“A recent report by The Wall Street Journal makes clear that GT Advanced Technologies’ Mesa plant was incapable of economically producing sapphire for Apple,” Mark Hibben writes for Seeking Alpha. “The report also makes clear exactly what went wrong: GTAT had committed to an experimental production approach that was a failure from the beginning. ”

“According to the WSJ, even as the ink was drying in October 2013 on the GTAT supplier deal, the first boule to be produced using the new furnace design was unusable. Subsequent production at Mesa suffered from a 50% failure rate. An image from the article shows boules with large cracks, opaque inclusions and large color variations, characteristics that would have caused them to be rejected,” Hibben reports. “The defective sapphire boules accumulated in a ‘boule graveyard’ at the Mesa plant.”

“There’s no question Apple structured the GTAT deal to protect itself as much as possible from the risk posed by the new furnaces and that many of those protective provisions have now been deemed ‘onerous and oppressive’ by GTAT. However, I doubt GTAT would have regarded them as such if the furnaces worked as desired.,” Hibben reports. “I believe there’s still an important market for a sapphire-equipped iPhone that Apple could address. How Apple and GTAT navigate through the bankruptcy will largely determine whether such a device comes to pass.”

Read more in the full article here.

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