Updated Nov. 4, 2013 7:28 p.m. ET
Apple Inc. AAPL +1.29% Apple Inc. U.S.: Nasdaq $526.75 +6.72 +1.29% Nov. 4, 2013 4:00 pm Volume (Delayed 15m) : 8.62M AFTER HOURS $526.73 -0.02 -0.00% Nov. 4, 2013 7:59 pm Volume (Delayed 15m): 117,180 P/E Ratio 13.20 Market Cap $467.89 Billion Dividend Yield 2.32% Rev. per Employee $2,127,850 11/04/13 Apple Enters Pact With GT Adva... 11/03/13 Patent Wars Erupt Again in Tec... 11/01/13 Short Lines for Apple iPad Lau... More quote details and news » is building a new component manufacturing plant in Arizona, striking an agreement with GT Advanced Technologies Inc. GTAT +3.78% GT Advanced Technologies Inc. U.S.: Nasdaq $8.38 +0.30 +3.78% Nov. 4, 2013 4:00 pm Volume (Delayed 15m) : 6.85M AFTER HOURS $9.65 +1.27 +15.16% Nov. 4, 2013 7:59 pm Volume (Delayed 15m): 2.24M P/E Ratio N/A Market Cap $998.40 Million Dividend Yield N/A Rev. per Employee $929,517 11/04/13 Apple Enters Pact With GT Adva... More quote details and news » that will provide sapphire material for use in Apple products.
GT said it entered into a multiyear supply agreement at an Apple-owned facility in Mesa, Ariz. GT said Apple would provide the company with a prepayment of approximately $578 million that GT will reimburse to Apple over five years, starting in 2015.
Sapphire, a material known for its hardness, is used for a variety of purposes in electronics, including the manufacture of LEDs, or light-emitting diodes. Currently, Apple is using sapphire crystal for the fingerprint sensors in its latest iPhone 5S. The company and other smartphone makers are also using sapphire for purposes such as covers for camera lenses.
Apple confirmed that the deal with GT would make components for its products, though declined to be more specific.
"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," an Apple spokeswoman said in a statement.
The announcement is the latest sign that Apple is shifting a portion of its production to the U.S. after years of criticism from politicians and media for outsourcing manufacturing to companies in Asia. Apple has said the latest version of its new high-end Mac Pro desktop computer will be assembled in Texas.
Apple, meanwhile, has been shelling out to bolster its supply chain, including $11 billion in planned capital expenditures for the fiscal year that began in October, a 57% increase from the $7 billion in the previous year.
Demand for sapphire ingots used to make substrates for electronics applications—driven by LEDs and mobile phones—is expected to grow by more than 50% by 2016 from this year, according to the research firm IHS.
Sapphire is gaining popularity in portable devices because it is transparent and more scratch-resistant than glass. A patent filing from Apple earlier this year indicated that sapphire could be used to create scratch-resistant displays.
Apple said the forthcoming Arizona facility would run on "100% renewable" energy. "Their investment in renewable energy will also be greening our power grid, and creating significant new solar and geothermal power sources for the state," said Jan Brewer, Arizona's governor, in a statement.
GT, based in Merrimack, N.H., makes electronics manufacturing equipment and materials. The company said it would own and operate furnaces and related equipment at the Apple facility to produce the sapphire materials. The plant is expected to employ 700 workers who will be GT staff.
GT's shares jumped 12% to $9.41 in after-hours trading following the Apple news, which was issued along with GT's third-quarter financial results.
—Don Clark contributed to this article.
Write to Daisuke Wakabayashi at Daisuke.Wakabayashi@wsj.com
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