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Apple to Build New 700-Employee Sapphire Glass Manufacturing Plant in Arizona
Apple will build a new 700-employee manufacturing facility in Mesa, Arizona, to make sapphire glass, according to releases from the State of Arizona and GT Advanced, a New Hampshire-based materials manufacturing company.According to GT Advanced, that company will "own and operate furnaces and related equipment" at a new Apple facility in Mesa, with Apple providing GT with a prepayment of $578 million that GT will pay back over five years beginning in 2015.
Although the agreement does not guarantee volumes, it does require GT to maintain a minimum level of capacity. GT will be subject to certain exclusivity terms during the duration of the agreement. GT expects this arrangement to be cash positive and accretive to earnings starting in 2014. Gross margins from this new materials business are expected to be substantially lower than GT's historical equipment margins. However, the company believes the strategic nature of this agreement and the benefits associated with building a recurring revenue stream are important to its continued diversification.The State of Arizona issued a separate press release [PDF] that says the plant will create at least 700 jobs in the first year, plus an additional 1,300 construction-related jobs.
"Apple is indisputably one of the world's most innovative companies and I'm thrilled to welcome them to Arizona," said Governor Brewer. "Apple will have an incredibly positive economic impact for Arizona and its decision to locate here speaks volumes about the friendly, pro-business climate we have been creating these past four years. Their investment in renewable energy will also be greening our power grid, and creating significant new solar and geothermal power sources for the state. As Governor, I've worked hard to demonstrate that Arizona is open for business. Today's news is proof that's paying off."Apple uses small pieces of sapphire glass -- which provides superior durability and scratch resistance to other forms of glass -- to protect the cameras on the iPhone and on the home button for the new Touch ID-equipped iPhone 5s, however this would seem to be an expansion of Apple's sapphire glass efforts. A report from earlier this year suggested that future smartphones may use sapphire, a crystalline form of aluminum oxide, instead of more traditional forms of glass.
Other reports have suggested that Apple has experimented with sapphire displays but found them infeasible. Additionally, Corning has claimed its Gorilla Glass 3 is a better glass solution than sapphire.
One possible destination for Apple's new sapphire glass production is in a potential smart watch project. Sapphire is already extensively used in high-end watchmaking and could be more feasible on a small screen than the larger display on a smartphone or tablet.
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