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Apple Inks Sapphire Deal with GT Advanced Technologies

NEW YORK ( TheStreet) -- GT Advanced Technologies GTAT (GTAT), shares rallied on the news of its partnership with Apple AAPL (AAPL - Get Report), rising 14% to $8.38 in after-hours trading, adding to the 3.8% in gains already seen through the day. The agreement calls for Apple to buy significant amounts of sapphire, which could be used in Apple's iDevices to bring TouchID to them.

Apple has started to use sapphire to protect delicate features of its hardware such as the iPhone 5s' TouchID, finger print sensor and camera lens. One of GT's key business segments is the production of synthetic sapphire using sapphire crystallization furnaces. The inking of this agreement suggests Apple will begin to use the material, more lightweight and stronger than its current glass components, on a larger scale across its hardware line.

"Made from laser-cut sapphire crystal, the surface of the button directs the image of your finger to a capacitive touch sensor, which reads beneath the outer layers of your skin to get a detailed print," Apple said on its website, regarding the TouchID fingerprint verification system.

There is also speculation, though unconfirmed, that Apple could use the material for its new iWatch. Sapphire is widely used for watch faces, but this deal seems more about existing products, including iPhones and iPads, then it does about future products.

"We are very excited about this agreement with Apple as it represents a significant milestone in GT's long-term diversification strategy," said GT CEO Tom Gutierrez in a statement. "We believe that it is in the long-term best interests of our company, employees and shareholders to build a robust sapphire materials business with recurring revenues."

GT Advanced Technologies signed a multi-year agreement with Apple to provide sapphire material at the latter's Mesa, Arizona facility. GT will staff the facility with more than 700 workers, initiating full-scale production at the plant funded by a $578 million prepayment from Apple. GT is expected to reimburse the amount over five years ending 2020.

Shares of Apple finished the regular session higher, gaining 1.3% to close at $526.75. The stock was little changed in after-hours trading.

-- Written by Keris Alison Lahiff and Chris Ciaccia in New York

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