Apple uses sapphire glass to protect the camera on its iPhone and may use the material in the future on device displays, according to industry reports.
GT will own and operate furnaces and other equipment to produce the material at the Arizona site. Apple will provide GT with a prepayment of approximately $578 million. GT will reimburse Apple for the prepayment over five years, starting in 2015.
The announcement came as GT reported results for the third quarter, which ended Sept. 28. The company reported a net loss of $38.1 million, compared to earnings of $11.9 million in the second quarter and $2.3 million for the third quarter of fiscal 2012.
The project will provide 700 manufacturing jobs in the first year and 1,300 construction and associated jobs in Mesa, Arizona, according to a statement by Arizona Governor Jan Brewer on Monday.
Apple confirmed the plan, but would not say exactly what components would be made at the new facility or what products they would appear in.
GT specializes in "crystal growth equipment" for consumer electronics and other industries. It said on Monday it signed a multiyear supply agreement with Apple to provide sapphire material, which has in the past been used in watches, optical instruments and integrated circuits. There have been reports that device makers are looking at sapphire crystal for use in screens.
Apple's push to create jobs in the United States comes after scrutiny of its massive overseas cash reserves and conditions for workers at contract manufacturer facilities it uses in China.
The move also signals a tentative revival in U.S. manufacturing. Earlier this year, Apple revealed plans to build computers at a site in Austin, Texas, while Google Inc's Motorola unit decided to assemble its new Moto X phones in the same state.
Big corporations such as Caterpillar Inc and General Electric Co have been shifting some production back to home soil over the past few years. Last month Wal-Mart Stores Inc announced a campaign to buy more U.S.-made goods.
GT said it will own and operate the furnaces to produce the sapphire material, but Apple will own the Arizona facility.