“GT Advanced Technologies Inc. asked for bankruptcy court permission to shut down its synthetic-sapphire operations, citing terms of a contract with Apple Inc. that it called ‘oppressive’ and ‘burdensome,'” Dawn McCarty reports for Bloomberg News.
“The company told a bankruptcy judge today that it was going through cash too fast and wants to halt operations by Dec. 31, at a cost of 890 jobs. GT Advanced also asked that some details of its request be kept under wraps to avoid violating confidentiality agreements,” McCarty reports. “‘The cash burn at GTAT’s sapphire manufacturing operations for the benefit of Apple is not sustainable,’ the company said in court papers. ‘The relief requested in the wind-down motion is necessitated by GTAT’s liquidity crisis and the substantial daily cash burn of in excess of $1 million with respect to such operations.'”
Read more in the full article here.
MacDailyNews Take: You know, terms like “deliver us a quality product in bulk that we can actually use.”
GT Advanced to request to shut down synthetic sapphire production – October 10, 2014
Shattered sapphire dreams at GT Advanced – October 8, 2014
Apple’s withholding of $139 million payment led to GT Advanced bankruptcy filing – October 7, 2014
GT Advanced CEO sold 9,000 shares the day before Apple’s iPhone 6/Plus event – October 7, 2014
Law firms launch investigations into possible violations of federal securities laws by GT Advanced – October 7, 2014
Analyst: Apple may take possession of sapphire furnaces from GT Advanced – October 7, 2014
Apple to provide debtor in possession financing to GT Advanced? – October 7, 2014
Investors stunned over GT Advanced bankruptcy filing – October 7, 2014
GT Advanced files for chapter 11 bankruptcy court protection – October 6, 2014
Apple and GT Advanced rampup sapphire production in Mesa – August 11, 2014
GT Advanced expects sales of sapphire production tools to boost profit; shares surge – August 5, 2014
Apple and GT Advanced open second sapphire plant in Salem, Massachusetts – June 19, 2014
Apple patents method for embedding sapphire displays in LiquidMetal device chassis – May 27, 2014
Something tells me that supply chain guru Timmy is seething inside with the heat of Mount Doom.
Nah, he is wringing his hands in glee for the
opportunity to take over the plant, run it correctly and lock up
a good portion of saphire production.
A lot of us hitched a ride on GTAT. I’m glad I own way more AAPL than GTAT.
Who was hold the gun when GTAT signed that “oppressive and burdensome” contract?
Exactly. Obviously GTAT’s management were taking the money and knew very well they couldn’t supply enough or were delusional. Either way, they took the money and signed the contract.
Also, if they knew they never could meet the contract at any time during the last several quarters and didn’t inform investors (which they didn’t), that is outright FRAUD!
Screw the management of GTAT and take them to the cleaners. The judge should allow Apple to take over whatever IP GTAT had and take the company over in exchange for the debt. Investors should sue the living shit out of the management and the FCC should then throw the lot of them in federal prison.
It looks like fraud from ever angle.
FCC? SEC, perhaps?
Yes, SEC. I stand corrected, thank you.
Forgot to say I agreed with your point, three letter designator not withstanding.
Talking of fraud, a recent BBC report said that, since Feb 2014, GTAT’s CEO had sold tens (or was it hundreds?) of thousands of his shares in the company, including a large chunk the day before Apple unveiled the iPhone 6/6+ with, of course, NO sapphire screen.
Does that count as insider trading, or is it just plain old fraud? Or neither?
This attitude by GT Advanced opens the possibility of their bankruptcy request being denied. An inconvenient contract does not equate to a bankruptcy court agreeing to a company being able to break that contract.
But we’ll see. There’s still a great deal we don’t know.
If Apple sees this material as a crucial part of its plans for future (or even to some degree, current) products, then maybe this is one of those times they just buy the thing and own it.
I realize that’s not the way Apple has done production since Tim Cook took over and improved product margins by outsourcing assembly (other than the Mac Pro) but maybe this is one time Apple should just own the whole widget.
Yup. Apple can certainly find someone very well qualified to run the operation for it.
This really sounds to me like GTAT thought it would make a bunch of money on this deal, but realized recently that it was in over its head and now just wants out. Filing for BK forces Apple to seriously address buying GTAT out/terminating the contract.
Not ready for prime time GT
I was thinking the same thing when this story first hit.I think maybe they are trying to force Apple’s hand in this. At this point we’ll just have to wait on Apple’s move.
I think Apple owns the facility and certain IP. GTAT was the operator. Looks like 890 new Apple badges should do the trick. Any voiding of the lease and contract obligations probably cuts both ways. Apple has a shiny new facility and lots of willing management partners, I guess.
Or maybe Apple can arrange for another key supplier to buy it. Maybe even Corning? Or an Asian screen manufacturer. There are plenty of options, seems to me. I would not worry about Apple’s role in the hole thing…
Corning buying them and working out a way to use sapphire as a scratch resistant coating on gorilla glass is about the best thing that can happen to GT. Buy itself, sapphire isn’t any good for anything bigger than a watch due to how brittle it is.
That’s what I was thinking. Apple should just buy the damn thing with spare change and then if they don’t want to run it, lease it to someone to run.
I’m thinking they’ll take the IP, merge it with what they’re doing elsewhere and bring to the world LiquidSapphire — clear, scratch impervious, moldable to any shape. 🙂
Let this be a lesson: Tim, don’t outsource it! Do it in-house… own the factory. Apple has the cash.
And if the technology didn’t pan out, Apple would be left owning a bunch of sapphire furnaces collecting dust.
Pretty sure right now they’re left owning furnaces collecting dust. Hey Sparkles, CEO much?
It might be money better spent than paying iCan!
Disney World is the model Apple should take a look at and possibly emulate.
Disney owns the property, zoning, manufacturing plants for Disney World products and outsources the rest.
Samsung would take some of that off spec stuff. Their customers only need to know it is the same stuff Apple is using and their good with it.
Let’s see. $1 million per day. And the next milestone payment from Apple was to be $138 million. But GTAT cannot make it until then. Something does not add up. Oh, well. As Donald Duck’s uncle would say: “Back to the drawing board!”
As I said in the first article, the bankruptcy was a maneuver o extort Apple.
This is all so confusing to me. Why did GT build the factory with all those furnaces before Apple discovered that it wouldn’t work? Isn’t that putting the cart before the horse? Why would Apple even enter the partnership if they weren’t sure they wanted sapphire covers for the iPhone?
It still feels right to me that Apple never told GTAT when they would use the sapphire. Surely they wouldn’t give away such valuable road-map info a year ahead of time. Rather, they would have said, some day soon we’re going to want tons of sapphire. Let’s build out. So GTAT would perhaps have assumed that it would start paying off in summer/fall 2014, not summer/fall 2015.
Also Apple could be being hardasses about perfect quality in ways this CEO and maybe the plant can’t handle.
Just wish I could figure out what to do with my $1.08 GTAT stock.
GT seems to be inefficent and and innexperienced and just couldn’t deliver pro manufacturing performance. i always wondered why all those contingencies and the really atypical deal, Apple must have anticipated the possibility of defaulting sinve there was stipulation about that in the published details…
There are other saphire manufacturers out there that might jump at the chance of expanding into a built and ready to go plant once GT is out, since it all belongs to Apple…
When Apple seizes complete ownership of the intellectual property they had mearly been licensing or co-wning with GT Advanced, they will come out way ahead in this deal.
Hopefully, they can transfer/recruit/hire a crew of Apple-salaried technologists and engineers to take over operations. After all, Apple owns the building facility and the furnaces.
Seems to me that the whole thing was built on GTAT’s side with the expectation that the sapphire would be used in the iPhone 6. At this point with Apple updating phones only annually GTAT would be looking at sitting on the furnaces for a year until the next iPhone came out with sapphire — assuming they could get a good product at all. Even given ramp-ups that would have left GTAT with all these people and capacity and no sales for 6-8 months. Could that be it?
Whilst I can’t imagine that Apple will suffer from this. It does seem odd that they went so big on something like this, when multiple reports stated that sapphire was prone to crack and therefore wouldn’t be suitable for iPhone screens. It would be interesting to know what they actually had planned for this stuff. Perhaps GT Advanced wrongly assumed it would be for an iPhone and thus were undone by timescales.
The cutting edge is as ever : the bleeding edge.
The WSJ reported that the president of GT Advanced sold all of his company stock one day before GTA declared bankruptcy.
Perhaps these leaks have something to do with a potential shareholder’s lawsuit against the GTA president.
If he did, he will be going to prison. Even freak’n Martha Stuart couldn’t talk her way out of that one.
Wasn’t it that he sold the stock the Day before the iPhone six was released?
What is to become of the sapphire for the watches?
Back to the bush leagues, GT. Gee, I wonder if the $160,000 in shares the CEO sold off the day before the iPhone 6 launch (and indisputably during a period when Gutierrez KNEW his company was going under) would have helped to keep those 890 people employed for a little longer.
Higo– Don’t know what to tell you on your stock but I just dumped my 400+ shares at $0.80. Actually bought some of it this morning at $0.92.
Small loss is way better than zero….
And people wonder why companies are loathe to bring jobs back to the States, or did someone sit down blind folded with a gun to their heads when confronted with that contract?
Who held a gun on their head to sign the contract?
Why isnt apple taking over the sapphire business ?
They own the facility and the furnaces!
Not enough details right now. Still it seems like GT took the money, while over promised and completely under-delivered?
Looks like they didn’t read the terms of the iTunes agreement. LOL!
Somebody here said they live near GT Advanced’s Arizona plant and from the moment of its completion, it’s been deserted and producing nothing.
This whole thing has scam written all over it. Maybe the plan all along was to take a loan from Apple, let them build a new sapphire plant for GT, then file for bankruptcy so they could renege on repaying the loan.
I guess Apple threw away the original money invested