Apple calls GT Advanced bankruptcy 'surprising,' company committed to preserving jobs in Arizona

Posted:
in General Discussion edited October 2014
In a rare public statement regarding a partner, Apple on Wednesday admitted it was surprised by sapphire maker GT Advanced Technology's Chapter 11 bankruptcy filing, but said it hopes to keep jobs in Arizona.




"We are focused on preserving jobs in Arizona following GT's surprising decision and we will continue to work with state and local officials as we consider our next steps," Apple spokesman Chris Gaither said in a statement to Reuters.

Apple doesn't usually comment on dealings with its partners, but it may have felt compelled to address the controversy given that the iPhone maker worked closely with state officials to build a new sapphire manufacturing facility in Mesa, Ariz. Arizona Governor Jan Brewer touted the deal at the time, saying it would create at least 700 "quality" jobs in the first year alone, as well as an additional 1,300 construction jobs associated with building the facility.

The state of Arizona lured Apple with a series of tax breaks, and earlier this year were looking to expand those incentives. It was said that the deal could result in tens of millions of dollars in tax savings for Apple.

As part of that deal, Apple pledged a $578 million prepayment to GT Advanced Technologies for supply of advanced sapphire material.

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The deal apparently fell apart, however, as GT Advanced announced on Monday that it had filed for bankruptcy. Subsequent reports have indicated that Apple withheld a $139 million payment to GT Advanced for unknown reasons.

Speculation suggests that GT Advanced was unable to hold up its end of the deal and supply adequate sapphire to Apple. The company currently uses the scratch-resistant material to protect the Touch ID fingerprint sensor and rear camera lens cover on iPhone models, and it will also be featured in two out of the three upcoming Apple Watch models.

Well-connected insider Ming-Chi Kuo of KGI Securities indicated this week that the bankruptcy of GT Advanced will not affect production of the Apple Watch, which has a smaller screen which is more durable and easy to manufacture with sapphire. But the company's struggles do signal that the likelihood for full sapphire screen covers on future iPhone models, at least in the near future, may be in jeopardy.

According to Kuo, large iPhone screen sizes require a 6-inch sapphire ingot, and Apple inked a deal with GT Advanced because its manufacturing process is more resilient and durable than competing options. He doesn't believe that Apple will turn to other suppliers, though the company is said to still be "very interested" in adopting sapphire covers for future iPhone models at some point in the future.
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Comments

  • Reply 1 of 52
    philboogiephilboogie Posts: 7,438member
    Why does the article contain an image of the 5.5" 6+ screen?
  • Reply 2 of 52
    jkichlinejkichline Posts: 1,331member
    Apple pinked a deal with GT Advanced? Sounds gross. #Typo
  • Reply 3 of 52
    They should have bought the company and replaced every executive.
  • Reply 4 of 52
    Kuo's speculation is irrelevant. Also, it's not Apple's responsibility to provide employment to anyone. Their responsibilities are to their shareholders and customers.
  • Reply 5 of 52

    GTAT might have overspend Apple's big check and were not able to deliver the technology or volume in time for iPhone 6.  I'm sure they will try again for 2015.

  • Reply 6 of 52
    chadbagchadbag Posts: 1,076member

    I am wondering if a laminate of sapphire and "Gorilla Glass" could be used to overcome the weaknesses of both?  Corning claims that Gorilla Glass can be made really thin.   Like laminated auto glass, maybe a layer of that underneath the sapphire would allow for more shatterproof sapphire?

     

    Not a materials guy

  • Reply 7 of 52
    Originally Posted by PhilBoogie View Post

    Why does the article contain an image of the 5.5" 6+ screen?



    How can you tell it’s a 5.5”?

  • Reply 8 of 52
    coolfactorcoolfactor Posts: 1,429member
    Quote:

    Originally Posted by jkichline View Post



    Apple pinked a deal with GT Advanced? Sounds gross. #Typo



    And the comma is in the wrong place in the title; it should be outside the quotation marks, after 'surprising', not inside. Rushed posts these days... the world is going down the drain, I say. :)

  • Reply 9 of 52
    coolfactorcoolfactor Posts: 1,429member
    Quote:

    Originally Posted by chadbag View Post

     

    I am wondering if a laminate of sapphire and "Gorilla Glass" could be used to overcome the weaknesses of both?  Corning claims that Gorilla Glass can be made really thin.   Like laminated auto glass, maybe a layer of that underneath the sapphire would allow for more shatterproof sapphire?

     

    Not a materials guy




    That very idea was suggested weeks ago. I, for one, expected Apple to do just that, but it never happened. 

  • Reply 10 of 52
    evilutionevilution Posts: 1,349member

    Maybe GTAT are forcing Apple's hand. Apple have 2 choices, not invest the money they said they would and lose all the money they have already put in, or save the company and their investment by ploughing more cash into it.

     

    TBH, if GTAT is that badly run, Apple should just buy it and force it to conform by replacing the key people.

  • Reply 11 of 52
    mjtomlinmjtomlin Posts: 1,819member

    All the speculation seems to be a bit ridiculous... If Apple was surprised by the bankruptcy, then that means everything was still going as planned. If there really were issues, then there would be no reason for Apple to respond.

  • Reply 12 of 52
    Could you imagine how bad sapphire-gate would be with millions of iPhone 6s with shattered glass?
  • Reply 13 of 52
    Quote:

    Originally Posted by Evilution View Post

     

    Maybe GTAT are forcing Apple's hand. Apple have 2 choices, not invest the money they said they would and lose all the money they have already put in, or save the company and their investment by ploughing more cash into it.

     

    TBH, if GTAT is that badly run, Apple should just buy it and force it to conform by replacing the key people.


     

    Maybe Apple realized that their next payment of $139 million would be better spent in exactly that way.  GTAT stock is currently having a market cap of $193M, and that's up from Monday, when their market cap was probably close to that $139M.  Oh yes, AAPL will be acquiring GTAT in the next few days if they haven't done so already, IMO.

  • Reply 14 of 52
    AI also forgot to report that the CEO SOLD a lot of GTAT STOCK when he found out that Apple was not going to use their sapphire for the iphone 6 because of failed drop tests. Something's not right here besides the brittle sapphire.
  • Reply 15 of 52
    Originally Posted by dridots View Post

    AI also forgot to report that the CEO SOLD a lot of GTAT STOCK when he found out that Apple was not going to use their sapphire for the iphone 6 because of failed drop tests. Something's not right here besides the brittle sapphire.

     

    It was mentioned (by a user) somewhere that the amount of stock sold could amount to nothing more than yearly interest, though the timing is questionable without knowing more about when their fiscal year starts and ends.

  • Reply 16 of 52
    normmnormm Posts: 548member
    Quote:

    Originally Posted by dridots View Post



    AI also forgot to report that the CEO SOLD a lot of GTAT STOCK when he found out that Apple was not going to use their sapphire for the iphone 6 because of failed drop tests. Something's not right here besides the brittle sapphire.

    He sold a tiny amount of his stock the day before the iPhone event (something like $100,000 worth)?, the first day he was allowed to sell that batch of stock.  He obviously knew months earlier that the iPhones weren't going to use sapphire screens.  Or do you think he just found that out at the Apple event, ten days before they started selling the new iPhones?

  • Reply 17 of 52
    malaxmalax Posts: 1,598member
    Quote:
    Originally Posted by coolfactor View Post

     



    And the comma is in the wrong place in the title; it should be outside the quotation marks, after 'surprising', not inside. Rushed posts these days... the world is going down the drain, I say. :)


    That's not true, at least in US style guides.

     

    As you can see here (http://blog.apastyle.org/apastyle/2011/08/punctuating-around-quotation-marks.html) the US style and British style differ.  Since AI doesn't say "colour" or "aluminium" I assume they follow US conventions.

  • Reply 18 of 52
    thomprthompr Posts: 1,511member
    markbyrn wrote: »
    They should have bought the company and replaced every executive.

    Apple has the furnaces, the factory, the rights to use the IP, and now they can hire the talent without getting the executives.

    Seems to me that they just effectively bought the company for cheap and don't have to fire anybody.
  • Reply 19 of 52
    malaxmalax Posts: 1,598member
    Quote:

    Originally Posted by NormM View Post

     

    He sold a tiny amount of his stock the day before the iPhone event (something like $100,000 worth)?, the first day he was allowed to sell that batch of stock.  He obviously knew months earlier that the iPhones weren't going to use sapphire screens.  Or do you think he just found that out at the Apple event, ten days before they started selling the new iPhones?


    Right, but in 2013 he sold no stock and in 2014 he has sold $10,000,000.  The most immediate sale the day before some Apple announcement was minor, but this could very well be a case of a year-long liquidation of stock based on inside information (drawn out to make it look less obvious).

  • Reply 20 of 52
    Quote:

    Originally Posted by mjtomlin View Post

     

    All the speculation seems to be a bit ridiculous... If Apple was surprised by the bankruptcy, then that means everything was still going as planned. If there really were issues, then there would be no reason for Apple to respond.




    Apple may have been surprised by the bankruptcy filing, yet fully aware of the the technical/contractual issues pertaining to GTAT meeting Apple's requirements.  GTAT has other clients, revenues sources, and probably didn't grant Apple visibility into their day to day financials.  

     

    And the statement is a cover for 'We're not bad, we're just good at business dealings' Corporate message. 

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