Apple is using “strengthened ion-x” glass in the new iPhone 6 and 6 plus, and not sapphire.
When everyone was speculating in recent months that the iPhone 6 would be sapphire, Corning’s stock took a hit since they make the Gorilla Glass used in the current iPhone.
In the Apple announcement on Tuesday, there was no mention of Corning, so their stock has not rebounded. In fact it continues to drift downward.
But I remember at CES that Corning was touting a new ion feature in their latest Gorilla Glass 3. So today I checked the Corning website and found this text:
"Ion exchange is a chemical strengthening process where large ions are “stuffed” into the glass surface, creating a state of compression. Gorilla Glass is specially designed to maximize this behavior. The glass is placed in a hot bath of molten salt at a temperature of approximately 400°C. Smaller sodium ions leave the glass, and larger potassium ions from the salt bath replace them. These larger ions take up more room and are pressed together when the glass cools, producing a layer of compressive stress on the surface of the glass. Gorilla Glass’s special composition enables the potassium ions to diffuse far into the surface, creating high compressive stress deep into the glass. This layer of compression creates a surface that is more resistant to damage from everyday use."
It sure sounds like the same thing. But the analysts seem ignorant, as seem the reporters. At least until someone figures it out for them.
I applaud Apple for avoiding sapphire at this time for the following reasons:
- While sapphire is 25% stronger than Gorilla Glass and more scratch resistant, sapphire also has a tendency to shatter when dropped from just three feet; Gorilla Glass requires three times the force to shatter.
- Sapphire takes 100 times more energy to produce (according to Corning) – something that Apple cares about with its strong focus on environmental responsibility
- Sapphire costs 10 times as much as Gorilla Glass (according to Corning and MIT), although some of this discrepancy might be addressed in new manufacturing processes deployed in the mega GT Advanced sapphire plant in which Apple invested $578 million
- The new mega plant is just coming online, and relying on that would undoubtedly have caused supply shortages of iPhone 6 – that would have been disastrous for Apple given the lost sales for the holiday quarter
- Corning continues to improve Gorilla Glass and is now on version 3. Each year, their demonstrations at CES are a highlight of that show for me. They will continue to innovate
Long-term, Corning may lose out to sapphire in the next iPhone 7 or iPhone 6s or whatever it’s called. But I have a great deal of respect for Corning’s innovation, and they continually invent new businesses unlike any other company — even perhaps including Apple. Examples of technologies and businesses that they’ve created include light bulbs (1879), railroad signal lanterns (1912), Pyrex heat-resistant kitchenware (1913), high speed ribbon machine for mass producing bulbs (1926), fiberglass insulation (1932), silicone (1934), world’s largest piece of glass for telescope (1935), CRTs for radios and TVs (1939), continuous melting process for optical and ophthalmic glass (1944), mass-produced TV tubes (1947), Corningware/Corelle® ceramic dinnerware (1952), heat-resistant windows for spacecraft (1961), fusion overflow process for LCDs (1964), fiber optic cable (1979), cellular ceramic substrate fo automotive catalytic converters (1972), active-matrix LCDs (1982), Hubble Telescope glass (1990), Clear-Curve® 90 degree angle optical fiber (2007), Gorilla Glass® for smart phones (2007), and Gen10 process for producing more affordable LCDs (2008). Without Corning’s innovations, we would not have today’s lighting, television and optical communications industries as we know them. In each instance, Corning was responsible for the invention, and in each case they commercialized the innovation so effectively that they became the dominant producer. Corning also created the dominant medical testing company Quest Diagnostics (which was Corning Clinical Labs before it was spun out into a new public company); Quest is now the clear market leader in lab testing. However, Quest was different from the other Corning businesses because it was created through a roll-up of a series of acquisitions of smaller labs rather than technical innovation. But in any event, I can’t think of any company that combines invention with effective commercialization as much as Corning. Their only weakness is that they are not very good at sustaining businesses in the later stages of the cycle, perhaps because they lose interest in more mature businesses; there are a series of businesses such as Pyrex and Corelle that evolved into money losers, but after divestitures rose to new heights by the acquiring company. But no company excels at everything.
Corning is also resilient. It has managed to bounce back from market disasters, such as the telecom meltdown in 2002 when the world had overbuilt fiber-optics infrastructure and their customers all started to go bankrupt. So I expect that Corning will show resilience and further innovation in glass even if sapphire does eventually replace Gorilla Glass. If you’d like to see the evidence, check out the series of videos that Corning produced a few years ago on “A Day Made of Glass” that Corning released in 2011. The videos are inspiring.
I’ve always thought about buying Corning stock, and the Company may be the next best thing to Apple for sustained innovation and repeatedly re-inventing itself. So I decided today was the day and I pulled the trigger and bought some Corning shares for the first time. I’m not expecting the more than 100 times returns I’ve realized in Apple, Microsoft, Abbott Labs and Nucor, but it could be a long-term winner and this seems to be a good time to buy. We’ll see.
Disclosure: I have owned Apple shares since 1985 and now also own Corning shares.
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