GT Advanced Technologies, Apple’s sapphire partner, recently announced financial results for the second quarter of 2014. The company acknowledged publicly that its facility in Mesa, Arizona is starting the transition to volume production. CEO Tom Gutierrez had the following to say regarding the matter:

The build-out of our Arizona facility, which has involved taking a 1.4 million square foot facility from a shell to a functional structure as well as the installation of sapphire growth and fabrication equipment, is nearly complete and we are commencing the transition to volume production. We remain confident about the long-term potential of the sapphire materials business for GT.
The financial results showed a net loss of $86 million for the quarter, a result that wasn’t expected given that the company has been restructuring itself as part of its deal with Apple. The Mesa, Arizona facility is owned by Apple and being run by GT, with Apple providing some of the upfront capital to help move the project along. GT ended up allocating over $45 million to what they claimed were “sapphire production ramp up costs” with the company stating that these costs were related to the fact that it was building out its facilities.

What was a bit more alarming is that this amount is up from just $1.9 million in the prior quarter, signaling the company’s move to launch production for Apple. All said and done, GT did end up confirming that it expects to meet the targets outlined in its deal with Apple, allowing the company to receive its final $139 million prepayment from Apple by the end of October.

For those of you who didn’t know, Apple uses sapphire for the camera lens cover on several iOS devices and also for the Touch ID sensor on the current flagship iPhone 5S. The Cupertino California company is pursuing a large increase in sapphire usage for upcoming products.

As of right now, the next-gen iPhone’s display has been rumored to include a sapphire cover. Furthermore, the much rumored iWatch is also being speculated to sport a full sapphire cover to help protect against scratches. Many industry speculators are saying that production yields of sapphire materials may be the exact reason that Apple products such as the next-gen iPhone may not see a large-scale rollout in 2014.

Ultimately we’ll just have to wait and see.

Source: GT Advanced Technologies (Investors)