Wait...so GT has agreed to sell a couple thousand of these furnaces to pay back Apple, but the furnaces have serious yield problems. Who's going to buy them?
Shhh. You'll wake sog.
Are you saying you think we should let sleeping sogs lie?
From another article elsewhere, it seems they have no yield problem with smaller boules (250lbs), and GTAT tech is cheaper than the usual KY process for largish parts (less waste and faster growth so less energy).
So the furnaces may be quite good in fact, just not as good as they assured to Apple. Add a probable bankruptcy discount, and that could a very good deal for the serious manufacturers.
shompa wrote: »
Instead of buying its own shares and burn them, think ahead dear Apple. You are repeating the same misstakes as 1985. Dividends, burning shares and taking huge 40 billion loans. Steve is doing flips in his grave...
The boules are sliced into thin sheets and polished, then cut into screens the size of iPhones and iPads. That's millions of screens.
What product is Apple is working on that requires a chunk of sapphire that weighs 578 pounds, or even half that?
I don't know how the boules are turned into a finished product but it would seem that making pieces of sapphire which are maybe up to 6" diagonal and a couple millimeters thick would be applicable to products that can be carried around in your pocket or on your wrist. Even using it for a 23" touch screen iMac would not need 578 pounds in a single block.
you realize that your 0.00001oz i7 chip in your iMac came from likely a couple sq CMs of a couple micrometers sliver of a 75KG Silicon boule, don't you?
If not, go back and learn about the process.
your logic is quite stale.
this is the crux. if they were saying that at 250lbs (50% production) they could meet quality, they couldn't meet volume with the current plant size. However, part of this may be the diameter of the boule was critical to hit iPad/iPhone 6+ numbers (let's say 4-6 iPads per slice), and a 250 boule meant not 4-6, but 1-2 full screens (due to boules are normally grown in diameter, not length) so 50% is really 25-33%.
Which means the cost of production under GTAT's terms was 3-4X what apple planned. That's a serious bump, and likely under the price/performance curve of Gorilla Glass (2X). Apple was holding GTAT to their agreed numbers and offered not more money but accelerated money (read: fix the problem out of your long term profits), and GTAT management realized their bluff the buyer game just fell apart.
Yes. But take the other manufacturers point of view : Those GTAT furnaces are probably proposed on the cheap side now, they have slightly higher capability than their current process (KY) which is typically 220 lbs boules and the manufacturing cost is presumed cheaper (although KY furnaces can run without supervision unlike the GTAT ones it seems). Not for Apple sure, but for all other needs, it fits in the market. Long term, if the yields can be improved with experience, prices of Sapphire would go down.
Might be a good deal I would say.
I said that I do not know how the boules are turned into finished products didn't I?
A silicon chip that is manufactured on a large plater along side 100 other chips before being cut apart from the wafer is one thing but how do you cut a watch face or a phone screen from a solid block of sapphire? or is the boule just the first step in refining or purifying the sapphire and then some other process such as vapor deposition is used o turn it into a finished product?
The photos do not appear to show a piece of material thin enough to be cut into finished products - at least not if only cut in a two dimensions.
I don't understand how my logic is stale and I admit that my understanding of the process is incomplete.
Interesting details, and very informative.
The question that someone in the upper ranks of Apple management has to answer is: why partner with a company that has no track record of production? They were great at building furnaces, it would appear, but not at using them. At least, not the big ones.
So why did Apple go this route rather than finding a company that had experience, and maybe doing a three-way deal?
It seems to me that there are a lot of problems on both sides of this deal.
Agreed. And who says there has to be "fault." It was an experiment. Everyone makes it sound like Apple should have picked someone else. Who?????
Exactly. Everyone keeps saying that Apple made a poor choice and GT is a terrible vender, but Apple's only other option was to not do the project. Nobody else was going to make that much sapphire and as it turns out, neither could GT. It's pretty obvious GT got in over their head. However, entrepreneurs do it all the time. GT may not have great leadership, but that doesn't make them liars. It was a quality problem and a scaling problem. The only way to find that problem was to try.
BTW, this isn't over. Apple still owns a factory in Arizona.
No post processing. They actually cut thin slices of sapphire from the boules. And yes it works. GT has been doing it for years on smaller boules. The problem occurred when they made bigger boules to get the costs down. Many of the larger boules came out cracked (worthless).
Granted that there is much speculation as to exactly what happened and whether or not there was any deception involved. Without real information to go on we can only infer what might have happened or gone wrong etc. The manner in which is was revealed, with bankruptcy filing and sealed documents in court makes it more likely than not that there is something that wasn't completely above board somewhere in the mix. But I suppose that might be true of virtually every company if you were to dig long enough, deep enough, wide enough, and far enough into the past, but not all cases where someone was less than 100% forthright result in a company going out of business or failing to meet the terms of a contract. Plus it is far more satisfying a story if there is a "bad guy"
lighteningkid wrote: »
Are you saying you think we should let sleeping sogs lie?
There was certainly a quality problem and a scaling problem. That doesn't make them liars nor does it indicate that they were not.
You ask - "who else ?" Well, we don't know. But there are a number of companies that bought smaller GTAT furnaces and used them effectively. I don't know who they are but GTAT had been in this business for quite a few years and had done well providing furnaces to them. I'm sure that Apple could have contacted them via GTAT to enquire about their expertise.
Apple was not faced with a do-or-don't-do scenario. As well as the work-with-GTAT and do-nothing options, there was also the possibility to do some kind of three-way deal and involve one of the companies that had the production experience that was lacking at GTAT. Maybe Apple tried this, maybe not - we don't know. But there were more options available.
After reading WSJ article about this topic, it looks to me like the project was too much for GT and Apple was negotiating pretty hard. My guess is the CEO decided to show Apple who was boss by filing bankruptcy. Stupid move. He obviously let his emotions get the better of him. In the long run, it would have been better to work it out with Apple.
I haven't read the article (no WSJ sub) so I may be incorrect here.
But it seems to me, from the widely available information, that the company's problems started well before.
In fact, his best decision would have been to ask either Apple or one of the "production companies" for assistance. That would have been humbling to some extent but quite possibly would have put the company on a better footing. It might not have solved the problems with the "big boules" but it certainly would have brought sanity to staffing levels and how the day-to-day operation was run. No sane manager keeps hiring when the current staff is underutilized (*) and yet that appears to be what GTAT did. Any competent mid-level manager would have cured that in less than a day (the prospective hiring debacle - dealing with those already hired would certainly have taken longer).
But to be effective this "work it out" discussion with Apple would have to have started during the Spring - when the problems were clearly visible but not so bad as to be beyond redemption. My guess is that the CEO was in denial and unwilling to admit to any problem or deficiency. "Death or Glory" is all well and good but the best managers influence the direction towards the latter, rather than ignoring all the portents of Death. And the best managers don't set up stock-sale plans just after they receive news that will adversely impact the stock price. I don't think even Dilbert's Pointy-Haired-Boss is that stupid (maybe Scott Adams will address the topic in a future strip ?)
So why did GTAT follow the path it did ? We don't know but I don't believe that "GTAT" on anyone's resumé is looking good.
(*)I have seen this done with Gov't contracts where staffing levels were mandated within the contract. And, yes, it's insane.