Bankrupt sapphire supplier seeks to cut ties with ‘oppressive’ Apple

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The iPhone 6's Touch ID sensor is greatly improved over the 5s &mdash for me, anyway.
With GTAT gone, who will supply the sapphire for Apple components like Touch ID? Photo: Jim Merithew/Cult of Mac

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.