF furnaces.  GT’s Sapphire Production and R&D facility in Salem, MA has over 80 ASF furnaces inside its 25,000 square foot walls.  The Mesa, AZ sapphire facility measures 1.3 million square feet or the equivalent of 56 of GT’s Salem facilities.  Needless to say Apple is not going to waste over $2b in cash to produce the equivalent of 6 million cover screens that could have been grown from GT’s Sapphire Production and R&D facility in Salem, MA.  Yet again, to put it simply Kuo’s sapphire prediction does not add up.

Since I love beating up others with facts, I want it to be known that the sapphire plant in Mesa went live with 140 tools (furnaces) on January 10th of 2014 within Module 1 of the Mesa sapphire plant, which measures just 12,500 square feet according to building permit records. I also want it to be known that by mid February GT had GT applied for a building permit to make changes to the medium voltage fuse to accommodate the tool load.  My point here is GT had already ramped up the Mesa sapphire plant production by the middle of February and given GT’s track record they could have all 1,600 furnaces online and growing sapphire by of March 2014 without a problem.  GT could supply 70 million iPhone 6 cover screens in 4 months or less with 1,600 furnaces active and growing sapphire.  Even if only 800 furnaces were active GT could still deliver enough sapphire cover screens to meet Kuo’s total estimated iPhone 6 sales in 2014. Yet again, to put it simply Kuo’s sapphire prediction does not add up.


Larger Form Factor Equals More Scratched, Cracked and Broken Gorilla Glass Screens on Apple’s Devices

Perhaps the biggest issue being ignored by Kuo is why on earth would Apple introduce larger iPhones without changing the cover glass material from Gorilla Glass to sapphire crystal?  One in four Apple iPhone owners are already walking around with a cracked or shattered screen and increasing the size of the display will only lead to more breaking and shattering of iPhone 6 displays made out of Gorilla Glass.  Perhaps a comment from GT’s CEO Tom Gutierrez on this topic might be a little more convincing!

Well, quite honestly, the problem doesn’t change with form factor. The screens, the bigger they’ve gotten, the more prone to breaking and cracking and scratching they are. But honestly, because the larger form factors you stick in your pocket, you don’t hold out. And so our view is the form factor doesn’t change anything. The form factors that we know of, that are being considered by the OEMs that we’re talking to, are inside the range that can be accessed by the technology, both on the fabrication side that’s being developed, as well as our growth technologies. If — one thing probably, as they get bigger, our growth technology probably has preferential treatment because of the form factor of our boules relative to some of the other technologies that are out there. So we’re comfortable. Nothing that’s happening in the marketplace is diminishing our opportunity. In fact, it’s just the opposite.  (Seeking Alpha GTAT Q4 2012 Conference Call)

CEO Tom Gutierrez  made is very clear in the statement above that the larger the form factor (size of the phone) the more prone (Gorilla Glass) will be to breaking, cracking and scratching.  Gutierrez also believes that the focus on larger screens will only increase GT’s market opportunity.  Kuo has completely disregarded customer satisfaction or lack there of, that would result, if Apple introduced larger screens with Gorilla Glass that were even more susceptible to breaking, cracking and scratching.   Yet again, to put it simply Kuo’s sapphire prediction does not add up.  



I’ve made it very clear that Kuo’s sapphire prediction that sapphire covers will only be placed on the Apple’s 5.5″ 64 GB iPhone 6 simply does not add up.  Not only will Apple cover the 4.7″ and 5.5″ iPhone 6 with sapphire alongside the iWatch but Apple may go ahead and cover the iPad and iPod as well.  Sapphire yield is not a risk to Apple’s 2014 product lineup but might actually be a welcomed boon for Apple’s customers and shareholders.

I’ll leave you with one final comment from GT Advanced that dates back to May 2012, just 3 months before Apple and GT Advanced Technologies officially signed their confidentiality agreement.  GT and Apple clearly believe in GT’s ability to quickly scale a sapphire operations and deliver quality, low-cost sapphire in unprecedented volumes.

We believe that GT is the only sapphire equipment company capable of quickly scaling to support the quick ramp of quality, cost and sizable volumes that the mobile device market could require as sapphire gains wider market adoption. (GT Advanced Technology Q1 2012 Conference Call courtesy of Seeking Alpha)


Full Disclosure: I am long GTAT and have no plans to buy or sell any holdings in the next 72 hours



by Matt Margolis

Apple’s CEO, Tim Cook ended 2013 with a letter to Apple employees, Cook made sure that everyone was aware that 2014 will include “big plans” that we think customers “are going to love,” the big plans.  As an iPhone owner (iPhone 4s), I really haven’t seen much too much to love from Apple’s hardware releases and innovation over the last 2.5 years.  The iPhone 5 was slightly larger at 4″ over the 3.5″ iPhone 4s but there was nothing impressive about it.  The iPhone 5s included a fingerprint sensor made of sapphire but again there was nothing sexy about the 5s that made me want to go out and buy one.  I do understand Apple’s hardware has improved its speed through new chips and processors but I really need something ground breaking to upgrade my iPhone 4s anytime soon.  The entire letter can be found here via 9to5Mac.

We have a lot to look forward to in 2014, including some big plans that we think customers are going to love. I am extremely proud to stand alongside you as we put innovation to work serving humankind’s deepest values and highest aspirations. I consider myself the luckiest person in the world for the opportunity to work at this amazing company with all of you.

Happy Holidays,


Apple iPhone 6 rumors and analyst speculation continue to arrive daily.  The one certainty at this point appears to be the size of the upcoming iPhone 6, the upcoming display should measure at 4.7″ and 5.5″.  A bigger screen will certainly remove the size advantage that Apple rivals have but if Apple really wants to give consumers something they will love, it will take a lot more than just a larger device.   Apple needs to add differentiating attributes to their product lines such as sapphire cover screens, wireless charging and solar charging.  Sapphire screens will help bring sexy back to Apple devices and make Justin Timberlake proud.  The ugly Otterbox protective cases and other protective covers will disappear and true appreciation for the beauty, thinness, craftsmanship and user interaction with your Apple iDevices will finally be realized to its fullest.

Apple Solar Cell Patents

Apple filed for a Power management circuitry and solar cells application #US 12/186,306 on August 5, 2008.  Apple has 2 patents that were published to cover this application, US Patent 8022571 published September 20, 2011 and US Patent 20100013309 published January 21, 2010. In addition to the power management circuitry and solar cells application Apple also owns the integrated touch sensor and solar assembly patent that was filed on September 30, 2008 and issued on April 1, 2010.  The integrated touch sensor and solar assembly patent # is US Patent 20100079387.  

These patents together shed light on the solar cell design within Apple’s devices and as well as how Apple plans to utilize solar cell energy to perform a variety of charging methods for their portable devices.  The power management options that Apple has invented are simply breathtaking and are powered by a “Mother Brain” that controls the circuitry and decides what needs to be charged, powered or regulated.  The solar assembly patent throws traditional solar charging methods out the window because Apple has invented a way to ignore the surface area limitations that arise while solar charging a portable device.

Integrated Touch Senor and Solar Assembly

The invention allows for integrated touch senor and solar panel to be stacked up for use in portable devices including portable media player (iPod, iWatch) and phones (iPhone6).  The stack-up configuration may include more than one touch sensor layer and more than one solar cell layer.  Stacking the touch sensor layer and solar cell layer preserves the surface area on the portable devices.  The solar panel can be mounted face down, obstructed by a touch senor or another component.  The configuration of Apple’s solar charged devices may also  include light channels that allow light into the device and direct the light around the component and to the solar panel.

The issue with using solar cells on portable devices is the small form factor (size of the devices).  The maximum solar energy that can be produced from a solar panel is roughly proportional to the surface area of the solar cells, which limits the solar energy that may be gained from solar panel on portable devices.   However, Apple’s invention creates a way to “channel” light into the device and to “direct” the light to the solar panel it allows Apple to place the solar cells under another component of the device (see Figure 18 below for image and explanation).   Apple’s patent only mentions that “light” is directed to the solar cells.  Apple’s patent does not appear limited by the type of light.  The invention likely applies to natural light as well as sunlight which would make solar charging an even more appealing option.  The integrated touch sensor and solar assembly patent abstract is below:

Integrated touch sensor and solar panel stack-up configurations that may be used on portable devices, particularly handheld portable devices such as a media player or phone are disclosed. The solar cell stack-up configurations may include one or more touch sensor layers and one or more solar cell layers. By integrating both the touch sensors and the solar cell layers into the same stack-up, surface area on the portable device may be conserved. The solar panel may be mounted face down or otherwise obstructed by a touch sensor or other component. In this configuration, the device may include light channels that allow light into the device and direct the light around the component and to the solar panel. A parabolic reflector may be used to direct the light.

The patent also defines touch screens and touch panels:

Touch screens can include a touch panel, which can be a clear panel with a touch-sensitive surface. The touch panel can be positioned in front of a display screen so that the touch-sensitive surface covers the viewable area of the display screen. Touch screens can allow a user to make selections and move a cursor by simply touching the display screen via a finger or stylus.

Touch panels can include an array of touch sensors capable of detecting touch events.

Figure 9 below shows breaks down how the solar cells would actually benefit the device’s battery life. If power is being generated by a solar cell and the device is off but not fully charged, the solar cell will charge the battery.  If power is being generated by the solar cell and the device is on it will power the device.


Figures 10 and 11 illustrate where the solar cells would be located within the portable devices in relation to the cover glass.



FIG. 18 illustrates an exemplary touch sensor array 1802 with a solar cell panel 1804 mounted face down behind the touch sensor array and toward a parabolic reflector 1806. This configuration allows the solar panel 1804 to absorb light 1810 that comes into the device around the touch sensor array 1802. Light may enter the device through light channels 1812 on a surface of the device. The back surface of touch sensor array 1802 may be reflective in order to direct back toward parabolic reflector 1806. This configuration allows the solar cell panel 1804 to be mounted behind or integrated with one or more components that may absorb light such as an LCD screen. Light piping such as fiber optics or a mirror assembly may alternatively be used to direct light to the solar panel within the device and around the LCD screen or other component.


Power Management Circuitry and Solar Cell

Apple’s power management circuitry and solar cells patent is like giving your solar cells a brain of their own.  The circuitry is intelligent enough to charge your device when the battery is low, power the device when the battery is full and can even continue powering the portable device when solar cells are partially obstructed.  Even if device battery is dead the boost circuitry can continue to regulate the power generated by the solar cells.

  • If the battery is not drained the circuitry can connect the solar cells in a series/parallel configuration, which can allow the solar cells to generate a constant preset voltage as long as a subset of the solar cells is operating.
  • In the event that the battery is drained the boost circuitry can not be powered by the battery.  The invention can connect the solar cells in a series configuration that facilitates the generation of a start-up voltage sufficient to power the portable electronic device.
  • The series/parallel configuration may allow the solar cells to continue powering the portable electronic device even if the solar cells are partially obstructed.  (Yes they have a brain of their own!)
  • The start-up voltage can be configured to be higher than the voltage generated by the solar cells in the series/parallel configuration. In some cases, the solar cells can also be used to directly power the boost circuitry when the solar cells are connected in the series configuration. As a result, the boost circuitry can continue to regulate the power generated by the solar cells even when the battery is drained.
  • In some instances while the solar cells are connected in the series configuration, surplus energy (e.g., generated energy that exceeds the load of the portable electronic device) can be used to charge the battery if the battery is not fully charged

Below is the image representing the “Mother Brain” behind Apple’s power management circuitry and solar cell patent

Solar Power Management

Sapphire Cover Screens

Sapphire cover screens have been touted as “more cost-effective, scratch-resistant and optically superior alternative to other materials currently in use,” – GT Advanced Technologies Q2 2012 Conference Call August 2012.    Sapphire cover screens are needed to protect Apple’s precious goods under the hood.  In addition to sapphire’s strength and scratch resistance benefits Apple has already found use for sapphire as a heat spreader.  If you think reinforced glass can do this, you better think again.  Apple has big plans for solar charging across of their hardware platform, which means devices will get hot from the sun.  Sapphire holds the key to Apple’s solar charging plans.  Not only will sapphire protect “solar charging stuff” under the sapphire screen from getting damaged it will also allow Apple to push the heat generated from the sun away from the processor and other key components.   The heat spreader benefit that was called out in Apple’s Attachment Techniques patent is below:

For example, sapphire may effectively be attached to a frame of a mobile computing device as a cover glass for a display screen. Additionally, as sapphire’s thermal conductivity is on the order of metals, it may effectively be implemented as a heat spreader. That is, sapphire may be attached both mechanically and thermally to a processor. More specifically, a sapphire substrate may be used as a processor mount to dissipate heat generated by the processor.

Why 2014 is the Year for Solar Charging


Sapphire Cover Screens Supply is Locked up

Apple has been planning the release of the iPhone 6 since the middle of 2012.  In August of 2012 they signed a confidentiality agreement with GT Advanced Technology and eventually signed a contract with GT on October 31, 2013 to produce sapphire materials for Apple.  GT Advanced has been trying to “break” into the mobile phone cover screen market with their sapphire cover screens for the past several years.    Apple’s Mesa sapphire plant went “live” and began growing sapphire on January 10th and significantly stepped up their production by the middle of February as evidenced by FTZ records and building permit descriptions.  GT’s management has said in the past that they could fully ramp up production of this size in 6 to 12 months.   GT is ready and able to deliver sapphire screens for both 4.7″ and 5.5″ iPhone 6 models.

Manz AG $85m Solar Display Order

Manz AG announced a $85m order on January 15, 2014 that will be booked as revenue during the first half of 2014.  Manz also indicated that the “cooperation with a leading smart phone manufacturer” offers “excellent prospects for follow-up orders and corresponding high future revenue.”  This is a clear indication that Manz is working with a high-profile smartphone manufacturer and they expect this to be a recurring order of high magnitude.  Apple has an existing relationship with Manz AG (see top of page 29) dating back as far back as 2006 from what I could find.

  • These orders will already become effective in terms of both revenue and earnings in the first half of the year

  • The innovative coating technology, which was developed in close cooperation with a leading smart phones manufacturer, offers excellent prospects for follow-up orders and corresponding high future revenue potential.

  • The transfer of our innovative coating technology from our Solar division formed an important target of our strategic orientation. We have thereby tapped a lot of new applications, and again significantly extended our position as an equipment supplier to the electronics industry.

  • Along with systems and plants in the automation, laser process technology and measuring technology areas to manufacture smart phones and tablet computers, these orders for the first time also comprise innovative vacuum coating systems to enhance touch panel displays’ scratch-resistance

Apple’s 2014 WWDC Logo is Screaming Solar Charging Through a Sapphire Crystal

WWDC 2014 Solar Panel 20140412-064155.jpg


Image #1  The WWDC14 official Logo

Image #2  A Solar Panel

Image #3  The color scheme generated when light passes through a crystal or prism

The 2014 WWDC logo clearly resembles a solar panel.  Take a look at the border and you will notice it, the invite was intentionally left with a thin white border.  Take a look at the solar panel and you will notice a thin white border all around the solar panel.  Take a close look at the triangular white diamond shapes that is found within the corner of each solar panel.  Take a look at the corner of each colored square on the WWDC 2014 logo and you will notice the same white diamond shapes.  If you don’t believe me, take head over to the official WWDC  2014 website and you will notice that the 2014 WWDC logo sparkles and shimmers on the page much like a solar charge.

When white light passes through a crystal or prism it generates a specific color pattern and set of colors.  The pattern of colors generated from white light passing through the crystals are red, yellow, white, green and blue.   The colors reflected through a crystal structure are exactly the same colors shown on Apple’s 2014 WWDC with the white light centered in the middle of the Apple.    Sapphire cover screens are actual composed of synthetic sapphire crystals and are the same crystal structures that would generate the color pattern and set of colors generated when white light is passed through them.

If Apple wants to introduce solar charging they need to protect their precious assets even more than prior years and that’s why sapphire cover screens hold they key to the solar charging kingdom.  If Apple is going to put solar panels under the phone cover they need to ensure the phone cover screens will not break.  Can you imagine having solar power under Gorilla Glass and shattering your phone?  A busted glass green coupled with solar charging would certainly complicate the screen repair process and drive up repair costs even further for consumers and by Apple for devices under warranty.

My detailed analysis of the 2014 WWDC logo can be found here.



  • Apple has the patents and know-how to not only make solar charging possible but also to maximize the consumer experience.
  • Apple’s solar and power management patents can charge and power portable devices including an iPhone, iPod or iWatch versus traditional solar cells powered by direct exposure to light/sun.
  • Apple’s integrated touch senor and solar assembly patent does not appear limited by the type of light.  The invention likely applies to natural light as well as sunlight which would make solar charging an even more appealing option.
  • Apple’s unique patent including a parabolic reflector (Figure 18) will allow the solar cells to maximize their power generation by collecting the light and bringing it to a common focal point
  • Apple’s solar and power management patents will significantly improve battery life
  • Apple has locked up GT Advanced Technologies to produce sapphire cover screens. Sapphire screens are vital to protect portable devices from unwanted damage and to push spread heat away from the processor.  The Arizona sapphire plant was cranking out sapphire by the middle of February and sapphire cover screen yield does not appear to be a valid concern at this point.
  • Manz AG received a $85m order related to solar displays order from a leading smartphone manufacturer.  The order is expected to be booked as revenue in the first half of 2014 and Manz AG expects high volume follow-up orders.  Manz has an existing relationship with Apple that goes back to at least 2006.
  • The WWDC 2014 image is nearly identical to a solar panel with diamonds in the corners and a white border around the invite.  Additionally, the colors on the WWDC 2014 invite identical to the colors that would be generated when white light passes through a crystal (i.e. sapphire).  Lastly, if you head over to the official WWDC 2014 website, you will notice that the diamonds in the WWDC 2014 image shimmer on the page much like a solar charge.

Apple’s CEO Tim Cook, stated that the tech giant has big plans for 2014 and whatever they plan to roll out customers are going to love.   As an Apple customer, I am expecting to see sapphire cover screens protecting solar charged iDevices in 2014, beginning  with the 4.7″ iPhone 6  that could be rolled out to customers by the end of June 2014.

But hey, what do I know?  I’m just some Obscure Analyst!



Full Disclosure: I am long GTAT and have no plans to buy or sell any holdings in the next 72 hours.







by Matt Margolis

Thanks again to my street analyst that provided pictures of the exterior building that were taken this morning on 4/10/14.  My street analyst also took pictures on 2/16/14 so I can have some fun comparing the images to show the significant progress that has been made in just under 2 months.

  • Line of solar arrays have been installed on the North-side of the building and you can notice the reflection from the sun on the building all around the 3740 BLD-1 sign
  • 2 Huge water storage tanks, massive cooling tower system and large electrical station appear to be completed
  • 100 foot long and 75 foot high pile of dirt near the large electrical station is gone since 2/16/14 and the large crane has moved
  • On the northwest side of the building there appears to be an extremely large generator along with some piping that goes into the building and directly into the ground.
  • The parking lot was full and trucks and golf carts were racing around the building hurrying to get work done.
  • The city of Mesa is in the progress of expanding the main roads leading up to the plant from 2 lanes across to 4 lanes across.
  • A significant amount of large spools of electrical cable that were partially used were seen on the ground outside of the building.
  • The north side of the building seems almost complete as it has been landscaped.

Below are the 2/16/14 and the 4/10/14 images of the West Exposure as well as the closeup of the electrical station that is between the crane and the water towers in the 4/10/14 image

Electrical Station 4/10/14


4/10/14 West Exposure Electrical Station, Cooling Tower System and Water Storage Towers

  • White long building is new and has been completed since 2/16/14  just under crane

  • Black structure to the right of water storage power has been completed

  • Electrical Station has been completed

  • Piping connected to water storage for cooling system is now complete


2/16/14 West Exposure Electrical Station, Cooling Tower System and Water Storage Towers

  • Incomplete electrical station

  • Incomplete piping from water storage towers

  • Massive 100 foot long and 75 foot high dirt pile

  • Crane outside of water towers has now moved

  • Next to water storage (right) is another structure which is incomplete but has been completed on 4/10/14 photo






Solar Arrays Installed on North Side (notice reflection on building and solar arrays up close to building

April 10 Northside Solar Arrays April 10 Northside Solar Arrays Image 2

Northwest Exposure – Large Generator and Piping Entering Building and connected to the ground

Northwest Piping and Generator


Northern Exposure Looking Complete on 4/10/14

2/16/14 (Left) versus 4/10/14 (Right)


Feb 17 Northern ExposureApril 10 Northern Exposure

Parking lot looking Full on 4/10/14.  

2/16/14 (Left) versus 4/10/14 (Right)

Feb 17 ParkingApril 10 Parking

Extra Electric Cables Everywhere and large piping (4/10/14)

Extra Electric Cables Extra Electric Cables 2


West Side Rock Truck Frenzy (4/10/14)

April 10 West Truck Derby

Elliot Road Landscaping Looking Complete (4/10/14)

Elliot Road Landscaping




According to wantinews Apple placed a $20m for sapphire laser cutting machines on April 1st. The report indicates that Han’s laser predicts that a new generation of high end models of the iPhone will use sapphire cover screens on the surface of phones. The report also indicates that delivery of the first laser cutting machines are expected by July/August.

Recently, Han’s Laser Technology, Inc. sapphire surface protective cover (to protect the smart phone screen, etc.) with a laser cutting machine to get Apple’s approval of the U.S. Moreover, the company received about $ 20 million from Apple in the hands of the first laser cutting Machine orders( News Han’s Laser predicted that a new generation of high-end models of the iPhone will use the sapphire surface cover material.

Han’s Laser estimated in July and August 2014 to provide the first Apple laser cutting machine supplier would cover the surface directly to the phone Apple – Factory Changsha blue Synopsys delivery.

The Obscure Analysts takeaway – Using laser cutting sapphire machines to cut sapphire for cover screens would be a new concept and process. It is likely that GT will be using a combination of diamond wire saws and laser cutting methods. I previously reported that Apple had placed a $80m diamond wire saw order with Meyer Burger and delivery of those saws was expected to begin in January and be completed by mid year. The cost box to produce sapphire screens is already within a competitive range versus Gorilla Glass without diamond wire cutting saws. I believe it would make more sense for GT to use laser cutting methods on larger surface sapphire such as the iPad to further reduce the sapphire cover screen cost for a larger surface. It also makes more sense to use a new cutting method (laser cutting) on a a lower volume product (iPad) versus the iPhone.

Full disclosure I am long GTAT and have no plans to add or sell any holdings

by Matt Margolis

I’ve had a bit of time to do some more digging (a few hours) and here is what I know so far about Project Cascade aka the secret sapphire project in Mesa, AZ.  The permit dates are an approximate date in some cases because the Mesa, AZ Development Services Division did stamp all applications with a received date.  However, to determine the permit date I was able to look up the permit numbers above and below the permits for Project Cascade to come up with a very reasonable permit grant date.

Based on the building permit description below for permit # BLD2014-00886 it appears that the Mesa, AZ sapphire plant likely ramped up production significantly by the middle of February.  The building permit granted on (approximately 2/13/14) indicated the need for MV (Medium Voltage) Fuse Changes due to tool (furnace) load, which clearly indicates the installed and operational furnaces were putting some pressure on the power grid inside Mesa by the middle of February.    As you can see from my furnace deliveries below, I am estimating that over 1,500 furnaces were delivered to Mesa by the end of January 2014.  I have confirmed deliveries of 1,060 external furnaces and I estimated 500 furnace deliveries from GT Advanced as part of their $180m Q4 2013 deployment of assets.


I have tracked 1,265 ASF furnaces delivered to Mesa through 3/10/14.  GT deployed $180m of PPE in Q4 2013 and if I assume $150m of that PPE was for ASF furnaces it would equate to another 500 furnaces inside Mesa.  Assuming 1,265 furnaces purchased and delivered as of 3/10/14 plus 500 furnaces deployed from GT brings my estimated total furnaces count inside Mesa to 1,765 as of 3/10/14.  My total by month would be 1,172 in December 2013, 388 in January, 191 in February and 14 in March.   The total imports reported by Import Genius for all imports to GT Corporation (see image below) illustrate that GT’s imports spiked in December 2013 and leveled off some in January and February.




The total imports reported by Import Genius  (see image below) illustrate that GT’s imports spiked in December 2013 and leveled off some in January and February.


Mesa Facility 6 modules/phases referred to as 1 through 6 and  A, B and C



Mesa Facility Module Sizes and Stages

Module 1 – 12,500 square feet

According to Building Permits filed Module 1 measures 12,500 square feet and will house 140 tools (ASF growth furnaces) and is referred to as the Quick Start 140 Area.  Temporary/Partial C-of-O for Quick Start 140 Area was issued on 1/10/14.  Upon execution of this C-of-O the Owner and the Owner’s tenant shall have the ability to commence with occupancy and production within the above mentioned space for an undefined period of time.  Module 1 has 1 ASF furnace for every 89 square feet of manufacturing space assuming the building permit square footage is accurate.




Modules 2 – 12,500 square feet

According to Building Permits filed Module 2 measures 12,500 square feet.   Additionally, a different permit received on 1/27/14 requested approval to provide protection for new tools platform for Module 2.  I am estimating 140 furnaces could be up and running inside module 2, since the listed square footage is identical to module 1 at 12,500 square feet.




Module 3 – Size N/A

According to Building Permits I have reviewed Module 3 does not include a square footage measurement but I will keep looking. (it’s a shame that not each form was completed consistently!)

Module 4 – 163,483 square feet

According to Building Permits filed Module 4 measures 162,483 (nearly 13 times the size of Module 1).  If we assume the same space to furnace ratio, Module 3 can accommodate 1,800 furnaces.  A building permit requesting installation of fire alarms was received on 2/10/14.




Below are some interesting building permit descriptions and timelines

Module 1 Go-Live 1/10/14 and commence construction on Module 2,3 and 4

Apple/GTAT was granted the approval to begin production in Module 1 on 1/10/14.  The approval was a temporary C-of-O because Module 1 still had some items to complete.  The entry below with approval granted on 1/17/14 indicates that Module 1 needs to be finished off and Module 2, 3 and 4 have not started construction but would commence construction of the manufacturing area to complete architectural, mechanical, electrical, process and systems.  This entry also indicates that Module 5 is not as far along and will only have the shell space completed once construction begins.






Pump House, North and South Electric Building Permits Issues (1/27/14 and 2/7/14)






Centrifuge Platforms and Build out of Fabrication Office Permit (2/10/14)




I & C Additions, MV Fuse Changes due to Tool (Furnace) Load  Permit (2/13/14)




ADDENDA DRB019 TO PACKAGE A04E. REF BLD2013-06024 – FABRICATION AREA BASE BUILD PKG, (MECH, PLUMBING, PROCESS PIPING AND ELECTRICAL WORK). Add break rm light/power, updated tool breakers, updated lighting in Coolant Reclaim rms, add a/c units, add power factor correction cabinets, clean rm ceiling, CDA piping, RODI piping, Coolant Reclaim piping.


Piping Support and Rooftop Equipment Support for Pump House Piping and Tanks Permit (2/25/14)


4,752 Product Recycle Room Permit (3/4/14)

REF BLD2014-00161 & BLD2014-00263. Double interlock pre-action system to cover 4752 s.f. approx PRODUCT RECYCLE ROOM within building.

Central Utility Plant, Heat Exchangers, Cooling Towers, New Exhaust Fans Permit (3/24/14)



Full Disclosure I am long GTAT and have no plans to  buy or sell any holdings in the next 72 hours