GT Advanced Technologies, a sapphire supplier that works closely with Apple, today confirmed that it has filed for Chapter 11 bankruptcy court protection. Its share price has been falling since it was revealed that Apple opted for Gorilla Glass rather than sapphire for its iPhone 6 displays, but GT insists it’s not going out of business.
Last November, GT signed a multi-year deal with Apple that came with a $578 million prepayment. It was thought that the company would supply sapphire panels for the iPhone 6 and iPhone 6 Plus, and in the months preceding Apple’s event — as the rumors grew stronger — the company’s stock price continued to rise.
However, with no mention of sapphire at Apple’s event — at least not for the new iPhones — it was clear that GT wasn’t supplying cover glass for these devices, and its share price has been falling since.
GT is still supplying the sapphire that protects both the iPhone’s Sight camera and its Touch ID sensor, however, and it will supply the sapphire panels used for the Apple Watch. As of September 29, the company had $85 million in cash. Now it’s seeking Chapter 11 bankruptcy protection to “resolve its current issues.”
“GT has a strong and fundamentally sound underlying business,” said Tom Gutierrez, president and chief executive officer of GT, in a press release today. “Today’s filing does not mean we are going out of business; rather, it provides us with the opportunity to continue to execute our business plan on a stronger footing, maintain operations of our diversified business, and improve our balance sheet.
“We are convinced that the rehabilitative process of chapter 11 is the best way to reorganize, protect our company and provide a path to our future success. We remain committed to our roots in innovation and our diversification strategy. We plan to continue to operate as a technology leader across our core set of businesses.”
GT had used its Apple payout to expect and improve its manufacturing plant in Massachusetts, but it’s unclear how its bankruptcy filing might affect its partnership with the Cupertino company.
In hindsight, believing Apple would use sapphire to protect the iPhone’s display was more than just wishful thinking. While it is significantly harder than glass and incredibly scratch resistant, it’s also prone to shattering and very expensive.