We’ve witnessed a quick unraveling of GT Advanced Technologies (GTAT), Apple’s main sapphire supplier, since the company suddenly filed for bankruptcy earlier this week.
New court filings indicate that GTAT wants to take legal action against Apple for its “oppressive and burdensome” terms. The sapphire maker also plans to shut down its Arizona plant by December 31st, which leaves Apple’s sapphire production in limbo. The Arizona plant shuttering will also result in the loss of 890 jobs.
Court documents reveal that “the agreements [with Apple] imposed oppressive and burdensome terms and obligations on GTAT” that made its “continued performance” no longer “a viable business option.”
Very little information has been shared about why GTAT has fallen into financial crisis, with its lawyers citing a binding confidentiality agreement with a key partner that would result in at least a $50 million fine. That partner is of course Apple, which had reportedly contracted GTAT to make sapphire displays for the iPhone as well as the upcoming Apple Watch.
There’s plenty of information to still be learned about the two companies’ relationship. GTAT’s CEO cashed in $160,000 worth of company stock right before the iPhone 6 unveiling last month, and Apple mysteriously withheld a $139 million payment it was expected to make.
Now GTAT is pleading with the court to release it from its 13 outstanding contracts with Apple, including the confidentiality agreement that has kept the details of its bankruptcy in the dark. Both court filings from today can be read here and here.
After GTAT filed for bankruptcy on Monday, Apple issued a statement saying, “We are focused on preserving jobs in Arizona following GT’s surprising decision and we will continue to work with state and local officials as we consider our next steps.”
Apple currently uses sapphire for certain parts of the iPhone, including its Touch ID sensor. The mid-tier Apple Watch will also sport a sapphire display. Analysts and other reports have said that GTAT’s closing shouldn’t affect Apple’s current sapphire supplies, but it certainly makes the prospect of a sapphire-coated iPhone display less likely.
Alex Heath is a journalist who works for Tech Insider. He’s the former co-host of The CultCast. He has been quoted by the likes of the BBC, KRON 4 News, and books like “ICONIC: A Photographic Tribute to Apple Innovation.” He lives in Lexington, Kentucky. If you want to pitch a story, share a tip, or just get in touch, additional contact information is available on his personal site. Follow him on Twitter.
22 responses to “Bankrupt sapphire supplier seeks to cut ties with ‘oppressive’ Apple”
Sorry, the shady shit the CEO did makes me not believe them.
CEO, has cashed his chips and is running.
Not the first company to accuse Apple of heavy handed business dealings. The Telcoms don’t like Apple either: http://goo.gl/gvy3jH – They all have to come crawling though because Apple has the prized iPhone.
Or the entire music industry when they agreed, oh so many years ago, to sell songs on iTunes for .99.
Did they not READ the contract they were signing?
Its not about understanding the contract its about one company (Apple) using its monopolistic powers to control and extort concessions from other companies it does business with. Why do you think Foxcom, Apple sole iPhone assembler, has so many labor issues in China. Because in order for it to make a decent profit off the Apple deal it instituted labor practices that are considered abusive in western societies.
Apple has every right to conduct it business practices in a way that benefits Apple and Apple shareholders. The fact it has that right does not make it right.
I’m not excusing Apple of any wrongdoing but I highly doubt that Apple is the only reason Foxconn engages in awful labor practices (there are plenty of other manufacturers that use Foxconn and China as a whole isn’t exactly a shining example of excellent human rights).
As far as GTAT is concerned, I’m a little suspicious.
GTAT didn’t have time to peruse the fine print, but the CEO certainly found time to get his ducats. I call BS on the accusation.
890 people losing their jobs… someone needs to get hung high
Lol Apple is like.. we need 65 million sapphire displays by the end of the year. GT is like.. holy shit! Lets um… declare bankruptcy!
How are they being oppressive? By wanting to give hundreds of millions of dollars for a high quality component shipped in a timely manner to meet demand of the product they are used in? WOW. Just WOW. Sorry for those that bought this stock, but whomever this CEO is, he’s an IDIOT. Oppressive? My a##. He needs to figure out that if you want to swing with the big boys, you HAVE to meet their hurdles. This CEO should lose his job over this one if he has this attitude.
Apple didn’t put a gun to this guys head when he signed the contract with Apple.
A whiff of insider trading and the fact that going against Apple will most likely see him blackballed in the tech industry…high price to pay for not delivering.
Corporations like Apple, pay late, over order and then return without compensation. I had a similar issue with Walmart 10 years ago, At a company I worked at. Walmart ordered one million dollars in product. Instead of paying in 30 days per the contract, they took 180 days to pay, their answer to non-payment was ‘sue us’ the product that they did not sell, instead of paying for it, they just sent it back, their response was if you ever want to do business with us again, you’ll take it back and like it. Well after late payments and returns without payments, the company I worked for went bankrupt, leaving no money left to sue Walmart. Apple does this all the time, along with dozens of the fortune 500 companies. Apple has a totally shit record, price fixing, extorting app makers, stealing app ideas then kicking those apps off the app store, conspiring to prevent employees from searching out other jobs with higher wages, conspiring to keep wages and benefits the exact same as Google and Facebook, paying late on all royalty payments in the iTunes store. So with their shitty track record I’ll take the Sapphire Companies story and side every day of the week. Fuc# Apple.
Proof, please, not generalities. How come I’ve never heard that “Apple does this all the time…” as you say? The news media are constantly looking for any scrap of information to make Apple look bad or to turn into a scandal. You sound like someone with a personal axe to grind.
@Len Williams Ikr we need the facts xD Also, didn’t apple front them 130 million?
I can smell an Apple hating TROLL from a mile away, and that sir is YOU! You just clumped Apple together with the scum like Walmart and expect to be taken seriously? All your assertions are just media and Apple hater BS. Now please leave.
And they just noticed the burdensome and oppressive terms?
So I expect the CEO will be charged with insider trading then? If anyone has doubts about Apple in this case, you only ned to see how it’s relationship with Cornning went with Gorilla Glass. Upon seeing the experimental glass, Steve Jobs advanced them $150 mill to build the plant to make the glass. If this company were Lying to Apple on its production, they have every right to withhold payment. They fronted them with $130 mill, where did that go? Someone has had their hand in the cookie jar I suspect.
890 jobs is a lot of people suddenly all wondering how they’re gonna pay the bills. I feel sorry for them. It looks like on the surface, they’re paying the price for their CEOs (and the rest of the management team’s) greed. Anyone working with such a big company like Apple as a supplier will know the potential for the business they do with them to have huge positive effects on the bottom line and also the impact it will have on their day to day running of their business. You deal with the big boys the pressure is ratcheted up. It’s the price you pay for working with lucrative and demanding customers. Without knowing what’s actually gone on it does look like they didn’t really have the systems in place to manage the contract or the yields to deliver on their promises. Neither of these things are Apple’s fault. I don’t doubt for a second that they would have chosen GTAT unless they could deliver which makes me suspect someone wasn’t telling Apple the whole truth when they signed on the dotted line. They set themselves up for a fall from the beginning.
The CEO is a crook and should be investigated, tried, and hung by his balls.
…GTAT’s CEO cashed in $160,000 worth of company stock right before the iPhone 6 unveiling last month…
Sounds like a CEO that should be spending time in a prison instead of making another grab for Apple cash.