GT Advanced says it's only settling with Apple because it can't afford to sue

article thumbnail

AppleInsider is supported by its audience and may earn commission as an Amazon Associate and affiliate partner on qualifying purchases. These affiliate partnerships do not influence our editorial content.

Beleaguered Apple supplier GT Advanced Technologies has suggested it would prefer to sue the iPhone maker rather than reach a settlement, but going to court would be too "challenging and expensive" for the company to pursue.

GT Advanced told bankruptcy court that its settlement proposal with Apple is a necessity because litigation wouldn't be a viable solution for the company, according to The Wall Street Journal. In its filings, GTAT continues to paint a picture where it is under the thumb of Apple, noting that "protracted litigation against one of the largest corporations in the world with over $100 billion of cash would be challenging and expensive."

GT Advanced told the court it believes it could win in court against Apple, citing "actions rooted in the Bankruptcy Code and breach of contract claims." It also accused Apple of engaging in "inequitable conduct" that "resulted in an injury to creditors or conferred an unfair advantage on Apple."

But while the officials and lawyers at GTAT contend that they have been wronged in some way, they also believe that the cost of fighting Apple in court would be too great to bear.

The language used by GT Advanced is far different from Apple, which implied last week that it may not be done with the former partner. In a statement issued last week, Apple said it would "continue evaluating GTAT's progress on larger sapphire boule development."

GT Advanced, however, has said it plans to exit the sapphire production business entirely. The proposed settlement with Apple, in lieu of a lawsuit, would see GTAT sell off more than 2,000 "Advanced Sapphire Furnaces" on the open market to repay $439 million over 4 years, interest-free.

The deal on the table would allow GT Advanced to be released from its exclusive agreement with Apple, and the company would retain "all production, ancillary and inventory assets located in Mesa."

In the end, the deal between GT Advanced and Apple lived for less than a year — the original master development and supply agreement between the two parties was signed on Oct. 31, 2013. GTAT has already begun the process of shutting down its facility in Mesa, Ariz., and about 650 employees there have been laid off.

Apple currently uses scratch-resistant sapphire crystal to protect the fingerprint sensor found within the Touch ID home button on its iPhone and iPad lineups. Sapphire also covers and protects the rear iSight camera on the company's iPhones.

GTAT was apparently unable to meet Apple's demands for sapphire production, and the company filed for bankruptcy earlier this month, in a move that shocked observers and was even unexpected to Apple. Offering a slight glimpse into what the two parties had planned, Apple said it was working on an "ambitious" sapphire manufacturing process, but that the method is "not ready for production."