Neil Hughes
Following the news that GT Advanced Technologies will spend up to four years paying back Apple's $439 million prepayment, Apple has revealed that the two companies were working on a new method of manufacturing sapphire that never actually went into production.
In a comment provided to Re/code, an Apple spokeswoman said the company is focused on working with the city of Mesa, Ariz., and Maricopa County to help the GT Advanced employees who were affected by the company's bankruptcy. And although Apple's exclusive agreement with GT Advanced has been severed. and GTAT is exiting the sapphire production business, Apple signaled that it may not necessarily be done with the former partner.
"Apple put a lot of effort into an ambitious new sapphire manufacturing process with GTAT which was not ready for production," the company said. "We're going to continue evaluating GTAT's progress on larger sapphire boule development, as well as consider other options for the facility."
Apple's comment came after it was formally announced that the iPhone maker had reached an agreement with GTAT, in which the former partner will sell more than 2,000 "Advanced Sapphire Furnaces" on the open market to repay its debt to Apple. GT Advanced has four years to repay Apple the $439 million prepayment it made for sapphire material one year ago.
The comments from Apple would seem to suggest that the facility in Mesa — which Apple built and GT Advanced ran — was never used for sapphire production on shipping products. Apple currently uses scratch-resistant sapphire to protect the Touch ID fingerprint sensor on the iPhone and iPad, as well as for iSight camera lens covers, but it's unknown where that sapphire is built or who is supplying it.
Sapphire will also be a key component in two out of three Apple Watch models set to launch in early 2015.
Though GTAT will be exiting the sapphire production business, officials at the company hope they will be able to emerge from bankruptcy and refocus the business as an "equipment supplier" that would manufacture and develop "sapphire growth systems and processes."
Exactly what happened between GT Advanced and Apple, and what Apple hoped to do with its "ambitious" sapphire manufacturing process, or how fast the company planned to implement it, remains unknown. GTAT remains beholden to secrecy agreements the company signed with Apple, and bankruptcy court filings made by the company have been redacted.
Christine McKee
Andrew Orr
Charles Martin
Marko Zivkovic
Wesley Hilliard
69 Comments
..., Apple has revealed that the two companies were working on a new method of manufacturing sapphire that never actually went into production.
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So, Apple was also pushing the envelope for a "new method" and "ambitious manufacturing process" that just wasn't there yet? Does that mean GTAT is not the sole perpetrator in the downfall? Just adds another dimension to the tale....
Diversion for Samsung?
[quote name="icoco3" url="/t/183014/apple-says-its-ambitious-sapphire-manufacturing-process-is-not-ready-for-production#post_2626015"] So, Apple was also pushing the envelope for a "new method" and "ambitious manufacturing process" that just wasn't there yet? Does that mean GTAT is not the sole perpetrator in the downfall? Just adds another dimension to the tale.... [/quote] Doubtful. It probably was as simple as GTAT not living up to their end of the contract. Maybe they simply got in over their heads. To speculate where drama took place beyond that, though, is a bit of a reach in that even if drama did take place somewhere it would be hard to guess without good information. And if Apple really had acted in bad faith relative to the contract we probably would have seen a different outcome.
Seems like a company that specializes in sapphire products should've known the risks?
Apparently the c-level execs at least knew when to cash out.
I still think there needs to be an SEC investigation of those stock sales right before the company declared bankruptcy.
[quote name="John.B" url="/t/183014/apple-says-its-ambitious-sapphire-manufacturing-process-is-not-ready-for-production#post_2626025"]I still think there needs to be an SEC investigation of those stock sales right before the company declared bankruptcy. [/quote] Yeah... much of GTAT's response and executives' actions look very suspicious. But we need a whole lot more investigation and accountability of crime in business anyway. Particularly where stocks and Wall Street come into play.