GT Advanced says 'oppressive and burdensome' sapphire contracts with Apple led to bankruptcy
Apple partner GT Advanced Technologies announced on Friday that it plans to close its sapphire producing plants in Arizona and Massachusetts operations, and decried its unsustainable contracts with Apple as "oppressive and burdensome."
The details were revealed in a pair of U.S. Bankruptcy Court filings made by GT Advanced and detailed by The Wall Street Journal. In the filings, the sapphire maker said that closing the plants will cost a total of 890 jobs.
In cutting those positions and closing operations in two states, GT Advanced Technologies told the court it hopes it will be able to "stop its mounting losses." The company alleged that those losses were as a result of the terms of its deal with Apple, and seeks to break its contract with the iPhone maker.
If the court does allow GT Advanced to terminate its contract with Apple and close the two plants, the sapphire maker suggested the dispute between the two companies will still be far from over.
"GTAT believes that it has many claims against Apple arising out of its business relationship with Apple," the filing reads.
It was first revealed on Thursday that GT Advanced had asked a U.S. bankruptcy court judge to close its plant in Arizona, but at the time no mention of the Massachusetts operation was made. In addition, Friday's filing is the first time GT Advanced has attempted to place the blame squarely on Apple.
It's been a whirlwind week for GT Advanced, after the company announced on Monday that it had filed for bankruptcy. Its fall from grace stands in contrast to less than a year ago, when it was announced that the company had signed a $578 million sapphire deal with Apple.
On Wednesday it was said that Apple attempted to help GT Advanced qualify for its final $139 payment, working with the partner in an effort to meet certain technical milestones. But despite Apple's help, the sapphire maker failed to meet the required goals stipulated in its contract.
As for the jobs that will apparently be lost if and when GT Advanced's factories are shuttered, Apple issued a rare public statement to say it is committed to preserving jobs in Arizona. The iPhone maker may have felt compelled to address the controversy given that it 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.
Apple currently uses scratch-resistant sapphire to protect the fingerprint Touch ID home button on the iPhone 6 Plus, iPhone 6, and iPhone 5s. Sapphire also protects the rear camera lens on those handsets and the iPhone 5c, while two out of three Apple Watch models set to arrive in early 2015 will also use the material.
The details were revealed in a pair of U.S. Bankruptcy Court filings made by GT Advanced and detailed by The Wall Street Journal. In the filings, the sapphire maker said that closing the plants will cost a total of 890 jobs.
In cutting those positions and closing operations in two states, GT Advanced Technologies told the court it hopes it will be able to "stop its mounting losses." The company alleged that those losses were as a result of the terms of its deal with Apple, and seeks to break its contract with the iPhone maker.
If the court does allow GT Advanced to terminate its contract with Apple and close the two plants, the sapphire maker suggested the dispute between the two companies will still be far from over.
"GTAT believes that it has many claims against Apple arising out of its business relationship with Apple," the filing reads.
It was first revealed on Thursday that GT Advanced had asked a U.S. bankruptcy court judge to close its plant in Arizona, but at the time no mention of the Massachusetts operation was made. In addition, Friday's filing is the first time GT Advanced has attempted to place the blame squarely on Apple.
It's been a whirlwind week for GT Advanced, after the company announced on Monday that it had filed for bankruptcy. Its fall from grace stands in contrast to less than a year ago, when it was announced that the company had signed a $578 million sapphire deal with Apple.
On Wednesday it was said that Apple attempted to help GT Advanced qualify for its final $139 payment, working with the partner in an effort to meet certain technical milestones. But despite Apple's help, the sapphire maker failed to meet the required goals stipulated in its contract.
As for the jobs that will apparently be lost if and when GT Advanced's factories are shuttered, Apple issued a rare public statement to say it is committed to preserving jobs in Arizona. The iPhone maker may have felt compelled to address the controversy given that it 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.
Apple currently uses scratch-resistant sapphire to protect the fingerprint Touch ID home button on the iPhone 6 Plus, iPhone 6, and iPhone 5s. Sapphire also protects the rear camera lens on those handsets and the iPhone 5c, while two out of three Apple Watch models set to arrive in early 2015 will also use the material.
Comments
Then why sign on the dotted line. GT Adv wants to keep the money without following through on the contract. The CEO needs to be run out. Don't blame Apple because GT Adv couldn't hold up their end of a contract. This is why Apple does manufacturing in China and other countries and not the US. American companies do dirty things like this forcing Apple into the arms of communist business environments because they do have their merits.
I already posted this
http://forums.appleinsider.com/t/182746/apple-sapphire-partner-gt-advanced-seeks-to-wind-down-plant-operations/40
From previous post: Perhaps Nancy Pelosi was involved and insisted on signing the agreement so they could know what was in it LOL
I feel sorry for the line employees. Hopefully there will be jobs for them in the near future at these two facilities.
Oh, shut the **** up. Yeah, you want to play with Apple, you better be on your A game, cause obviously the standards are extremely high. Either you can meet those terms, or you can't. And when you can't, don't start whining and bitching like a little child. For many companies, An Apple contract is the best thing that can possibly happen to them. But obviously there will be strings attached, and wont be an easy ride.
So let me see if I understand this. A bunch of grown businessmen entered into a contract with Apple, and now those same businessmen are saying the deal they voluntarily entered into with Apple, their legally binding contractual agreement, was oppressive and burdensome? The sheer stupidity of that claim should be enough to get them tossed out of court moments after they arrive. This is a free country. You think you're getting a raw deal, don't sign the contract. This company was run by clowns. Possibly by clowns who broke the law and are going to jail for insider trading. Apple shoudl just buy the plant. The courts should throw the GT folks in the slammer.
They are trying to get rich quick and not pay back loans Apple is owed.
Classic example of seeking to blame others.
Now they are closing the Arizona facility... and are heading into bankruptcy.
Whoops...
I don't understand the turtle speed AI is doing on posting news. This story is yesterdays news, almost literally:
http://9to5mac.com/2014/10/09/wsj-apple-deal-with-gt-advanced-broke-down-over-inability-to-provide-iphone-6-displays/
If the court does allow GT Advanced to terminate its contract with Apple and close the two plants, the sapphire maker suggested the dispute between the two companies will still be far from over.
"GTAT believes that it has many claims against Apple arising out of its business relationship with Apple," the filing reads.T
This soap opera just keeps getting stranger. Can't wait to see what GTAT thinks Apple owes them yet. Sounds like GTAT was lucky this didn't form a black hole when it all collapsed so quickly in on itself.
So GT is playing the sympathy card trying to make Apple look like the bad guy?
Sounds like a convenient scapegoat for poor executive decision making.
Notice they're not claiming that Apple breached its contractual obligations, or that Apple misrepresented the terms and conditions of the contract.
Although they haven't disclosed very much at all.
Again I ask:
Why the FUK didn't Tim Cook do better due dilegence on these guys? The CEO is a total FRAUD and CROOK.
GT is their own company and Apple has no business poking around making sure that they are doing their jobs. Apple is looking for results – the outcome of the work. Those results never transpired. It wasn't in the contract that Apple would babysit GT management. This whole situation stinks of mismanagement at the upper levels at GT, not at Apple. Could Apple have done a better job at more closely monitoring GT's progress? Who knows except Apple and GT.
If GT has referred to the contract as "oppressive and burdensome', then they deserve no mercy.
Typical corporate strategy. GTAT just got mugged.
Why doesnt apple just take over?
they own the furnices and the facility!
Typical corporate strategy. GTAT just got mugged.
GTAT got mugged by their top management, not Apple.