The Coherent facility in Newton Aycliffe was originally built by Fujitsu and described as the world’s most advanced microelectronics plant when it was opened by Queen Elizabeth in 1991.

But the Japanese company announced plans to close the plant in 1998 amid an electronics industry slump. It has since cycled through a succession of owners including a microchip firm backed by Roman Abramovich before it was sold to II-VI, a US company that later merged with Coherent.

In 2021, the company announced a major expansion of the site, which is believed to have been related to winning the Apple contract. Accounts for the year to June 2023 showed that the UK factory’s revenues rose from £13.3m to £104.5m as the supply agreement came into force.

The iPhone’s Face ID system features an array of sensors and cameras used to unlock the phone and authenticate payments, as well as produce more accurate photos and augmented reality effects.

Apple is expected to overhaul the system in the next generation of device, which is released later this year. Reports have claimed that it will feature a much smaller module buried under the screen.

Losing a contract from Apple can often be disastrous for the company’s suppliers. The British semiconductor company Imagination Technologies lost half of its value and was eventually sold after Apple said it no longer planned to use the company’s graphics chip designs in 2017. Other companies including Volex and Wolfson Microelectronics suffered share price plunges after losing contracts.

The Government announced a £1bn semiconductor strategy last year but critics say the money is not supporting the industry and pales in comparison to semiconductor subsidies in the US and Europe.

Apple did not comment, while Coherent did not respond to requests for comment.