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Apple Sapphire Deal with GT to Hit Full Production Beginning in 2H 2014
"Our arrangement to supply sapphire materials to Apple is progressing well and we started to build out the facility in Arizona and staff the operation during the quarter," said Gutierrez. "We are pleased to have Apple as a sapphire customer and to be in a position to leverage our proprietary know-how to enable the supply of this versatile material. While our primary focus during the balance of the year is to continue to execute on our commitments in Arizona, our aim is to position GT not only as an exceptional sapphire supplier to Apple but also as an unparalleled world-class supplier of sapphire material and equipment to a variety of customers.As part of the deal with Apple, GT halted sales of its sapphire production furnaces in order to focus on building out capacity for Apple, a move that resulted in a drastic reduction in GT's revenue for the latter half of 2013 and saw the company's full-year revenue drop to $299 million in 2013 from $733.5 million in 2012.
GT projects that company revenue will remain low during the first half of 2014 as it continues to ramp up production for Apple, with revenue of just $20-30 million for the first quarter. But the company forecasts a massive increase in revenue for the latter half of the year, which should represent 85% of the company's full-year revenue of $600-800 million. That timing would appear to be in line with an Apple product launch such as an iPhone 6 with sapphire-covered display in the usual September-October timeframe.
The company expects that 2014 will be a transformational year, one in which it builds a sapphire materials business while continuing to invest in the new technologies that will drive its equipment business in 2015 and beyond.With sapphire estimated to account for 80% of GT's revenue for the year and Apple undoubtedly representing the lion's share of that segment, the deal with Apple could be generating in the range of $400-500 million for GT this year. Looking further ahead, GT sees even more growth with estimates of over $1 billion in total revenue for 2015.
The company expects that revenue and profitability will be back end loaded, with its sapphire materials business ramping as the year progresses, and with improving financial performance during the second half of 2014.
On an annualized basis, during 2014, the company expects revenues to range from $600 million to $800 million, with approximately 15% of total revenues occurring in the first half of the year. The company expects that its sapphire segment will account for more than 80% of total revenue in 2014. The sapphire segment includes the company's equipment and materials businesses in the LED, industrial and consumer electronics markets.
Apple has been looking to rush its new sapphire plant into production this month to "create a critical new sub-component of Apple Products". Given the number of sapphire furnaces delivered to the facility and on order, the partnership between Apple and GT could be sufficient to produce 100-200 million sapphire-covered iPhone displays per year.