Apple Sapphire Deal with GT to Hit Full Production Beginning in 2H 2014

GT Advanced Technologies, Apple's partner in a new sapphire plant in Arizona, today announced earnings for the fourth quarter of 2013 while also providing a forward look at what will be a "transformational" year for the company. The company's comments help put into perspective just how large the deal with Apple is, with significant ramping heading into the second half of this year and into 2015.

"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.

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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.

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.

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.

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.

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Top Rated Comments

AngerDanger Avatar
134 months ago
Aluminum and saphire—Apple tech is slowly taking the place of jewelry.

I'm still waiting for the day I can get down on one knee and propose to a woman with an off-contract iPhone… although that probably depends more on the woman. :p
Score: 20 Votes (Like | Disagree)
darkslide29 Avatar
134 months ago
Isn't Arizona known as the 'crazy' state? Hope this doesn't affect production.

Will Tim Cook still keep this deal in Arizona if the gay-bashing legislation gets signed by their governor?

Seriously, what is wrong with Arizona always trying to pass laws that discriminate?

It's as if they want to surpass Florida on the WTF scale.
Score: 4 Votes (Like | Disagree)
Gasu E. Avatar
134 months ago
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.

There must be have been some amazing guarantees from Apple, in order for this company to agree to tear up its current business model.
Score: 4 Votes (Like | Disagree)
Koodauw Avatar
134 months ago
Can I buy stock in this company?
Score: 4 Votes (Like | Disagree)
luckydcxx Avatar
134 months ago
As great as sapphire is for scratch resistance it would be amazing if they could make it thick enough to be shatter proof against drops.

I don't need the thinnest smartphone in the world again, I need all day battery life with a thick battery and a thick sapphire screen for it not to break.
Score: 4 Votes (Like | Disagree)
whooleytoo Avatar
134 months ago
Aluminum and saphire—Apple tech is slowly taking the place of jewelry.

I'm still waiting for the day I can get down on one knee and propose to a woman with an off-contract iPhone… although that probably depends more on the woman. :p

OFF contract iPhone? Do you really want to propose to someone who's afraid to commit? ;)
Score: 3 Votes (Like | Disagree)