AppleInsider Staff
Prior to GT Advanced Technologies' bankruptcy filing earlier this week, Apple reportedly attempted to assist the firm in meeting certain technical milestones that would allow continued payment as part of a conditional $578 million deal.
Despite Apple's help, GT Advanced failed to meet required sapphire plant goals stipulated in its contract, which in turn led to Apple's withholding of a final $139 million loan payout, reports The Wall Street Journal.
According to sources familiar with the matter, GT received the first three of four payments from Apple — totaling nearly $440 million — even though the company missed contract goals.
Further, sources said Apple is not planning to exercise a contract provision that would allow the company to recoup its investment in GT. As part of the $578 million deal, GT was required to have a cash balance of at least $125 million, but the company on Monday revealed it had only $85 million as of Sept. 29.
Earlier today, Apple said it was surprised by GT's bankruptcy filing and is currently working with Arizona officials to preserve jobs created in the state as part of the huge sapphire operation.
Last November, Apple announced its partnership with GT Advanced, which ultimately led to the construction of the world's largest sapphire manufacturing plant in Mesa, Ariz.. The facility is supposedly tasked with providing Apple material for use in future products, which some analysts mistakenly assumed to be the recently released iPhone 6 and iPhone 6 Plus.
GT's Mesa plant has been steadily ramping up production over the past few months, possibly in preparation for the upcoming Apple Watch. Aside from protective covers for the iPhone's rear-facing camera and Touch ID fingerprint reader, Apple has yet to deploy sapphire on a large scale.
Malcolm Owen
Oliver Haslam
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24 Comments
I wonder whether Apple now wishes they'd paid a Chinese company to build that plant, instead of building it in Arizona, where GT Advanced Technologies has failed.
I wonder whether Apple now wishes they'd paid a Chinese company to build that plant, instead of building it in Arizona, where GT Advanced Technologies has failed.
Who says they have failed? They are obviously still providing sapphire for Apple products. GT is a stand alone company, I'm wondering if this wasn't a knee-jerk reaction (by GT) to Apple withholding the final payment. Bankruptcy does not mean the company isn't still operating or viable. It will be interesting the see what further details will be released. I'd also guess that Apple would like to clamp down on any further negative press....albeit from a related party.
Sounds like GTAT is simply mismanaged if they couldn't stay solvent or even meet the minimum cash balance required by Apple. If this bankruptcy was the result of some external event, I'd like to know what that was.
I wonder whether Apple now wishes they'd paid a Chinese company to build that plant, instead of building it in Arizona, where GT Advanced Technologies has failed.
China wouldn't help in this case. China excels in problems where you can throw cheap labor at it, like screwing together parts. Not like they're going to grow sapphire by hand.
I wonder whether Apple now wishes they'd paid a Chinese company to build that plant, instead of building it in Arizona, where GT Advanced Technologies has failed.
Maybe, maybe not.
Clearly, Apple knows who makes sapphire glass and they decided to partner with GT, so they must of had some reasons to do so.
We know it wasn't GT's capacity since they had to build a new factory, so it is likely that GT has some sort of technological advantage or knowledge about an upcoming process improvement that would make their product superior to the competition.
China's big advantage as mentioned above is its enormous manpower, which is helpful for manual labor of assembly of a large volume of units. This advantage isn't a factor if a particular process is highly automated or if only a small number of units are to be assembled. Presumably, sapphire glass production doesn't take a lot of people.
This is why Apple can afford to build Mac Pros here in the United States: the assembly line is highly automated and they don't make a lot of them. It doesn't take a lot of people to build them.