Apple says its 'ambitious' sapphire manufacturing process is 'not ready for production'

Posted:
in General Discussion edited October 2014
Following the news that GT Advanced Technologies will spend up to four years paying back Apple's $439 million prepayment, Apple has revealed that the two companies were working on a new method of manufacturing sapphire that never actually went into production.




In a comment provided to Re/code, an Apple spokeswoman said the company is focused on working with the city of Mesa, Ariz., and Maricopa County to help the GT Advanced employees who were affected by the company's bankruptcy. And although Apple's exclusive agreement with GT Advanced has been severed. and GTAT is exiting the sapphire production business, Apple signaled that it may not necessarily be done with the former partner.

"Apple put a lot of effort into an ambitious new sapphire manufacturing process with GTAT which was not ready for production," the company said. "We're going to continue evaluating GTAT's progress on larger sapphire boule development, as well as consider other options for the facility."

Apple's comment came after it was formally announced that the iPhone maker had reached an agreement with GTAT, in which the former partner will sell more than 2,000 "Advanced Sapphire Furnaces" on the open market to repay its debt to Apple. GT Advanced has four years to repay Apple the $439 million prepayment it made for sapphire material one year ago.

The comments from Apple would seem to suggest that the facility in Mesa -- which Apple built and GT Advanced ran -- was never used for sapphire production on shipping products. Apple currently uses scratch-resistant sapphire to protect the Touch ID fingerprint sensor on the iPhone and iPad, as well as for iSight camera lens covers, but it's unknown where that sapphire is built or who is supplying it.



Sapphire will also be a key component in two out of three Apple Watch models set to launch in early 2015.

Though GTAT will be exiting the sapphire production business, officials at the company hope they will be able to emerge from bankruptcy and refocus the business as an "equipment supplier" that would manufacture and develop "sapphire growth systems and processes."

Exactly what happened between GT Advanced and Apple, and what Apple hoped to do with its "ambitious" sapphire manufacturing process, or how fast the company planned to implement it, remains unknown. GTAT remains beholden to secrecy agreements the company signed with Apple, and bankruptcy court filings made by the company have been redacted.
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Comments

  • Reply 1 of 69
    icoco3icoco3 Posts: 1,456member
    Quote:
    Originally Posted by AppleInsider View Post



    ..., Apple has revealed that the two companies were working on a new method of manufacturing sapphire that never actually went into production.

    ...
     

    "Apple put a lot of effort into an ambitious new sapphire manufacturing process with GTAT which was not ready for production," the company said. ...

     

    So, Apple was also pushing the envelope for a "new method" and "ambitious manufacturing process" that just wasn't there yet?  Does that mean GTAT is not the sole perpetrator in the downfall?  Just adds another dimension to the tale....

  • Reply 2 of 69
    cpsrocpsro Posts: 2,432member

    Diversion for Samsung?

  • Reply 3 of 69
    icoco3 wrote: »
    So, Apple was also pushing the envelope for a "new method" and "ambitious manufacturing process" that just wasn't there yet?  Does that mean GTAT is not the sole perpetrator in the downfall?  Just adds another dimension to the tale....

    Doubtful. It probably was as simple as GTAT not living up to their end of the contract. Maybe they simply got in over their heads. To speculate where drama took place beyond that, though, is a bit of a reach in that even if drama did take place somewhere it would be hard to guess without good information. And if Apple really had acted in bad faith relative to the contract we probably would have seen a different outcome.
  • Reply 4 of 69
    john.bjohn.b Posts: 2,716member

    Seems like a company that specializes in sapphire products should've known the risks? 

     

    Apparently the c-level execs at least knew when to cash out.

     

    I still think there needs to be an SEC investigation of those stock sales right before the company declared bankruptcy.

  • Reply 5 of 69
    john.b wrote: »
    I still think there needs to be an SEC investigation of those stock sales right before the company declared bankruptcy.

    Yeah... much of GTAT's response and executives' actions look very suspicious.

    But we need a whole lot more investigation and accountability of crime in business anyway.
    Particularly where stocks and Wall Street come into play.
  • Reply 6 of 69
    Quote:

    Originally Posted by icoco3 View Post

     

     

    So, Apple was also pushing the envelope for a "new method" and "ambitious manufacturing process" that just wasn't there yet?  Does that mean GTAT is not the sole perpetrator in the downfall?  Just adds another dimension to the tale....


     

    I think Apple threw money at this thing hoping to achieve a certain goal but protected itself with onerous demands that GTAT was foolish enough to accept. GTAT should have known better... it's not like the BOD were a bunch of high school kids. 

  • Reply 7 of 69
    Quote:

    Originally Posted by Cpsro View Post

     

    Diversion for Samsung?


     

    That would be pretty funny, with a bunch of Samsung execs scratching their heads over a new sapphire ppfacility ppfailure. "Wait, we won't be able to do this?"

  • Reply 8 of 69

    This really is an interesting saga as information trickles out.

  • Reply 9 of 69
    Sounds like GT bet the farm on some new method of sapphire manufacturing, and they lost. Doesn't look like good business decisions, more like blind gambling.
  • Reply 10 of 69
    elehcdnelehcdn Posts: 375member
    Quote:

    Originally Posted by island hermit View Post

     

     

    I think Apple threw money at this thing hoping to achieve a certain goal but protected itself with onerous demands that GTAT was foolish enough to accept. GTAT should have known better... it's not like the BOD were a bunch of high school kids. 


    Well, for GTAT it was more of a lifeline since they looked to be near death before they signed this deal with their main income stream of solar cells down the tubes. Gave GTAT a chance to stave off the inevitable for a few years and allowed the executives to cash out some money.

     

    Looks to me like GTAT overreached and made commitments that they couldn't keep up, but Apple decided that it was more prudent to try to keep some sort of relationship going to get any advances that GTAT came up with rather than blow them out of the water and have them possibly selling their knowledge on the open market.

  • Reply 11 of 69
    malaxmalax Posts: 1,598member
    Quote:

    Originally Posted by icoco3 View Post

     

     

    So, Apple was also pushing the envelope for a "new method" and "ambitious manufacturing process" that just wasn't there yet?  Does that mean GTAT is not the sole perpetrator in the downfall?  Just adds another dimension to the tale....


    Who says there is a "perpetrator"?  Not every plan succeeds.  I'm sure that both parties hoped for, worked toward, and expected success.

     

    As has been discussed here and elsewhere by knowledgeable people (and others), "plain old" sapphire would be too brittle for a large flat thin screen for a mobile device.  Apple and GTAT were trying to come up with a breakthrough and, apparently, that didn't happen.  Shrug.  At the end of the day this doesn't seem to have cost Apple much (except distraction), and they presumably learned relevant things.  Innovation comes from taking risks (and working hard), so I doubt Apple is regretful.

  • Reply 12 of 69
    rogifanrogifan Posts: 10,669member
    icoco3 wrote: »
    So, Apple was also pushing the envelope for a "new method" and "ambitious manufacturing process" that just wasn't there yet?  Does that mean GTAT is not the sole perpetrator in the downfall?  Just adds another dimension to the tale....
    I wonder what Jony has up his sleeve. Cook did tell Charlie Rose that Apple is working on stuff no one has rumored about yet. I wonder if sapphire plays into that.
  • Reply 13 of 69
    Quote:

    Originally Posted by elehcdn View Post

     

    Looks to me like GTAT overreached and made commitments that they couldn't keep up, but Apple decided that it was more prudent to try to keep some sort of relationship going to get any advances that GTAT came up with rather than blow them out of the water and have them possibly selling their knowledge on the open market.


     

    Yeah, sounds to me like process engineers were overly optimistic in scale-up or QC, and the exec's didn't have the experience or wisdom to see it. Apple got screwed, but at least it's not a total loss. And letting GTAT twist in the wind is certainly better than if Apple had tried to do this all on its own and had to chalk up a half-billion loss in operations.  That would have led to endless "can't innovate" commentary.

  • Reply 14 of 69

    This was probably as simple as optimistic technological expectations not panning out.

     

    GTAT was at fault to the extent that they signed a ridiculously 1-sided contract with Apple. But that probably had a lot to do with the fact that it is unlikely that there was any other company who could have provided them with the resources to build such a facility out in the first place.

     

    It seems Apple has a bad track record with identifying new breakout materials. First LiquidMetal and now Sapphire. At least I got the appeal of LiquidMetal, in that it would allow them to do a lot of cool new things. I don't even get the appeal of Sapphire to Apple. Spend a lot of money using a more expensive, tougher to produce, slightly harder but slightly more brittle alternative to a cheap existing alternative?

  • Reply 15 of 69
    Quote:

    Originally Posted by TeaEarleGreyHot View Post

     

     

    Yeah, sounds to me like process engineers were overly optimistic in scale-up or QC, and the exec's didn't have the experience or wisdom to see it. Apple got screwed, but at least it's not a total loss. And letting GTAT twist in the wind is certainly better than if Apple had tried to do this all on its own and had to chalk up a half-billion loss in operations.  That would have led to endless "can't innovate" commentary.


     

    Apple got screwed?

     

    Apple went into this contract with its eyes wide open.

  • Reply 16 of 69
    pazuzupazuzu Posts: 1,728member
    Sorry Apple but that's a sad excuse. Why not just buy a plant to manufacture sapphire then? You certainly can afford to.
  • Reply 17 of 69
    pazuzupazuzu Posts: 1,728member
    Yeah... much of GTAT's response and executives' actions look very suspicious.

    But we need a whole lot more investigation and accountability of crime in business anyway.
    Particularly where stocks and Wall Street come into play.

    Like a congressional investigation?
  • Reply 18 of 69
    inklinginkling Posts: 731member
    GT Advanced is bankrupt. It's only customer was Apple. It's selling off its manufacturing furnaces. Exactly how is it going to make the money to pay back Apple over the next four years?

    If Apple wants to use GT Advanced sapphire in iDevices, it'll need to take over the company and make the investment required to make that mass-production sapphire. The money isn't going to float in out of thin air.
  • Reply 19 of 69

    The guy who predicted (and then defended his prediction) a sapphire touch screen for the iPhone 6 keeps getting wronger (is that a word?) as time goes on...

    Quote:


     He still holds hope that iPhone 6 cover screens will be made of sapphire, even after Apple's announcement. In his latest note, he said GT's output from its Arizona facility is "excessive," and that it will "continue to be grown for iPhone 6 cover screens."


     

    ouch.

  • Reply 20 of 69
    mpantonempantone Posts: 1,349member
    Quote:

    Originally Posted by pazuzu View Post



    Sorry Apple but that's a sad excuse. Why not just buy a plant to manufacture sapphire then? You certainly can afford to.

    That's contrary to Tim Cook's philosophy. Apple does not manufacture components, nor do they do final assembly. Shortly after Tim joined Apple, the company got out of the manufacturing business.

     

    Manufacturing is a low-margin industry, and there is frequent need for massive capital investment for new equipment. Apple is basically a software company who applications and services run best on their own proprietary designs. They are hardware design experts, let the component vendors battle it out for a slice of the pie, whether it be silicon, screens, an RF filter, camera module, whatever.

     

    It's like the difference between being an architect, a toilet seat cover maker, and a construction company.

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