Non substrate applications account for 25% of the US$1 billion sapphire industry. But emerging mobile phone applications could bring this total to more than $3 billion by 2018. Display cover applications could more than triple the size of the industry within the next 5 years Established applications could generate US$366 million in 2018. But adoption of sapphire for smartphone display covers could generate an additional $1.3 to $2.6 billion depending on the adoption scenario. Sapphire is currently used in some exotic, luxury phones. However the sapphire price reduction combined with the massive adoption of touch screen in smartphones have stimulated the interest of cell phone OEMS for this material. Crystal growth equipment manufacturer GTAT is leading the charge and recently created a lot of buzz around this application and on the OEM front. Apple is rumored to have conducted an extended due diligence. Adoption of sapphire in mobile display covers represents the single largest opportunity discussed in this report. It remains, however, uncertain. We see 4 major challenges: technology, supply chain, cost and market acceptance. Crystal growth and finishing technologies still need to be optimized in order to guarantee stable performance and reduce the price gap with chemically strengthened glass like Corning's Gorilla. We estimate that the current cost of manufacturing a sapphire display cover is around $22 but could drop to $12 and ultimately below $10. It remains to be seen if the Bill Of Material increase vs. the $3 glass display cover will be absorbed by the OEM in exchange for increased market share or if the consumer will value the increased durability brought in by the sapphire cover and accept paying a premium. It is difficult to predict the success of sapphire in this application. However, we expect that some OEMs will probe the market and introduce some models featuring sapphire by late 2013 - early 2014. Initial customer reaction will have a strong influence on the future of the technology. If successful, strong market traction could ease the funding for the more than $1.5 billion in capex needed to serve this industry and set up the supply chain to serve this application. Glass cover lens manufacturers might seize the opportunity. Because of their vast existing glass finishing capacity that could be converted to process sapphire and their privileged access to leading smartphone OEMs, those companies could beat established sapphire finishing companies into this market. However, another scenario would see collaborations between some leading sapphire and cover lens makers in order to pool technical knowledge, capacity and customer access under the push of some smartphone OEMs. In any case, if this opportunity materializes, it will transform the sapphire industry with new players emerging... More information at http://www.i-micronews.com/reports/Sapphire-Applications-Touch-screens-displays-semiconductor/3/372/

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Sapphire Applications
Touch Screens, Displays, Semiconductor,
Defense & Consumer Applications of Sapphire
Apple
Saint-Gobain Crystals
Meller Optics

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Application Characteristics
• The table below summarizes the main applications discussed in this report as well as the key sapphire
attributes that justify this material choice.
Market Application Shapes Dimensions Optical Mechanical Thermal Chemical
Plasma
Compat.
Bio-
Compat.
Dielectric
Properties
Medical /
Industrial
POS Scanner Window Windows Medium X X
Viewports Windows ,disks Medium X X X X
Dental Braces Custom Small X X X
Fluid delivery tubes Tubes
Small,
Medium
X X
NMR Spectroscopy Tubes Small X X
Sapphire Knives Custom Small X X X X
Windows for endoscopy X X X
Thermocouple protection Tubes Small X X X
Light guides Rods
Small,
medium
X (X) (X) (X)
Mechanical parts (Cylinders,
pistons, gears, bearings…)
Rods, balls,
custom
Small X X
Skull Pins
Lighting
Lamp tubes (HPS, Xenon,
metal halide)
Tubes Small X X X X
Optical
Prisms Block
Small,
Medium
X X
Lens Windows
Small,
Medium
X X
Windows Windows
Small,
Medium
X X
Overview

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Executive Summary
Aerospace and Defense
May 2013

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Key Players
Crystal
Growth
Cutting
shaping
Finishing
Assembly,
Coating, testing
System
Integration
Aerospace and Defense
Note: no major actors have been identified in China and Russia however, we expected both countries to actively develop their
domestic supply chain for highly sensitive defense projects.

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Alternative Materials:
ALON
TM
• ALON
TM
results from the incorporation of nitrogen into aluminum oxide. The Nitrogen stabilizes the matrix,
and results in a cubic crystal structure that is isotropic and can be produced as a transparent polycrystalline
material. Approximate composition is Al23O27N5.
• One of the key benefits of polycrystalline ceramic materials is that they can be produced in complex
geometries using conventional ceramic forming techniques such as pressing and slip casting in order to
manufacture complex shapes that are difficult to achieve with sapphire.
• The technology for the making of ALON
TM
transparent ceramics was transferred from Raytheon Company to
Surmet Corporation in 2002.
Polished ALON Hyper Hemispherical dome
(source: Surmet)
Large polished ALON plate
(source: Surmet)
Finished ALON dome
(source: Moore Nanotechnology Systems)
Aerospace and Defense

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EOTS & ISR
ATFLIR (Raytheon)
Overview:
• The ATFLIR (AKA AN/ASQ-228) was developed by Raytheon
(US).
• It is currently used by the US Navy on some F/A-18.
Volumes:
• We estimate that there are a total of 450 pods in service. In
addition 6 pods are to be delivered to Malaysia by 2017. The
ATFLIR uses a medium size window
Elements of Supply chain:
• The pod only uses a small sapphire window for laser targeting.
Other windows are made of ZnS.
• The sapphire windows were finished by Goodrich and
assembled internally by Raytheon.
• In addition, spinel windows manufactured by Technology
Assessment and Transfer and ArmorLine Corporation have been
tested within the frame of a US Army ManTech program ended
in April 2012. However, as of today we believe that no
production models have been delivered with Spinel windows.
ATFLIR Pod (Source: Raytheon)
ATFLIR ZnS Windows (Source: Goodrich)
Aerospace and Defense

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Transparent Armors
Major applications
Ground Vehicles:
HMMWVs, Tanks, Trucks, Resupply
Air Vehicles:
Helicopters, Anti Tank aircrafts
Personal Protection
Examples
Part
Description
• Windshield
• Side windows
• Gunner protection kits
• Windshields
• Blast Shields
• Lookdown windows
• Sensor protection
• Blast Shields
• Face Shields
• Goggles
Requirements
• Withstand multiple hits (automatic weapons) + Armor Piercing threats.
• Low weight
• High transparency and durability (exposure to sand, chemicals…)
• Compatible with night vision goggles.
• Light weight
• Protection against blast and
debris (IED)
Current
solutions
Glass (or glass-ceramics) + polymer laminates Polycarbonates
Emerging
Solutions
Sapphire, ALON or Spinel + polymer laminates
Aerospace and Defense

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Missile Domes and Windows
Manufacturing
• Various EFG-type techniques have been developed for near-to-shape domes:
– 1 point contact (Fig 1): the crystal is formed by rotation in contact with a point like die. This approach is very slow
and leads to dome with high residual stress due to the offset of the crystal vs the axis of the heater
– Spiral shape (Fig 2): with this design, the gradual enlargement of the dome is obtained by slowly rotating a revolving
spiral die while pulling the crystal.
– Fixed die arc (Fig 3): the enlargement of the dome is obtained by horizontal movements of the rotation axis of the
crystal relative to the fixed die.
• Similar technique were also developed by Saphikon (now part of Saint-Gobain Crystal) around 1990.
Variants of EFG growth of near to shape
domes and cones
Source: Experimental Factory of Scientific
Engineering (“EZAN”, Russia)
Fig 1 Fig 2 Fig 3
Image: Meller Optics
Aerospace and Defense

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Infra-Red Counter Measures (IRCM)
Overview
• The success rate of IRCM depends on the ability of the system to overpower the signal from the aircraft.
Systems concentrating a high amount of IR energy in the direction of the seeker are more likely to succeed.
• IR lasers are therefore increasingly replacing flares. They’re assembled in Directed Infra-Red Counter
Measure (DIRCM) systems. In DIRCM, the IR source is mounted on a movable turret and uses the missile
plume to accurately aim the laser beam at the seeker. The most sophisticated systems can defeat multiple
threats.
• IRCM are used extensively in all types of military aircrafts but are also increasingly being considered to
protect civil commercial, business and VIP aircrafts from infrared (IR) guided man-portable air defense
systems (MANPADS) missile in high threat routes and environments.
Decoy Flares Lamp Based Laser Based
1960 1985 2000
Evolution of IR Counter Measure Systems
Aerospace and Defense

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Sapphire Tubes:
Usage and Characteristics
• Sapphire tubes are used as plasma applicators and specified in some but not all microwave plasma source
with a fluorine chemistry. They can typically be found in:
– Most ashers: fluorine chemistry used for both process and chamber cleaning
– Some PECVD using a remote microwave source with fluoride chemistry for chamber cleaning
– Some dry etching tools using a remote microwave source with fluoride chemistry for chamber cleaning
• Tubes are typically 1” to 1.5” in diameter and 10-13” length. EFG is therefore the preferred growth method.
Leading suppliers for this segment are Saint-Gobain Crystal (US), Gavish (IL) and PST (LT).
• Failure mode is essentially thermal: defects  hot spots  cracking. We estimate the typical lifetime of a
tube to be in the 3000-4000 hour range, leading to a significant aftermarket for replacement parts.
• ASP vary from $xxxx to $xxxx per piece depending on dimensions.
F ,H
chemistry
With
microwave
plasma source
for cleaning
Total PECVD
market
Potential for sapphire tubes
(competing with quartz)
F,H
chemistry
With
microwave
plasma source
for cleaning
Total dry
etcher market
Potential for sapphire tubes
(competing with quartz)
Asher
market
Mostly
microwave
plasma source
with fluorine
chemistry: quartz
or sapphire tubes
Semiconductor

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Watch Market Segmentation:
Sapphire Window Adoption
Luxury:
> $5000
High End:
$1500-$5000
Medium End:
$300-$1500
Entry Level:
$100-$300
Commodity Watches:
<$100
Volumes
(Million Units)
Sapphire
Adoption %
Sapphire Windows
(Million units)
xx m xx% xx m
xx m xx% xx m
xx m xx% xx m
xx m xx% xx m
xx m xx% xx m
Total: 3xx m
Trend:
Increasing penetration
of sapphire in lower
end models
Watch Windows

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Projected Capacitive Touch Panels
Overview
• The touch screen module is generally manufactured as a stand alone component that is later laminated
onto the top of the LCD display. The diagram below shows a generic P-Cap touch screen display structure.
• The top surface which is exposed to the environment and with which the user interacts is often called the
“cover lens” or “cover glass”. Glass has displaced plastic since the first iPhone and the adoption of touch
screens in most smartphones. It is this component, that could potentially be substituted with sapphire.
• There are multiple possible designs for projected capacitive touch panels. Design choices can impact the
supply chain and the acceptance of sapphire as a substitute to glass covers. The most common designs are
discussed in the following slides.
Transparent cover = lens (plastic, glass…)
Transparent conductor film: X axis electrode (ITO…)
Separator (Glass, sputtered SiO2, polymer…)
Transparent conductor film: Y axis electrode (ITO…)
Thin Film Transistor array on glass
Liquid Crystal
Color Filters on glass
Polarizer
Touch
module
LCD
display
module
Generic structure of a mobile device P-Cap touch screen (Yole Developpement)
Nissha Printing
AUO
Mobile Devices

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Projected Capacitive Touch Panels
In-Cell / On-Cell
Cover Lens
Liquid Crystal
TFT Array Glass
LCD Polarizer
Color Filter Glass
In-Cell P-Cap structures have the X-Y
ITO electrode array deposited under
the top polarizer in the LCD stack or on
top of the color filter glass. The cover
lens is added to protect the LCD stack
surface.
Cover Lens
Liquid Crystal
TFT Array Glass
LCD Polarizer
Color Filter Glass
ITO X-axis
ITO Y -axis
X-Y Electrodes
Insulator
Color Filter coating
Hybrid On-Cell / In-Cell have the Y electrode deposited
on top of the color filter glass and the X electrode
underside, before the color filter coating is deposited.
The cover lens is added to protect the stack, however,
performance can be reduced due to the increased
distance between the finger and the X electrodes
Cover Lens
Liquid Crystal
TFT Array Glass
LCD Polarizer
Color Filter Glass
In-Cell P-Cap
Hybrid On-Cell / In-Cell
• The structure presented so far are all discrete touch panel modules manufactured separately from the TFT-
LCD display. The 2 elements are then assembled (laminated) to create a touch display.
• Some LCD manufacturers are now integrating the touch sensor within the TFT-LCD stack. Those structures
are called In-Cell or On-Cell.
Mobile Devices

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Touch Panel Supply Chain
Major Players
Players Country Cover Lens Module TFT LCD Apple Supplier ? Comment
3M US
ALPS JP Yes
BIEL Crystal CN Yes
Cando TW Controlled by TPK
Digitech Systems KR
ECW EELY CN
G Tech Optoelectronic TW 37% owned by Hon Hai
Hanns Touch TW
Iljin KR
Jtouch TW
LBGK (Laibao Hi Technology CN
Lens (one) Technology CN Yes
Luminous Optical Technology TW/CN
Melfas KR
Moreens KR
Nissha Printing JP
Ocular US
Panjit TW
Proware CN
S-Mac KR
SMK JP Yes
Swenc (Hanghao Tech) TW
Touch International US
TPK TW Yes Owns 19.9% of Cando
Truly HK
Vitalic Industry CN
Wintek TW Yes
Xingxing Firstar Panel Tech CN
Young Fast TW
Yu Shun (“Success Electronic”) CN
Mobile Devices
Current leading
module suppliers are:
TPK (#1), Wintek,
Youngfast and Jtouch

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Cover Lens Manufacturing
Sheet or Piece Process
• Manufacturing can be conducted:
• At the glass substrate level = Sheet type processing
• Or after cutting of the individual lens cover = Piece type processing.
• For TOC type of touch screen (=sensor electrodes deposited directly on the back of the cover lens), the
sheet type is often preferred. However, some companies like TPK use a piece type.
• Piece type tends to be more complex to manufacture and is often geared toward higher end devices.
Chemical
Strengthening
ITO
deposition
and
patterning
Cutting,
forming, hole
drilling
Screen
Printing and
coatings
Cutting,
forming, hole
drilling
Chemical
Strengthening
Screen Printing
and coating
ITO deposition
and patterning
Large Glass
sheet
(up to 1 m2)
Sheet type
process
Piece type
process
Cover Lens Maker TP Maker
Glass Supplier
Glass Supplier
Vertically Integrated Cover Lens + TP maker
Mobile Devices

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Cost Simulation
Process Flow
Wire slicing
Annealing
Shaping + Beveling Grinding or lapping Hole Drilling
Polishing
Dimension control,
Cleaning and final
inspection
Edge Polishing
Note: screen printing and the various coatings were not included in our cost simulation
Mobile Devices

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Cost Simulation
Current Cost
• Scenario: “mid-volume” manufacturing of 250,000
parts per month conducted by an established sapphire
manufacturer using tools, consumable at currently
available prices.
• Result: we estimate that a COGS of <$22 is achievable
under reasonable yield assumptions:
– Crystal growth process yield*: 70%
– Finishing yield: 90%
• Growth, slicing, polishing and lapping are the largest
contributors, representing 91% of total cost.
Wafer Process Flow
Cost
(USD/Cover)
Breakdown
Crystal Growth $ xxx xx%
Boule cutting $ xxx xx%
Boule Orientation $ xxx xx%
Boule Inspection & Mapping $ xxx xx%
Cropping / Bricking $ xxx xx%
Blank Slicing $ xxx xx%
Shaping and Beveling $ xxx xx%
Lapping (or Grinding) $ xxx xx%
Hole Drilling $ xxx xx%
Annealing $ xxx xx%
Polishing $ xxx xx%
Edge Polishing $ xxx xx%
Flatness and dimension control $ xxx xx%
Cleaning $ xxx xx%
Final Inspection $ xxx xx%
TOTAL $ xxx 100%
Detailed simulated cost breakdown (Yole Developpement)
Mobile Devices
May 2013

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Adoption Scenario
Overview
Quarterly
Volumes
Group #1 Group #2 Group #3 Group #4
10 m
5 m
1 m
Apple iPhone,
Samsung Galaxy
Luxury:
Gresso, Vertu..
HTC, Huawei,
ZTE…
Sony, Nokia,
Blackberry
Scenario #1:
Step Function
Scenario #2:
Smooth Ramp
Current status
Mobile Devices
May 2013

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Smooth Ramp Scenario
Volume & Revenue
• Under this scenario, the adoption of sapphire is initially driven by adoption in a few high end, low/mid
volume smart phone models.
• The graph below assumes sapphire penetration increasing from 0.3% of smartphone in 2013 to 8% in 2018.
• OEM would use those first products to test both consumer acceptance and perception of the added value
of a sapphire cover, and the capabilities of the supply chain.
• For suppliers, this allows for a smoother ramp up, with capacity being added at a slower pace, on a per
needed basis as market acceptance growth.
Mobile Devices
May 2013

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Exfoliation as a Potential Enabler:
Cost Estimate
• Typical implantation thickness is a few 10’s µm. A sapphire exfoliated layer laminated on glass or other
material would retain some but not all the benefits of bulk sapphire: scratch resistance will be maintained
but other mechanical or dielectric properties will be essentially driven by the carrier material.
• As details of the technologies are not published, attempting a precise cost modeling is challenging. We have
simulated the exfoliation assuming the following process flow (other key hypothesis listed on next page):
Sapphire
Initial part: 1.5 mm thick
double side polished part.
Implantation (35 µm) Bonding Exfoliation
Glass Glass
Glass
Polishing
Glass
Cleaning
Polishing
Mobile Devices

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Yole Activities
Yole Finance
M&A / Due Diligence /
Fund raising services
www.yolefinance.com
© 2012 21
www.yole.fr
Media business
News feed / Magazines /
Webcasts
Reports
Market
Research
Consulting services
Market research,
Technology & Strategy

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© 2012 22
Compound Semiconductor reports from YOLE
UV LED MARKET
LED Packaging
Status of the LED
Industry
LED Front End
Manufacturing
Technologies
GaAs Wafer Market &
Applications
III-V Epitaxy Substrates
& Equipment Market
SiC Market
Sapphire CoSim+
New! New!
Sapphire for Display,
Defense, Consumer…
Sapphire for LED