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The effect of potential impurities on cuprate superconductors are investigated within a formalism suitable for addressing the complex interplay of the bare repulsive electronic correlations in these materials and disorder when both are strong. Augmenting an inhomogeneous Hartree-Fock-Bogoliubov theory with the Gutzwiller projection method, we show that the mechanism governing the demise of superconductivity is rather subtle and differs from the conventional weak-coupling theories. While the superconductivity remains amazingly robust for up to moderate disorder strengths, it crashes down sharply at large disorders. Its initial robustness is attributed to the strong repulsive correlation that smears out charge inhomogeneities by reorganizing the hopping on the bonds of underlying lattice. This prohibits the formation of superconducting "islands". However, with increasing strength of disorder, when site energies on neighboring bonds become significantly different, the overall energy of the system is shown to reduce by prohibiting hopping on such links. Integrating this concept within our formalism, we show that the correlations fail to homogenize the system across these "cut-bonds". This mechanism produces islands of interspersed regions of Mott-insulating, Anderson-insulating and locally superconducting natures at large disorder, which eventually destroys the global superconductivity. This mechanism of formation of "islands" has some similarities and also crucial differences with that established for the s-wave superconductors. |