GT Advanced Technologies signs multiyear contact with Apple to supply U.S. made sapphire windows for iPhones

Merrimack, NH--Sapphire- and polysilicon-materials fabricator GT Advanced Technologies Inc. (Nasdaq:GTAT), which, at its Salem, MA location makes 8-in.-diameter doped sapphire ingots that the company grinds and polishes to form laser gain media for titanium sapphire (Ti:sapphire) lasers and amplifiers, has signed a multiyear contract with Apple, Inc. (Cupertino, CA) to provide (undoped) sapphire material for use in Apple's iPhones. The iPhone uses sapphire for the phone's camera-lens cover; sapphire has a hardness rating on the Mohs scale second only to diamond, and does not scratch even when rubbed directly with rocks and metal objects.

In the agreement, GT will own and operate its ASF advanced sapphire furnaces and related equipment to produce the material at an Apple facility in Mesa, AZ where GT expects to employ more than 700 people. Apple will provide GT with a prepayment of $578 million; GT will reimburse Apple for the prepayment over five years, starting in 2015.

Although the agreement does not guarantee volumes, it does require GT to maintain a minimum level of capacity. As noted in GT's press release, "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."

GT demos large and small sapphire smartphone windows
At SPIE's Photonics West 2013 (San Francisco, CA) in February, GT exhibited not only the smaller sapphire windows suitable for camera-lens covers, but larger sapphire windows that can replace the glass touchscreen windows on smartphones. There, Jeffrey Nestel-Patt, director of marketing and communications for GT, demonstrated the durability of these windows using the rock-rubbing test on a smartphone-mounted window, pressing hard but failing to create a scratch in the window.

GT has accelerated the development of its next-generation large-capacity ASF furnaces to deliver low cost, high-volume manufacturing of sapphire material. These R&D efforts will support the contract with Apple; GT expects that this will enable the expansion of its LED, industrial, and specialty sapphire businesses by positioning GT and its equipment customers as the industry's lowest-cost sapphire producers.

For more info, see http://investor.gtat.com/releasedetail.cfm?ReleaseID=804195