Apple surprised by Sapphire partner's bankruptcy filing

[Shawn Knight]

GT Advanced Technologies' decision to file for Chapter 11 bankruptcy protection earlier this week took many by surprise, including Apple.

In its first statement since the Monday filing, Apple said they are focused on preserving jobs in Arizona following GT’s surprising decision and will continue to work with state and local officials as they consider their next steps.

If you recall, Apple partnered with GT last year to build a sapphire manufacturing plant in Arizona. As part of the $578 million deal, Apple agreed to make four pre-payments to GT contingent upon them meeting certain technical goals along the way.

Apple didn’t make the final $139 million payment because GT was unable to meet specific technical requirements according to people familiar with the matter as reported by The Wall Street Journal. It’s unclear if this non-payment is why GT filed for bankruptcy protection but it certainly seems plausible.

Adding a bit of controversy to the mix, GT’s CEO Thomas Gutierrez sold more than 9,000 shares of GT stock on the day before Apple announced its new iPhones last month, netting $160,000 in the process.

GT share value had more than doubled over the course of the past year, fueled by speculation that Apple’s new iPhones would feature sapphire-covered displays supplied by GT. Once it became apparent that Apple was instead using traditional glass, shares dropped 13 percent within 24 hours. On Monday, when GT filed for bankruptcy, shares slid a whopping 93 percent to just 80 cents.

It’s worth pointing out that a filing from GT claims Gutierrez sold the shares as part of a pre-arranged plan that was put in place back in March. What’s more, the executive also sold shares in May, June and July which suggests there was no obvious pattern to his sales.

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https://www.techspot.com/news/58358-apple-surprised-sapphire-partner-bankruptcy-filing.html

 

[VitalyT]

This may have been the intent - drive them down and then buy out for cheap.

Apple isn't withdrawing from sapphire, they re-evaluate. They need it at least for the cameras and watches. Sapphire just wasn't quite ready to be in iPhone 6 due to some quirks related to fragility on impact. But I believe they will work it out for later.

 

[Skidmarksdeluxe]

This may have been the intent - drive them down and then buy out for cheap.

Apple isn't withdrawing from sapphire, they re-evaluate. They need it at least for the cameras and watches. Sapphire just wasn't quite ready to be in iPhone 6 due to some quirks related to fragility on impact. But I believe they will work it out for later.

I'm not so sure. Maybe this GT-A (note the similarity to the game) CEO has plans to grab the loot and go on the lam.

 

[RzmmDX]

I haven't seen a stock plunge that quick since RIM.

 

[SNGX1275]

I'm surprised that Apple was surprised. The article states Apple withheld the last installment of $139M because GT's product sucked.

 

[VitalyT]

The article states Apple withheld the last installment of $139M because GT's product sucked.

The question is - was it the product that sucked or the sapphire being applied the wrong way...

I don't mean it as a joke on Apple. But we are talking pure physics of materials here. If it really was a proper sapphire and it wasn't suitable, then there may be no simple substitute after all, perhaps something that requires another invention.

The problem, as it turned out, that while sapphire is truly scratch-resistant, second to diamond, it is fragile (breakable) when used in a thin form. I.e. it can resist any scratch or even bend, but not an impact, which is a basic property of crystals.

 

[bexwhitt]

I'm surprised that Apple was surprised. The article states Apple withheld the last installment of $139M because GT's product sucked.

What they are trying to do is technically very difficult "product sucked" is hardly fair

 

[VitalyT]

I'm surprised that Apple was surprised. The article states Apple withheld the last installment of $139M because GT's product sucked.

What they are trying to do is technically very difficult "product sucked" is hardly fair

It was physically difficult rather than technically Pure sapphire isn't reliable enough when used in a thin form, it breaks on impact.

 

[Jad Chaar]

I'm surprised that Apple was surprised. The article states Apple withheld the last installment of $139M because GT's product sucked.

What they are trying to do is technically very difficult "product sucked" is hardly fair

It was physically difficult rather than technically Pure sapphire isn't reliable enough when used in a thin form, it breaks on impact.

Yeah that is why they probably will use a mixture of sort.

 

[SNGX1275]

What they are trying to do is technically very difficult "product sucked" is hardly fair

I think its fair, GT presumably told them that if they had enough money they could produce it in larger pieces. They weren't progressing in line with the expectations they set. From what I've read they could make what they were trying to do, just with very poor yields.