Buying new touchscreen devices is a double-edged sword.
One day, you’re unwrapping the sleek, shiny, lightweight new toy from its designer-caliber box, breathing in the smells of its protective packaging, and putting your fingertips to the smooth surface for the very first time.
But sooner or later, this space-aged electronic gadget starts to look old. It starts to look and feel dated, and as much as you were excited when it first landed in your hands, it now feels used up, ordinary, and anything but special.
Usually, this transition from aahh to blah has a lot to do with the condition of the touchscreen itself.
It’s the key to the interface between man and machine. But more than that, it’s also the main aesthetic characteristic of any device belonging to this technological species.
The problem with touchscreens is that by design, they’re meant to be in constant contact with skin, untrimmed fingernails, styluses, tips of pens, and whatever else may be used to click on icons and tap virtual keys.
As a result, normal wear and tear comes in the form of scratches, blemishes, and all other types of surface attrition.
In the past, users of this technology have been encouraged to attach a clear plastic film to the screen as a kind of protective sheathing. The plastic film takes the damage, and eventually it’s replaced. The touchscreen remains unscathed.
But it’s not exactly an elegant solution. The films require constant renewing, while the mirror-smooth touchscreen itself is never allowed to display its beauty the way it was intended.
This problem has not been ignored by various high-tech component manufacturers.
Specialty material maker Corning Inc. (NYSE: GLW) produces the now-famous Gorilla Glass, which is lighter, more flexible, 20% thinner, and more responsive to touch than the plastic composites it competes with.
Now in its 3rd generation (Gorilla Glass 3), the original Gorilla Glass became famous when it debuted on the first iPhone back in 2007.
Today, Corning’s cost of production for a single iPhone screen is a mere $3 — solidifying its status as a cost-effective industry standard.
Manufactured Sapphire Defeats All
However, from the look of things, glass is about to be reinvented… again. And the solution will come from a synthetically produced sapphire crystal.
Never mind fingernails, ballpoint pen tips, and errant car keys. Sapphire is the second-hardest substance known to man — meaning if you want to scratch it, you’ll need an actual diamond to do so.
Luxury-brand watch manufacturers like Tag Heuer and Movado have been using sapphire crystal watch faces for years — allowing for a lifetime of clear, scratchless viewing.
Last year, however, Apple Inc. (NASDAQ: AAPL) signed a $578 million deal with GT Advanced Technologies (NASDAQ: GTAT) to co-develop a manufactured sapphire crystal screen for its future iPhone line.
Currently, GT Advanced Technologies produces sapphire crystal lenses for the iPhone 5 camera — a small step forward, but still a long way off from a full touchscreen-sized surface.
When the deal was first publicized in October, GT’s stock gained more than 30% (it’s more than tripled since May 2013).
Close, But Not Quite There… Yet
But don’t go converting your entire net worth over to GT stock just yet.
While sapphire glass is said to be no less than 3 times stronger than the latest Gorilla Glass, there are some problems yet to be worked out.
The first problem is cost. At the moment, a single iPhone touchscreen manufactured from artificial sapphire crystal costs ten times more than its Gorilla Glass equivalent.
Now, this may not be a problem for a $2,000 watch with a 1.5-square-inch face, but when you’re talking about a $500 cell phone with a 7-square-inch screen or a $500 tablet with a 45-square-inch screen, it doesn’t take much imagination to see how costs could rapidly become prohibitive.
One of the potential solutions to this problem is to continue to produce touchscreens in the traditional fashion but with a sapphire crystal protective cover installed permanently over the main layer.
The cover would be thinner than a human hair and could provide ample protection from scratches without detracting from the all-important touch-sensitivity.
On the investment end of the problem spectrum, the agreement between GT Advanced Technologies and Apple lacks one thing that’s key to long-term share price robustness — a guarantee of volume from Apple.
Without this guarantee, the $578 million prepayment already made by the world’s most famous name in tech loses its power to compel new investors.
However, one thing remains certain: In the ongoing war for the most durable touchscreen material, it’s unlikely that Corning will be able to maintain its market lead forever.
Although artificial sapphire remains far more expensive, over time, that cost disadvantage will erode.
Gorilla Glass, on the other hand — as well as any of its succeeding descendants (Gorilla Glass 4, 5, etc.) — is very unlikely to ever match the durability of the second-hardest material known to man.
When cost-of-production issues are ironed out, I would expect a paradigm shift not just in who makes our touch screens but also in the material of which they’re comprised.
To Your Wealth,
Brian Hicks
Check us out on YouTube!Brian is a founding member and President of Angel Publishing. He writes about general investment strategies for Wealth Daily and Energy & Capital. For more on Brian, take a look at his editor’s page.
