- Associated Press - Monday, August 11, 2014

PHOENIX (AP) - A large factory in the Phoenix area is reportedly close to starting production of scratch-resistant sapphire glass for Apple cameras and other devices.

Tom Gutierrez, CEO of GT Advanced Technologies Inc., told investment analysts last week that the previously empty plant in Mesa is nearly finished, the Arizona Republic reported (https://bit.ly/1pL3xyG ).

The glass is used to cover camera lenses and fingerprint-reading devices on iPhones.

Gutierrez said without elaboration that there have been startup challenges but the company expects to reach fully operational status early next year.

“The build-out of our Arizona facility … is nearly complete, and we are commencing the transition to volume production,” Gutierrez said.

At one point, there were 1,200 construction workers installing power and water connections, and other infrastructure into the building shell, Gutierrez said.

The company has hired hundreds of workers to get the 1.3-million-square-foot factory running, and Apple said in November the plant will employee 700 workers for the manufacturing operation.

GT incurred about $45 million in sapphire production ramp-up costs during the second quarter of 2014 and expects another $45 million in costs during the second half of the year, Chief Financial Officer Raja Bal said during the conference call.

The second-quarter expense “was greater than anticipated and reflects the complexity and challenges we’ve had ramping the operation,” Bal said.

In a filing Thursday with the U.S. Securities and Exchange Commission, GT cited inefficiencies in fine-tuning its production process. The company has taken losses on products not deemed to be salable and on inventory spoiled as a result of construction-related interruptions, according to the document.

Apple Inc. bought the vacant building from First Solar Inc. for about $113 million and is leasing it to GT.

Apple was awarded a $10 million incentive package from the Arizona Commerce Authority to locate the plant in Mesa, and the Mesa City Council approved the creation of a foreign-trade zone that allows it to operate outside of standard U.S. customs rules and avoid paying duties on imported goods.


Information from: The Arizona Republic, https://www.azcentral.com

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