Lack of experience, mismanagement doomed GT Advanced’s sapphire adventure

“Shortly before 7 a.m. Pacific time on Oct. 6, the chief executive of GT Advanced Technologies Inc. called an Apple Inc. vice president with bad news: GT, which was to supply Apple with superhard sapphire screens for its new iPhones, had filed for bankruptcy 20 minutes earlier,” Daisuke Wakabayashi reports for The Wall Street Journal. “The filing surprised Apple, because the companies had been negotiating changes in their contract to ease GT’s financial strain, according to a letter Apple later sent to GT’s creditors. Executives of the companies had planned to meet the next day at Apple’s headquarters.”

“The Apple-GT marriage was troubled from the start. GT hadn’t mass-produced sapphire before the Apple deal. The New Hampshire company’s first 578-pound cylinder of sapphire, made just days before the companies signed their contract, was flawed and unusable. GT hired hundreds of workers with little oversight; some bored employees were paid overtime to sweep floors repeatedly, while others played hooky,” Wakabayashi reports. “Apple put blame for the deal’s failure ‘squarely at the feet of GTAT’s own management,’ according to the letter to GT’s creditors, which Apple allowed The Wall Street Journal to review. ‘We never wavered from our commitment to make the project successful.'”

“It took roughly 30 days and cost about $20,000 to make a single boule,” Wakabayashi reports. “The people familiar with Apple’s operations said more than half the boules were unusable. GT stored unusable cylinders in rows in an area of the Mesa factory that employees labeled the ‘boule graveyard,’ people close to GT’s operations said.”

Read more in the full article here.

MacDailyNews Take: On October 10th, in response to “GT Advanced blames ‘oppressive and burdensome’ Apple terms in quest to ax sapphire production,” we replied:

You know, terms like “deliver us a quality product in bulk that we can actually use.”

Related articles:
GT Advanced Tech creditors chafe at settlement deal with Apple – November 19, 2014
Apple sticking with Arizona plan after sapphire supplier GT Advanced falters – November 18, 2014
Did Apple bully GT Advanced Technologies? – November 11, 2014
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
GT Advanced blames ‘oppressive and burdensome’ Apple terms in quest to ax sapphire production – October 10, 2014

16 Comments

  1. People keep forgetting that Sapphire being so hard makes it more liable to fracturing. A sapphire screen while far more resistant to scratching would make it far more liable to shattering under impact.

    I never believed that iPhone screens ever had anything to do with Sapphire and it was all to do with the watches where a sapphire screen makes sense.

    I believe that there was a problem getting sapphires screens to work with touch input. You can get a sapphire crystal on a $100 watch. I think it all has to do is using Sapphire with a touch interface, period. I maybe wrong but it is what fits the evidence.

        1. “Common applications[edit]
          Along with zirconia and aluminium oxynitride, synthetic sapphire is used for shatter resistant windows in armored vehicles and various military body armor suits, in association with composites.

          Wikipedia

          1. The sapphire and spinel windows used on military vehicles and ships are not crystals grown by boules but are assembled in a “sintering” system of much smaller granulized particles of the minerals mixed with other materials that is not pure sapphire or spinel. These windows are a mixture of materials that actually flex with impact. . . so my point is that large scale pieces of sapphire boules like those being grown by GTAT are not used military vehicles is true. Synthetic sapphire is used but not like you implied.

    1. some real speculation. Apparently the touch thing screen is resolved, aka AppleWatch. And sapphire has been used for a long time for watch faces, and I don’t remember hearing of a shattering problem with them.

      sounds like it was harder to make than expected without flaws, and GT may have actually misrepresented their abilities when doing the Apple deal. Of course that doesn’t let Apple completely off … sounds like some better due diligence would have been a good idea.

      1. I’ve had watches with sapphire crystals shatter if the impact was hard enough. I have a lot more experience with anodized aluminum (layers of aluminum oxide a.k.a. Sapphire) the thicker the anodizing the more scratch resistant it is but it also becomes more likely to chip.

  2. So where was the due diligence by Apple? They fell for vaporware like a silly schoolgirl. Where were the engineers to go in and see if the company could actually produce a usable product, not just blowing air up their skirt? GT sucks to be sure, but it’s really Apple with egg on it’s face in this one.

    1. Some rough figures.
      $20k x 2000 furnaces x 8 months(30 days) = $320,000,000 + setup costs $50m + running costs(power) $20m + wages $10m + expenses(?)$15m + unforeseen costs(regulatory compliance, finance, taxes etc) $30m =
      Total $445m
      Pretty easy to see where the money went…and all to produce approx. $200m acceptable product. >> bankruptcy guaranteed.
      Big question…where was Apple in this clusterfsck of mismanagement?

    2. GT Advanced Technologies manufactured furnaces that made 100KG boules of Sapphire, which were too small for the needs of Apple in quantities that Apple required. GTAT claimed they could make furnaces that could make 200KG boule furnaces easily. . . and instead of selling them for Apple to make the boules, offered to do it for Apple. Unfortunately, making a furnace that doubles the size of the boule is not as simple as they thought, nor was cooling the hot boule and keeping quality up as easy as they thought it would be. They wound up with a 50% or higher failure rate in the boules that were turned out. That resulted in costs that were unsustainable. Add those to personnel management that was incompetent and costs skyrocketed, especially after they failed to meet production goals and payments, which were performance based, were withheld. Apple had seen the smaller boules that WERE high quality and accepted the expert assurances of the engineers at GTAT that the larger boules would be of similar quality. . . but the engineers were too optimistic that they could solve what turned out to be intractable in the time frame they had.

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