Uh oh. Apple's Sapphire partner is going bankrupt.

[Eug]

GT Advanced Technologies has gone kaput. They are/were Apple's sapphire production partner. Stock is down massively.

http://investor.gtat.com/releasedetail.cfm?ReleaseID=874701

One wonders if they couldn't ramp up production fast enough for the iPhone 6, which is why these phones don't use sapphire. Or else maybe Apple changed their mind and GTAT didn't have a good enough contract or a plan B to cover them.

 

[Graze]

GT Advanced Technologies has gone kaput. They are/were Apple's sapphire production partner. Stock is down massively.

http://investor.gtat.com/releasedetail.cfm?ReleaseID=874701

One wonders if they couldn't ramp up production fast enough for the iPhone 6, which is why these phones don't use sapphire. Or else maybe Apple changed their mind and GTAT didn't have a good enough contract or a plan B to cover them.

Whatever it was it had nothing to do with ramping up production. Apple would have helped them out in that regard like it has done in the past with other part suppliers.

 

[Kaido]

Good time for Apple to buy them up!

 

[Ravynmagi]

Yeah, I think Apple already owns a chunk, so likely Apple would have to bail them out and buy the whole thing. No big deal for them, that money is in the petty cash drawer.

 

[openwheel]

synthetic sapphire is relatively cheap to produce anyway. I don't see any problem with Apple picking up the production.

 

[dawheat]

Its Ch 11 which could mean they come out of this mostly intact. Otherwise I agree that Apple will probably just snap up their assets.

Where exactly did the 500m+ that Apple put in go to?

 

[Sooon]

Read up on this a bit today. My understanding is that Apple's loan to them was contingent on them meeting certain performance metrics. They were scheduled to pay the final installment of the loan (in the $140 million range) either last month or this month, but that didn't happen due to GTAT not meeting Apple's standards. So now they need to pay back the $400ish mil they owe Apple right away, which isn't possible when they only have $85 mil in cash, which is why they're filing for bankruptcy protection.

The cash Apple loaned them was to build a huge manufacturing plant in Arizona, but Apple did not make any commitments to purchase sapphire from them. They could if they wanted to, but they were keeping their options open to buy from competitors.

 

[KB]

I understand that sapphire is heavier, more expensive and still just as breakable as gorilla glass. So no wonder Apple didn't use it in their iphone 6. I don't see a future for GTAT.

http://www.businessinsider.com/here...akable-sapphire-glass-for-the-iphone-6-2014-9

 

[Eug]

Read up on this a bit today. My understanding is that Apple's loan to them was contingent on them meeting certain performance metrics. They were scheduled to pay the final installment of the loan (in the $140 million range) either last month or this month, but that didn't happen due to GTAT not meeting Apple's standards. So now they need to pay back the $400ish mil they owe Apple right away, which isn't possible when they only have $85 mil in cash, which is why they're filing for bankruptcy protection.

The cash Apple loaned them was to build a huge manufacturing plant in Arizona, but Apple did not make any commitments to purchase sapphire from them. They could if they wanted to, but they were keeping their options open to buy from competitors.

Links? If that's the case then Apple basically screwed them over.

However, either GTAT was just too naive to protect themselves properly, or they foolishly decided to take a huge risk on purpose. Or a bit of both, among other things.

 

[Anubis]

I understand that sapphire is heavier, more expensive and still just as breakable as gorilla glass. So no wonder Apple didn't use it in their iphone 6. I don't see a future for GTAT.

http://www.businessinsider.com/here...akable-sapphire-glass-for-the-iphone-6-2014-9

its actually more brittle vs GG. as hardness goes up (scratch resistance), things get more brittle

 

[Sooon]

Links? If that's the case then Apple basically screwed them over.

However, either GTAT was just too naive to protect themselves properly, or they foolishly decided to take a huge risk on purpose. Or a bit of both, among other things.

http://www.forbes.com/sites/chuckjones/2014/10/07/what-does-gtats-bankruptcy-mean-to-apple/

In order to secure the $578 million loan/pre-payment (of which they've received $439 million), GTAT bet the farm that they could deliver what was agreed to, and failed.

GTAT spelled out what seems to have occurred in the Risks section of its 10-Q filing.

‘If we are unable to timely ramp up our sapphire materials operations in Arizona, we may not be able meet demand, we may not be eligible to receive future advances under the prepayment agreement, and would be subject to penalties (including payment of cash amounts).’

 

[Mopetar]

That seems like an utterly stupid business move. Projects of that size rarely finish on time, within budget, and satisfying every other constraint. Unless they were being incredibly pessimistic with their estimates, it's little wonder that it failed.

 

[Eug]

Yep. Here is a WSJ article essentially saying the same thing: They bet the farm on a single customer with a huge, huge amount of money and lost.

http://m.wsj.com/articles/shattered-screen-dreams-at-gt-advanced-heard-on-the-street-1412714363

They didn't come through and Apple withheld their $139 million payment to keep them afloat, triggering the filing for bankruptcy protection.

 

[MrSquished]

Yep. Here is a WSJ article essentially saying the same thing: They bet the farm on a single customer with a huge, huge amount of money and lost.

http://m.wsj.com/articles/shattered-screen-dreams-at-gt-advanced-heard-on-the-street-1412714363

They didn't come through and Apple withheld their $139 million payment to keep them afloat, triggering the filing for bankruptcy protection.

that's behind a paywall....seems to be similar to what that company hit, a paywall. can't get paid when it's behind the wall you built.

 

[jpeyton]

It was interesting to hear all the talk about sapphire screens prior to the iP6 launch.

Sapphire screens would have made a deep cut into Apple's profit margins...and for what? I doubt the iP6 would have sold better/worse with or without them.

Gorilla Glass is fine for 90% of consumers and is cheap to manufacture.

 

[Zodiark1593]

The company simply made a risk and lost, nothing more, and nothing less. Not exactly newsworthy if you ask me.

 

[Eug]

Over half a billion dollar bet for a potential key component of Apple's best selling product, that massively failed and that put the company in question into bankruptcy?

I'd say that's extremely newsworthy.

 

[Auric]

Meanwhile, Apple may have been able to negotiate a better deal with Corning.

 

[Mopetar]

Meanwhile, Apple may have been able to negotiate a better deal with Corning.

Or if they want a sapphire display manufacturer, buy one for pennies on the dollar.