An Apple supplier will make the sapphire glass used in its smartphone cameras at the plant.
MESA, Ariz. -- A company that will make small pieces of high-tech glass for Apple products plans to employ about 700 people at the now-vacant First Solar Inc. factory in east Mesa.
This is the first significant Arizona presence for Apple Inc., which is buying the building for its supplier, GT Advanced Technologies Inc. Apple looked closely at the Phoenix area about two years ago before deciding to award a much larger facility to Austin.
The deal, which was announced by GT in a regulatory filing Monday afternoon, is seen as a coup for Arizona, drawing excitement and praise from Gov. Jan Brewer and Mesa Mayor Scott Smith.
The project also will create 1,300 construction-related jobs to get the facility ready for production, Brewer said in a statement.
"Apple is indisputably one of the world's most innovative companies and I'm thrilled to welcome them to Arizona," her statement said.
Apple confirmed the deal but shared few details.
It is still unclear what incentives, if any, they used to seal the deal with the technology giant.
"Apple will have an incredibly positive economic impact for Arizona, and its decision to locate here speaks volumes about the friendly, pro-business climate we have been creating these past four years," Brewer said in her statement.
The factory will be run by GT, a New Hampshire-based company that will supply specialty sapphire glass for some of Apple's tech products.
Apple will buy the building and lease it to GT. GT said in its regulatory filing that it expected sapphire-glass production to start bringing in significant revenue in 2014.
The sapphire glass that GT will make in the facility will be used to cover the camera lenses in Apple's phones and the fingerprint-reading devices in its latest products. GT's technology also can be used to make scratchproof glass covers for smartphones, although it is not used for that purpose by Apple today.
"We are very excited about this agreement with Apple as it represents a significant milestone in GT's long-term diversification strategy," said Tom Gutierrez, GT's president and CEO.
The Arizona factory is a departure from GT's usual business, which is selling the equipment for sapphire-glass production. Supplying Apple with sapphire glass represents a more steady line of business than equipment manufacturing, the company said.
GT has lost about $45 million this year.
Apple prepaid for $578 million of GT's sapphire-glass goods, which GT must repay over five years ending in 2020, either as credit against Apple's purchases or as cash, GT said in its regulatory filings.
Why Mesa?
Arnold Maltz, supply-chain-management professor at Arizona State University's W. P. Carey School of Business, said it is unclear why Apple wants the production capacity in Mesa, but he had several ideas.
Maltz said it is possible that the material made in Mesa could go to another factory nearby in Juarez, Mexico, run by Foxconn Technology Group, another Apple supplier.
"I would not be surprised if a lot of this output doesn't go to Juarez," he said. "Foxconn has a monster plant there, and my guess is their client is Apple."
He also said it is possible either Apple or GT executives wanted to keep sapphire-glass production in the United States.
The majority of Apple products are manufactured in China, a fact that has put the company under considerable scrutiny. At its October launch event, Apple disclosed it was assembling its specialty Mac Pro computers in the United States
The building also comes at a steep discount price, with First Solar announcing it is taking a $56 million loss on the sale.
Second chance
Apple courted the Phoenix area, at least superficially, before deciding in early 2012 to build a massive operations center in Austin, where it will spend $282 million in the next decade on a 39-acre campus.
The Austin-American Statesman reported that project will receive an estimated $35 million in state and local tax incentives. The campus is projected to house 3,600 new workers with an average wage of $54,000 in the first year, growing to an average wage of $73,500 in a decade.
The Arizona Commerce Authority and other government agencies can provide tax incentives in Arizona. About $51.5 million was offered to First Solar to build a factory at the site before it scaled back global expansion plans last year due to worldwide oversupply of solar panels.
Brewer and other economic-development officials declined to detail any such offers Monday.
"Apple's presence in the region will be a game-changer for the Greater Phoenix area, its innovation landscape and future ability to attract other high-tech companies," Greater Phoenix Economic Council President/CEO Barry Broome said in a statement Monday.
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