Sputtering and micro-etching are complimentary processes that are often used to reduce touch screen borders and package sizes and ultimately improve touch performance.
“Sputtering” (aka known as suck-and-spit by the inventor) is a process by which an opaque material, usually indium tin oxide (ITO) is put onto glass or plastic, in a vacuum, resulting in a transparent thin film (say, 300 angstroms [number of atoms] thick). This is the starting point for overlay-type touch screens. Today, we also sputter molybednium/aluminum/moly (MAM) over the ITO to make very fine conductive traces (next answer) so that the nutcase designers can have unreasonably tiny borders.
Micro-etching is a method of removing the ITO or MAM in the sub-50 micron line width. On the touch sensor, making the ITO etch lines so tiny that you cannot see them eliminates all shadows, making the image look great and enhances the magic of touch.
Because projected capacitive is a scanned system, there must be a low resistance connection to every ITO row and column, occurring every 6 millimeters or so, and adding up to about 30 electrical signal traces at the edge of the ITO. When the designer has allowed almost no area to make the 30 separate connections, the only way to do it is to use tiny lines micro-etched in the area at the edge of the screen, which is usually hidden by an opaque (black) border.
While micro-etching the transparent ITO is no more expensive than conventional etching, the semi-conductor class equipment is a very expensive capital acquisition which is amortized into the product.
You do not want to have tiny borders on your product unless there is no other option, because this second step is expensive. Normally a projected capacitive screen is made by micro-etching the ITO in the visible touch area. After this etching step, the glass is put back into the sputtering chamber and an opaque layer of MAM is coated over the top of the etched ITO. Then the metallic layer is micro-etched again to create the fine lines at the edge. While the iPhone has micro-etched borders, the iPad does not which helps control the cost.
There is an even more expensive way to make your projected capacitive part known as “SITO”, for single sided ITO, which requires three trips to the sputtering chamber and three trips through the micro-etch line…..but I am not going to say any more so as to not encourage you…….