“Last Friday, the judge in GT Advanced Technologies’ (OTCPK:GTATQ) bankruptcy proceeding unsealed a document filed with the court by GTAT COO Daniel Squiller. Both Apple and GTAT had requested the document be stricken from the record as part of their proposed settlement, but the judge chose to ignore both parties. Squiller’s statement is perhaps the most negative depiction of Apple’s business practices that has ever been written,” Mark Hibben writes for Seeking Alpha. “”
“Many of the “onerous” provisions Squiller complains about in the October 8 document are probably fairly typical for an Apple supplier: secrecy provisions with very steep financial penalties for violations and exclusivity agreements that required GTAT to only use its sapphire furnaces to grow material for Apple. In the above areas, I can’t see why Apple would settle for less,” Hibben writes. “But Squiller goes beyond complaints about tough but reasonable contract terms to describe Apple as engaging in “bait-and-switch” negotiating tactics in which it simply “dictated” terms to GTAT. Squiller says GTAT had no choice but to become Apple’s “captive” supplier, in which Apple behaved not as a customer but as a lender, which in fact it was, to the tune of $439 million.”
“Even though I don’t buy most of the dissembling of Squiller, there are some nagging questions about both Apple’s and GTAT’s conduct in this matter.,” Hibben writes. “While I doubt Apple deliberately bullied GTAT, Apple management may have had unrealistic expectations, conditioned by their experience with electronic component suppliers. According to Squiller, Mesa was supposed to be running at full capacity by June under the terms of their Apple supplier agreement. For an electronics supplier, 8 months lead time might be enough, but for what GTAT was trying to do, it was totally unrealistic. GTAT wasn’t just building a new electronic component for Apple, it was building a new factory to make an optical component on a scale never before attempted, using untested, unproven equipment and processes. What were the Apple execs thinking?”
Read more in the full article here.
MacDailyNews Take: Did GT Advanced pull on their big boy pants and sign the deal with Apple? Yes, they did. Therefore, they now live and die by the deal they signed.
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GT Advanced COO claims Apple used ‘bait and switch’ tactic – November 7, 2014
Court unseals GT Advanced documents: Apple says it ‘bent over backwards’ to help sapphire supplier – November 7, 2014