Apple's 'Made-in-the-USA' Crusade Continues
In what might be considered part of a continuing response to critics who accuse Apple (NASDAQ: AAPL) of farming out most of its production overseas, the company announced Monday it was building a new plant in Mesa, Arizona, according to Reuters.
The new plant will employ 700, with another 1,300 jobs slated for construction and management.
The plant, which the company said would run on 100 percent renewable energy, is the result of an agreement with GT Advanced Technologies Inc. (NASDAQ: GTAT). GT will provide Apple with sapphire material for use in a variety of Apple products.
GT told The Wall Street Journal it had entered into a multiyear supply agreement with Apple. GT said Apple would prepay the company about $578 million, which GT would reimburse to Apple over five years, starting in 2015.
Apple representative Kristin Huguet told CNET, "We are proud to expand our domestic manufacturing initiative with a new facility in Arizona, creating more than 2,000 jobs in engineering, manufacturing, and construction."
According to the Tuscon Weekly, the Arizona Commerce Authority said that Arizona power utility, Salt River Project, worked with Apple to create additional renewable energy sources to power the plant.
In a statement, Arizona Governor Jan Brewer said, "Apple is indisputably one of the world's most innovative companies and I'm thrilled to welcome them to Arizona. Their investment in renewable energy will also be greening our power grid, and creating significant new solar and geothermal power sources for the state."
This latest announcement follows a decision last December to relocate some Mac production to the US. After that, Apple said it was opening a manufacturing facility in Texas and a repair operation in Pennsylvania (the company’s second in the U.S.).
The operation in Arizona, which involves re-purposing a closed First Solar (NASDAQ: FSLR) plant; will involve the production of sapphire material for a variety of Apple products according to The Wall Street Journal.
Apple currently uses sapphire for the fingerprint sensors in the iPhone 5S and covers for camera lenses. In a patent filing earlier this year Apple said sapphire might have some use in creating scratch-resistant displays on a variety of devices.
According to research firm IHS, overall demand for sapphire, for use in the making of smartphones, as well as more traditional use in the manufacture of LEDs, is expected to increase by more than 50 percent by 2016.
Techcrunch said that thanks to a well-constructed contract with GT, Apple would get sapphire materials at a much lower price than the price paid by other manufacturers. GT, for its part, said the recurring nature of the deal would offset the effect of the low margins.
At the time of this writing, Jim Probasco had no position in any mentioned securities.
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