Apple’s contract left GT Advanced “no choice” but to declare bankruptcy.

Ellen Wu
30 October, 2014
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GT-Advanced-Technologies-news-sapphire-apple-macworld-australiaGT Advanced Technologies Chief Operating Officer Daniel Squiller said Apple put the company in a position where it had “no choice” but to file for bankruptcy in a revised court document yesterday.

According to the report GTAT has incurred about US$900 million in losses. The synthetic sapphire manufacturer declared bankruptcy on 6 October this year.

Squiller said the contract between Apple and GTAT was “ambitious” and “unsustainable”.

Under GTAT’s contract with Apple it was unable to sell sapphire to other customers but Apple had the control over GTAT’s sapphire production.

“Under the new structure, Apple would act as a lender and would have no obligation to purchase any sapphire furnaces, nor did it have any obligation to purchase any sapphire material produced by GTAT,” Squiller said in court document.

“At the same time, GTAT would be precluded from doing business with any other manufacturer in or supplier to the consumer electronics market.”

GTAT was expected to fulfill any Apple purchase orders or modifications with severe penalties if they failed to do so.

Squiller said GTAT presented a report to Apple with outlined the company’s heavy losses to try to get the terms of their contract changed.

He said Apple was receptive but “none of Apple’s proposals soled the economic issues in an effective manner”.

Apple and GTAT have reached an agreement to dissolve their partnership, but will remain in contact.

GT Advanced are currently researching ways to produced larger sapphire boules. Its Arizona sapphire plant is expected to shut down by 31 December.

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